CSX says Baltimore port closures will cost it up to $30 million in monthly sales following bridge collapse

By James Rogers and Bill Peters

'It's also likely that you'll see a good amount of congestion immediately after reopening,' executive says

Railroad giant CSX Corp. on Wednesday said it could lose between $25 million and $30 million in sales a month due to the port closure in Baltimore that followed the collapse of a major bridge in the city last month.

Executives for CSX (CSX), which brings in billions in yearly sales and whose rail network crosses much of the eastern half of the U.S., said much of those lost sales would be from coal. They noted that the company, which runs an export coal business in the area, had already begun to steer its trains elsewhere.

CSX's management made the remarks during a conference call Wednesday afternoon to discuss the company's first-quarter earnings report. Those results were better than expected, even amid signs of weaker shipping demand elsewhere.

Baltimore's Francis Scott Key Bridge collapsed last month after it was hit by a massive container ship that lost power, killing six construction workers and upending shipping in the area. The disaster was the latest to raise questions about safety standards within the nation's transportation infrastructure.

While the port could be reopened by the end of May, CSX Chief Commercial Officer Kevin Boone said Wednesday that there would likely be hiccups in the flow of trains, trucks and boats afterward.

"It's also likely that you'll see a good amount of congestion immediately after reopening," he said. "But there's potential for it to take a few weeks to ramp back up to full run rate."

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Wall Street has been seeking more details on the disaster's financial impact on transportation and logistics companies. Earlier this month, rival rail operator Norfolk Southern Corp. (NSC) said that its second-quarter revenue will be affected by the bridge collapse. While some analysts projected that CSX was likely to be among those most affected by the collapse, others have downplayed the impact of closures at the Baltimore port on its business.

CSX reported first-quarter net income of $893 million, or 46 cents a share. That was down from net income of $987 million, or 48 cents a share, in the prior year's quarter.

Revenue was down 1% to $3.68 billion, from $3.706 billion in the same period last year.

Analysts surveyed by FactSet were looking for earnings of 45 cents a share on revenue of $3.664 billion.

CSX shares rose 2.9% in extended trading after ending Wednesday's session down 2%, compared with the S&P 500 index's SPX decline of 0.6%.

Shares of CSX are down 1.5% in 2024, while Norfolk Southern's stock is up 1.3%.

Total first-quarter volume for CSX was 1.53 million units, up 3% year over year, the company said. Intermodal volume was up 7%, coal volume was up 2% and merchandise volume was flat.

Lower fuel surcharges - the fees freight carriers attach to shipments to cushion against fluctuating fuel prices - plus weaker trucking revenue and a drop in export coal prices were negatives for the quarter, the company said. Severe weather in January also hurt shipping.

However, CSX said it expects total volume and sales growth in the low- to mid-single-digit range this year as it attracts new business, and as retailers restock their warehouses and back rooms amid "stable" consumer demand. Shipping demand has been in flux as consumers navigate higher prices.

Related: Knight-Swift's stock hurt by profit warning on over-supplied truck market and bad weather

Elsewhere, shares of trucking company Knight-Swift Transportation Holdings Inc. (KNX) fell on Wednesday after it slashed its profit outlook and warned of an "oversupplied" trucking industry where too many empty trailers have pushed down prices. Trucking-industry peer J.B. Hunt Transport Services Inc. (JBHT) also warned of weaker demand.

CSX management said trends in the trucking industry hadn't affected what they charge to ship goods.

-James Rogers -Bill Peters

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04-17-24 2052ET

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