CSX, a major railroad operating in the Eastern United States and parts of Canada, experienced a 10% decline in its first-quarter profit, earning $893 million, or 46 cents per share, compared to $987 million, or 48 cents per share, in the same period last year. Despite the challenges posed by weather and the closure of the Baltimore port, the railroad managed to keep its customers satisfied with reliable service. CEO Joe Hinrichs expressed optimism about the future, stating that CSX is receiving some of the highest customer satisfaction ratings ever and expects revenue and shipping volume to grow at low- to mid-single-digit rates this year.
Although CSX’s revenue slipped 1% to $3.68 billion in the first quarter, the results were slightly better than analysts had predicted. The railroad continued to execute well and demonstrated solid performance throughout the quarter, even as the average speed of its trains slowed down. CSX officials highlighted that certain factors contributing to slower train speeds, such as maintaining optimal velocity and increasing train length, also enhance operational efficiency. Wall Street expected CSX to report revenue of $3.66 billion for the quarter, indicating a slightly higher performance than anticipated.
Following the collapse of a bridge in Baltimore last month, which resulted in the closure of the port, CSX faced challenges rerouting traffic to other East Coast destinations. As the second largest coal export port, the closure of the Baltimore port will impact coal shipments and subsequently affect CSX’s second-quarter revenue. The railroad expects to incur a monthly revenue loss of $25 million to $30 million until workers clear the wreckage of the bridge and the port can resume operations. Despite these challenges, CSX remains one of the nation’s largest railroads, operating trains on over 20,000 miles of track in 23 Eastern states and two Canadian provinces.
In the aftermath of the bridge collapse and challenges posed by the closure of the Baltimore port, CSX’s shares surged more than 2% in after-hours trading following the release of the earnings report. CEO Joe Hinrichs expressed confidence in Congress passing a package of rail safety reforms later in the year, emphasizing the importance of targeted measures to enhance rail safety. Additionally, CSX announced the passing of former CEO Jim Foote, who played a critical role in transitioning the railroad to the precision scheduled railroading operating model. This model, which involves using fewer, longer trains with mixed freight, has been adopted by other U.S. railroads and led to significant efficiency improvements. However, unions have raised concerns about workforce reductions and potential safety risks associated with the model.
