CSX profit jumps on volume and revenue growth

“The progress we continue to make on productivity has helped drive substantial growth in profitability, earnings, and free cash flow. Our goal is to be the best performing railroad in North America, and the entire CSX team is responding to that challenge,” Chief Executive Steve Angel said on the railroad’s earnings call.

The results and outlook for the rest of the year prompted the railroad to raise its revenue growth forecast to high single-digits, up from prior guidance of mid-single-digit growth.

“As we move into 2027, we will be focused on ensuring we have sufficient resources across the network to support a growing business, which will include adding to our train and engine employee pipeline,” Angel said. “We remain committed to sizing our workforce to the needs of a safe, reliable, and efficient railroad.”

Overall freight volume increased 5% for the quarter. Intermodal was up 7%, merchandise was up 3%, and coal was up 2%.

The intermodal volume growth was due entirely to domestic shipments, as international traffic declined slightly.

“Reduced trucking availability, high truck rates, and elevated diesel costs continue to benefit our intermodal segment,” said Maryclare Kenney, the railroad’s chief commercial officer.

New service offerings are attracting truckloads off the highway, she said, including interline service with BNSF through Birmingham, Ala., and with CPKC through Myrtlewood, Ala. Double-stack operations, made possible by completion of the Howard Street Tunnel clearance project in Baltimore in the spring, have helped with volume growth in the I-95 Corridor.

CSX has experienced congestion at its Fairburn terminal outside Atlanta and is making investments in track, switching, and processing capacity to handle increased intermodal volume.

Export coal tonnage increased 7% for the quarter, while domestic coal tonnage declined 3% as increased metallurgical coal volume was not enough to offset a downturn in utility coal traffic.

Key operations metrics declined for the quarter amid higher volume. Average train velocity was off by 2%, while terminal dwell increased 12%, compared to a year ago.

The railroad’s service metrics declined compared to a year ago, with intermodal and carload trip-plan compliance falling 10 points each. Intermodal on-time performance was 83% for the quarter, while carload was 73%.

“We are handling more volume safely and efficiently, but we know our network can perform better,” Angel said.

Angel praised former Chief Operating Officer Mike Cory, who announced his retirement on Oct. 12. The railroad’s two operations senior vice presidents, Doug Ryhorchuk and Casey Albright, now report directly to Angel.

“Most people think of me as an operating CEO, and that’s what I like to do,” said Angel, who joined CSX a year ago after leading industrial gas company Linde. “If you go back into my early days, I actually ran manufacturing operations for GE, and I installed one of the first lean production systems in the United States back in Nineties. So operations always has been in my blood.”

Safety performance improved for the quarter, with the personal injury rate down 17% and the train accident rate down 5%. It was the seventh straight quarter of improvement in the injury rate, and the fifth consecutive quarter of improvement in the train accident rate.

Why it matters: CSX grew traffic and profits while spending less, but deteriorating service raised questions about whether its leaner operation could keep up.

This article was updated Oct. 22 to correct that earnings per share improved by 57 cents.

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