CSX reports 7% increase in operating income during third quarter
JACKSONVILLE, Fla. — CSX Corp. reported third-quarter operating income of $1.35 billion with net earnings of $894 million, or 46 cents per diluted share, in financial results announced Wednesday.
Those results compare with $1.27 billion in operating income and $828 million in earnings, or 41 cents per share, in the same quarter a year ago.
The railroad handled a total volume of 1.59 million units for the quarter, up 3% from a year ago. Its quarterly revenue of $3.62 billion represented a 1% increase, while the operating income was up 7% and its operating margin was 37.4%, an increase of 180 basis points.
“CSX’s commitment to excellent service allowed us to deliver meaningful growth in volume, operating income, and operating margin in the third quarter,” CEO Joe Hinrichs said in a press release. “Over the last several weeks CSX, along with many of the communities in which we operate, was presented with significant challenges brought about by the recent hurricanes. Thanks to the dedication of our employees, our network has remained flexible and resilient, and we remain ready to meet our customers’ needs as they increasingly favor the efficiency and reliability being delivered by the ONE CSX team.”
CSX executives will discuss the results in a conference call Wednesday afternoon.
FreightWaves SONAR, Keelvar talk data integration in October Webinar
FreightWaves SONAR and logistics software company Keelvar have teamed up to create a powerful integration tool for reviewing high-frequency supply chain data.
During Wednesday’s October Webinar, Nick Persin, director of strategic partnerships for FreightWaves SONAR, spoke with Dylan Alperin, VP of professional services at Keelvar, about delivering SONAR’s truckload datasets to the Keelvar platform.
“We are bringing in our low, medium and high contract rate pricing,” Persin said during the webinar. “We have our spot rate pricing, and then we also have some market intelligence, some context around those rates in our SONAR Lane scores.”
The collaboration helps procurement professionals make more informed decisions using real-time North American road transport data directly integrated into Keelvar’s platform, according to a news release about the service launch in August.
Alperin said in the webinar that the data from this integration is already available to customers using Keelvar’s platform.
“As long as you’re an existing FreightWaves customer – just work with Nick and the FreightWaves team – all you need is an API key from them that you can set up in your Keelvar account,” Alperin said. “Then, 100% of the features and options are there for you to use and start leveraging in your RFPs immediately.”
Additionally, FreightWaves SONAR has a 90-day proof-of-value concept offering available for prospective customers to try out at no charge. Persin said the integration with Keelvar is a simple “turnkey solution” with no technical or IT requirements needed by customers.
“The great thing about both of our companies is we’re here to support you throughout that journey,” Persin said. “So anytime there’s an issue or question [that] comes up, you have Dylan, myself, and our teams are available to make sure that the bid sheets are set up properly and that you’re seeing the data that’s flowing through.”
Alperin said the data can be utilized to run a more efficient and effective RFP. He added that using this data live in RFPs allows businesses negotiating with their suppliers to find “the best carriers on the best lanes with the best services at the right price.”
“I’ve been in a bunch of procurement conferences in the last week, and everybody’s constantly talking about ‘data being the foundation of everything we’re doing,’” Alperin said. “I think everybody gets that, but the question always is … ‘How do I get that data?’ To me, this is the ultimate answer to that question. If you are running a truckload RFP – and we’ve got other integration partners for other categories, but on the truckload side – there’s no excuse anymore for you to say, ‘I can’t get access to the data,’ ‘I can’t quickly integrate it into my RFP,’ ‘I can’t quickly update it,’ ‘I can’t understand how some of my lanes are more or less attractive.’ … You have all of that data now.”
With very little effort needed to set this integration up, Alperin challenged business owners to start leveraging the tool for their truckload RFPs.
“Whether it’s spot bids, whether it’s contract bids, [start using this integration] so you can really start making better decisions …,” Alperin said. “The more frequent you can be looking at this data, refreshing it and updating it, all of that’s available at your fingertips now, literally, in the system. You can just press refresh, and it will bring all of this data now over there to you. That’s the really exciting piece for me.”
