Oscar Munoz, CSX Corp. chief financial officer, told a J.P. Morgan conference in New York Tuesday that the railroad is moving toward “double-digit” earnings growth this year, a forecast based on a combination of traffic growth and price increases of at least 4% to 5%.
Munoz said traffic was up 3% in this year's first nine weeks. Intermodal, which accounts for 34% of CSX business, was up 12%, and general merchandise, which accounts for 37% of the total, was up 7%. While coal, which brings in 24%, was down 17% year-to-date, Munoz said he expected coal to end up well in the plus column by year’s end, driven partly by China’s rising metallurgical coal needs.
Deborah H. Butler. Norfolk Southern’s executive vice president of planning and chief information officer, told the conference that freight volume on NS was up 6% year-to-date. General merchandise is up 14% and intermodal volume is up 8%, though coal volume remains down 8%. Her presentation dealt mainly with capacity growth plans involving several high-volume corridors NS is developing in partnerships with federal and state governments; altogether, she said, NS will devote more than one-fourth of a $1.4 billion capital spending program to growth projects.
Munoz examined the trends behind the growth now forecast and described how the railroad will respond.
Gross Domestic Product is expected to grow 3.0% this year, with industrial production rising 4.3%. Last year, GDP fell 3.4% and industrial production was down 9.7%.
A more efficient railroad is in place to move the returning traffic, said Munoz, which means that “as volume builds, resources will return less than 1-for-1.”
These are the idle resources now available to CSX:
* Train & Engine employees furloughed now add up to1,529, 14% of the total.
* Locomotives in storage total 407, 10% of the fleet.
* Freight cars stored—15,864—represent 20% of the total.