New CSX Management Passes First Test

We admit it has been a brief test, but management CSX put in place following former CEO Hunter Harrison’s December death has been effective. CSX improved train velocity, terminal car dwell, and train length compared with the previous four quarters. Capital expenditure declined 17% from the prior-year period, and management indicates it has ample capacity before elevated investment is needed. In fact, CEO Jim Foote indicated it would take a monumental increase in demand to cause CSX to hire more employees; it has a substantial 800 locomotives in storage.

Volume isn’t particularly rosy, with carloads either flat or down in all major commodity classes, for a total 4% drop year over year, but revenue ton-miles declined just 1%. Pricing helped, as excluding coal, rates improved “slightly" sequentially, and year-over-year revenue per carload was up 4% (a portion due to greater fuel surcharges).

Resulting revenue was flat year over year, but the operational improvement is evident. Compared with last year, the rail is profitably handling 1% fewer revenue ton-miles with eight fewer hump yards, 12% fewer total employees, 20,000 fewer rail cars, and 1,000 fewer locomotives. Expenses were held to 8% lower than a year ago, excluding prior-year restructuring.

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