Prologis says softness in logistics real estate market to last into mid-2025
Logistics real estate landlord Prologis said the current downturn in warehouse leasing demand will likely extend into the middle of next year as vacancies have likely not yet peaked. Management from the company noted on a third-quarter call Wednesday “a measured level of optimism” and that “customers are very engaged, but they’re just not making decisions.”
San Francisco-based Prologis (NYSE: PLD) reported core funds from operations (FFO) of $1.43 per share, 5 cents higher than the consensus estimate and 13 cents higher year over year. The company raised the bottom end of its 2024 FFO guidance range by 3 cents to $5.42 and lowered the top end by 1 cent to $5.46 per share. The consensus estimate was $5.42 at the time of the print.
Consolidated revenue increased 6% y/y to more than $2 billion in the period. Total leases commenced included more than 50 million square feet, a 10% y/y increase. Occupancy fell 120 basis points y/y to 95.9%, but the company said that metric outperformed the broader market by 300 bps.
Table: Prologis’ key performance indicators
Global market rents were down 3% overall during the quarter but only half that amount when excluding larger declines in Southern California. Even with the headwinds, Prologis’ Southern California portfolio saw rents change on multiyear lease commencements by 84% on average.
Net effective rent change over the entire lease term fell more than 16% percentage points y/y to 67.8%, which represents more than $90 million in incremental net operating income. Prologis said its lease mark to market (resetting in-place rents to current market rents) was 34% in the quarter, which equates to $1.6 billion in future net operating income.
Prologis’ outlook is that vacancies will continue to rise, with rents not inflecting positively until the middle of next year. However, it said 90% of its leases don’t start to roll over for another 12 months, meaning the current dip in market rents “won’t have [a] significant impact on our long-term earnings, nor the value of the business,” President Dan Letter said on the call.
Letter said recent legislation in California will restrict new warehouse capacity, driving rents higher across the state, including in the massive consumption and logistics region of Southern California.
He believes the broader market is poised to improve in 2026 and beyond as new warehouse deliveries are now post-peak, warehouse starts (215 million square feet of space) are the lowest since 2017 and utilization is improving at existing locations. These dynamics are expected to tighten capacity and push rates higher.
Prologis’ development starts in the quarter were valued at more than $500 million, but the company lowered its full-year starts guidance by $750 million to a new range of $1.75 billion to $2.25 billion. It has acquired 14 million square feet of space so far this year and raised full-year guidance for portfolio acquisitions to $1.75 billion to $2.25 billion, a $750 million increase.
Shares of PLD were up 4.4% at 2:40 p.m. EDT on Wednesday compared to the S&P 500, which was up 0.5%.
Professional speed dating: Brokers, carriers can connect in new ways at Broker-Carrier Summit
The Broker-Carrier Summit (BCS) is a dynamic and one-of-a-kind event that exists for the sole purpose of strengthening the bonds between brokers and carriers. BCS is slated to host its fourth event in two years later this month, and the energy surrounding the event is ramping up.
The Strongest Man in Logistics, Robert Bain of GLCS, has been involved with BCS from the beginning. He is motivated by the connections that have been formed at past events, and he only expects those to grow with this next event.
“We want to form a common bond,” Bain said. “This is an industry that is incredibly connected, and the best way to grow your business is to connect with more people.”
In order to further foster those connections, BCS hosts a robust array of networking opportunities during its biannual in-person events. From mainstay activities like kick-off parties to more unique offerings like professional speed dating, brokers and carriers have numerous opportunities to seek each other out.
The Summit’s newest networking offering, professional speed dating, gives participants the opportunity to meet 15 to 20 new potential partners over the course of one hour. Speed dating is broken down into segments, with different sessions for those handling different types of freight. This ensures that each connection has the potential to be meaningful.
