Accessibility/Mobile Features
Skip Navigation
Skip to Content
Editorial News
Business
Classified Sites

The Canadian Press - ONLINE EDITION

Strong demand helped CSX in 2Q but railroad had to scramble to keep up with volume

A CSX freight train rolls past a grade crossing in Mt. Airy, Md. on March 22, 2014. THE CANADIAN PRESS/AP, Patrick Semansky

Enlarge Image

A CSX freight train rolls past a grade crossing in Mt. Airy, Md. on March 22, 2014. THE CANADIAN PRESS/AP, Patrick Semansky

OMAHA, Neb. - CSX is optimistic about its long-term performance, but the railroad's profit during this quarter will likely be relatively flat.

The company discussed its second-quarter results Wednesday after edging out Wall Street profit expectations.

CSX saw a surge in demand, particularly for hauling coal and crude oil, at the same time that it was attempting to clear a backlog of shipments delayed by severe winter weather.

Those frigid temperatures led to a 6 per cent increase in coal shipments because utilities in the Northeast had a smaller window in which to ship coal over the Great Lakes. That's encouraging for the railroad because it signals fewer utilities are switching power plants from coal to natural gas, which can be shipped through pipelines.

"These results are evidence of both broad-based economic momentum across most markets, and a transition in the energy markets that is largely behind us," said CEO and Chairman Michael Ward.

CSX expects volume to continue growing, and it's investing an additional $100 million in equipment to handle the load. The company expects only modest profit growth this year with most of that coming in the fourth quarter.

The railroad expects that its third-quarter profit will be in line with the 45 cents per share it delivered last year. That, however, is 3 cents shy of what analysts surveyed by FactSet were looking for, and shares slipped 6 cents to $31.09 in midday trading Wednesday.

CSX said Tuesday its second-quarter profit improved 2 per cent to $529 million, or 53 cents per share, from $521 million, or 51 cents per share, last year.

The railroad is now hauling about 20 trainloads a week of crude oil to refineries on the East Coast. Those shipments of oil from the Bakken region of North Dakota and Montana have been a bright spot for railroads, but new safety regulations currently being pieced together could prove costly.

Federal regulators are expected to propose new rules for tank cars sometime later this year, and the Transportation Department has been developing other rules to address safety concerns after several fiery rail accidents involving crude oil.

Ward said he is excited about the prospect of new regulations calling for the railroad tank cars hauling crude oil to be redesigned and strengthened, but he's worried about the possibility of a 30 mph speed limit being imposed on trains carrying crude oil.

"That would be severely limit our ability be to provide reliable freight service for customers and to support the timely, efficient passenger or commuter service," Ward said.

Railroads already have voluntarily lowered speeds from 50 mph to 40 mph in urban areas.

CSX Corp., based in Jacksonville, Florida, operates more than 21,000 miles of track in 23 Eastern states and two Canadian provinces. It is the first major railroad to release results.

Norfolk Southern will report earnings next Wednesday, and Union Pacific will release its quarterly earnings report next Thursday.

___

Follow Josh Funk online at www.twitter.com/funkwrite

  • Rate this Rate This Star Icon
  • This article has not yet been rated.
  • We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high. If you thought it was well written, do the same. If it doesn’t meet your standards, mark it accordingly.

    You can also register and/or login to the site and join the conversation by leaving a comment.

    Rate it yourself by rolling over the stars and clicking when you reach your desired rating. We want you to tell us what you think of our articles. If the story moves you, compels you to act or tells you something you didn’t know, mark it high.

Sort by: Newest to Oldest | Oldest to Newest | Most Popular 0 Commentscomment icon

You can comment on most stories on brandonsun.com. You can also agree or disagree with other comments. All you need to do is register and/or login and you can join the conversation and give your feedback.

There are no comments at the moment. Be the first to post a comment below.

Post Your Commentcomment icon

Comment
  • You have characters left

The Brandon Sun does not necessarily endorse any of the views posted. Comments are moderated before publication. By submitting your comment, you agree to our Terms and Conditions. New to commenting? Check out our Frequently Asked Questions.

letters

Make text: Larger | Smaller

Brandon Sun Business Directory
Sudden Surge: Flood of 2014
Opportunity Magazine — The Bakken
Why Not Minot?
Welcome to Winnipeg

Social Media

Canadian Mortgage Rates