Rob McCutcheon, vice president of strategy and growth at TAFS, is energized by the opportunities for networking and education BCS offers. TAFS is the title sponsor of the Broker-Carrier Summit.
“We love the purpose. We love the people behind it,” McCutcheon said. “We don’t do well unless the carriers we work with do well. We want to connect them with the best brokers and shippers as we can.”
Beyond networking events, education is a mainstay of the summit. The schedule includes a powerful list of expert speakers, including Beta Consulting Group CEO Trey Griggs, Integrity Global Logistics CEO Melanie Patterson, industry veteran Andrew Silver, Federal Motor Carrier Safety Administration Director Ken Riddle, Ballast founder Nate Shutes, carrier consultant and strategist Adam Wingfield and many others.
“We have talked to a lot of people across the industry that have a lot of knowledge, and we are focused on compiling all that educational material for Summit attendees,” McCutcheon said.
Tickets are still available for this fall’s Broker-Carrier Summit, which is scheduled to take place from Oct. 23-25 in Fort Worth, Texas. Multi-day tickets are available for all attendees, and day passes are also an option for drivers and carriers.
Click here to learn more about Broker-Carrier Summit or purchase tickets to the event.
How Spirit Halloween is doing same-day delivery; Hazmat 101; from NFL to broker | WHAT THE TRUCK?!?
On Episode 771 of WHAT THE TRUCK?!?, Dooner is talking to Roadie CEO Marc Gorlin about how Spirit Halloween is delivering this spooky season. Spirit Halloween, North America’s leading Halloween retailer, is tackling this with its first e-commerce same-day delivery program with the help of Roadie, a UPS company, to offer same-day delivery from Spirit Halloween’s online store across the U.S.
What do you need to know about running hazmat in 2024? Starz HazMat Consulting CEO Wendy Buckley schools us in the art of transporting hazardous materials.
Justin Boren went from the NFL to opening a brokerage. What’s harder, and does anything you learn inside the huddle apply to the brokerage floor? We’ll find out.
This summer the ports of Los Angeles and Long Beach saw record import volumes. We went down there to film a documentary about the resurgence of America’s gateway ports, how they’re dealing with automation and how the drayage community is handling electrification of their fleets. Today, we present Episode 1 of “Rebuilding America’s Gateway to America.”
Catch new shows live at noon EDT Mondays, Wednesdays and Fridays on FreightWaves LinkedIn, Facebook, X or YouTube, or on demand by looking up WHAT THE TRUCK?!? on your favorite podcast player and at 5 p.m. Eastern on SiriusXM’s Road Dog Trucking Channel 146.
To learn more about FreightWaves SONAR, click here.
AB5 notches another win: Supreme Court won’t hear Postmates/Uber case
California’s independent contractor law, AB5, has racked up another victory in the federal court system.
The U.S. Supreme Court without comment – which is common practice – denied review Tuesday in the case known both as Olson, for lead plaintiff Lydia Olson, and Uber/Postmates, to distinguish it from other Uber-driven litigation against AB5.
Postmates is now an Uber subsidiary, but the food delivery company was a separate entity when the case was first filed in late 2019.
It’s the second time the Supreme Court could have weighed in on AB5 and chose not to. In June 2022, the court denied certiorari of an appeal by the California Trucking Association of lower court decisions in its legal fight against AB5.
This past June, an 11-judge en banc panel of the 9th U.S. Circuit Court of Appeals reversed a lower court decision and found that AB5 had not unfairly singled out gig drivers like those who work for Uber in crafting AB5.
What the en banc panel said
Among the arguments made by Uber in the Olson case is that the exemptions under AB5 granted to app-based services such as Wag!, which links dog care providers with dog owners the same way Uber links drivers with people who need rides, had denied Uber the equal protection of the laws under the U.S. Constitution.
The judges countered that there were “rational reasons” for the type of differences Uber had focused on its arguments.
“So long as there is some conceivable legitimate purpose justifying the statute, we need not inquire into the legislature’s actual purpose in enacting it,” the 9th Circuit panel wrote. “That A.B. 5 may be underinclusive because it does not extend the ABC test to every industry and occupation that has historically contributed to California’s misclassification woes does not render it unconstitutionally irrational.”
Prop 22 is still in effect
In the background to the Olson case is the fact that California is blocked from enforcing AB5 against gig drivers because of Proposition 22. That is the referendum approved by California voters on Election Day 2020 that barred AB5 from being implemented against gig drivers in the state.
Legal efforts to overturn Prop 22 were originally successful in the state court system, with a judge blocking its implementation over issues of workers’ compensation. But the California Supreme Court last July upheld Prop 22 and its block on implementing AB5 against gig drivers.
In a statement issued to the San Francisco Chronicle, Theane Evangelis, an attorney representing Uber and the other plaintiffs in the case, suggested that Prop 22 would largely negate any impact from the en banc decision in Olson upholding AB5.
“Fortunately, in Proposition 22, California voters rejected AB5 because it threatened to take away the flexible work opportunities of hundreds of thousands of Californians,” Evangelis said in the statement. “Prop 22 remains the law of the land in California and ensures that drivers and couriers retain the independence and flexibility they want and also receive the benefits they deserve.”
While gig drivers appear to be free from AB5’s rules because of Prop 22, implementing AB5 in trucking has been upheld in a series of court decisions coming out of the California Trucking Association case filed against the law in late 2019. A lower court injunction in early 2020 stopped the law from being implemented against trucking, but all court decisions since then went against the CTA effort.
The association in August abandoned its case at the appellate level in the 9th Circuit. However, the Owner-Operator Independent Drivers Association, added as a plaintiff in September 2022, continues to pursue the case in the 9th Circuit.
AB5’s definition of whether a worker can be considered independent or an employee is governed by the ABC test. The three-step test says a worker can be considered independent and not an employee if certain criteria are met:
The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact.
The worker performs work outside the usual course of the hiring entity’s business.
The worker is customarily engaged in an independently established trade, occupation or business of the same nature as that involved in the work performed.
The B prong is where the transportation industry has focused its concerns. Independent owner-operator truck drivers and gig drivers provide transportation for companies that are, by definition, transportation companies, an obvious problem with the B prong.
Logistics real estate investment trust Prologis beat third-quarter expectations Wednesday, reporting core funds from operations (FFO) of $1.43 per share, 5 cents higher than the consensus estimate. Revenue increased 6% to more than $2 billion even as some key metrics slid in the period.
Prologis (NYSE: PLD) saw occupancy across its portfolio slip 120 basis points year over year (down 20 bps from the second quarter) to 95.9%. Net effective rent change over the entire lease term fell more than 16% percentage points y/y to 67.8%. That’s 610 bps worse sequentially. However, total leases commenced represented more than 50 million square feet, a 10% y/y increase.
The company lifted the bottom end of its full-year 2024 FFO guidance range by 3 cents to $5.42 per share and lowered the top end by 1 cent to $5.46.
“The bottoming process is underway as our customers navigate an uncertain environment,” stated Hamid Moghadam, Prologis co-founder and CEO, in a news release. “Looking ahead, the supply picture is improving, and the long-term demand drivers for our business remain strong.”
Prologis will host a call at noon EDT on Wednesday to discuss third-quarter results.
FreightWaves Infographics: Flexport to reduce management, fulfillment workforce amid company shift
To view more FreightWaves infographics, click here
J.B. Hunt sees normal seasonality in Q3
J.B. Hunt Transport Services beat third-quarter expectations Tuesday, sending shares 7% higher in after-hours trading. The multimodal transportation provider saw stabilized, and in some cases improving, trends across its service offerings as it prepares for “an eventual turn in the freight market.”
J.B. Hunt (NASDAQ: JBHT) reported earnings per share of $1.49, which was 8 cents ahead of the consensus estimate but 31 cents lower year over year.
J.B. Hunt’s intermodal segment saw demand improve throughout the quarter. Revenue was flat y/y at $1.56 billion as loads increased 5%, but revenue per load was off by a similar percentage.
Total intermodal loads increased 7% y/y in July and were 4% higher in both August and September. By comparison, total intermodal traffic on the U.S. Class I railroads was up 11% y/y in the quarter, according to the Association of American Railroads.
J.B. Hunt’s transcontinental loads were up 7% y/y (up by a double-digit percentage on eastbound transcontinental lanes out of Southern California) while Eastern network loads increased 3%. Eastern volumes are still seeing headwinds from depressed one-way truck pricing as well as some freight diversion ahead of a three-day dockworker strike earlier this month. The company said it could take a few more weeks for Eastern volumes to normalize and that the disruption at the East Coast ports could continue, as only a tentative agreement was reached and workers could strike again in mid-January without a permanent deal in place.
The unit posted a 92.8% operating ratio (operating expenses expressed as a percentage of revenue), which was 100 basis points worse y/y but 10 bps better than the second quarter. The company pointed to a network imbalance, resulting in incremental equipment repositioning costs, and driver hiring ahead of peak season as headwinds. However, Darren Field, president of intermodal, told analysts on a Tuesday evening call that bid compliance among customers is improving, which should reduce costs from lane imbalances moving forward.
Compared with the second quarter, intermodal loads increased 10% but revenue per load was up just slightly. Field said there was likely some volume pull forward ahead of peak season and as some customers altered trade routes around the East Coast to avoid disruptions from the strike. He also said the company has completed its 2024 intermodal bid season and that lower yields will likely linger through the first half of next year.
“We will be living with a large portion of current pricing through the first half of 2025,” Field said. He was a little more constructive on rate negotiations next year. “We just kicked off our 2025 bid season, and we do like our position given our service levels and ability to handle customer surge demand that we have been experiencing.”
J.B. Hunt said it does not expect any material change in its relationship with, or service levels provided by, rail partner BNSF (NYSE: BRK.B), following the railroad’s recent addition of industry veteran Ed Harris. There was some concern among analysts that BNSF’s service could be impacted as the precision scheduled railroading expert looks to cut costs.
J.B. Hunt’s brokerage segment reported a $3.3 million operating loss in the period, a $10 million improvement from the second quarter and roughly one-third the loss it booked a year ago.
Revenue was down 7% y/y to $278 million as loads fell 10% and revenue per load improved 3%. A 17.9% gross margin (510 bps better y/y), reduced cargo claims, and a reduction in head count drove the improved result. An increase in project freight during the quarter lifted gross margin, which the company expects to revert back to the 14% to 15% range.
The period included a $2 million negative impact from the continued integration of BNSF Logistics’ brokerage operations, which J.B. Hunt acquired in September 2023.
Dedicated revenue fell 5% y/y to $846 million as average trucks in service were down 3% and revenue per truck per week was off by a similar amount. The company sold service on 258 trucks in the quarter (1,273 trucks placed so far this year), but the additions are only partially offsetting attrition within some accounts amid a depressed demand environment.
The unit recorded an 88.7% OR, 20 bps worse y/y and in line with the second quarter. Startup costs within new accounts have weighed on margins.
Final-mile revenue dipped 3% y/y to $218 million as total stops fell 6%, but revenue per stop increased 3%. The unit reported $12 million in operating income, a 7% y/y decline.
Operating income in the truckload segment was up 6% y/y to $8.2 million. Revenue declined 12% but OR improved 80 bps.
Shares of JBHT were up 7.1% in after-hours trading on Tuesday.
Table: J.B. Hunt’s key performance indicators – Final Mile and Truckload
