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CSX profits surge as railroad steps up crew hiring effort

By Bill Stephens | October 20, 2021

Worker shortage and COVID-19 limited railroad’s ability to take on more volume

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Train on bridge along river
Train on bridge along river
With the Bear Mountain Bridge in the background, a CSX Transportation international intermodal train heads for the Port of New York and New Jersey on the railroad’s River Subdivision on Oct. 14. (Bill Stephens)

JACKSONVILLE, Fla. — CSX Transportation’s third-quarter profits, revenue, and volume all grew thanks to strong freight demand and the railroad’s acquisition of a bulk chemical trucking company.

But executives said the railroad would have been able to handle more traffic if not for a persistent worker shortage, as well as the impact of the spike in COVID-19 cases in the Southeast that at its peak sidelined several hundred CSX train crew members.

“We are committed to helping our customers overcome the current supply chain challenges,” CEO Jim Foote told investors and analysts on the railroad’s earnings call on Wednesday afternoon.

“We have a strong hiring pipeline, and we will hire until we have staffed the network to match demand,” he added.

Operating income surged 26%, to $1.4 billion, as revenue grew 24%, to $3.3 billion. Earnings per share grew 34%, to 43 cents. The results reflected the addition of $200 million in revenue from Quality Carriers, the trucking firm that CSX acquired in July for $546 million.

CSX’s operating ratio improved 0.5 points to 56.4%, but Quality Carriers added 2.5 points to the tally. Fuel costs doubled but the railroad benefited from all-time record fuel efficiency.

Traffic volume was up 3% overall in the quarter, with coal surging 16% and intermodal rising 4%. Merchandise traffic fell 2% largely due to a 26% decline in automotive volume thanks to the ongoing computer ship shortage that has curtailed vehicle production.

Although federal regulators say they’ve received ongoing complaints about CSX service, the railroad reported that carload trip plan compliance was 68% for the quarter and intermodal shipments were 88% on time.

Foote says both figures will improve once more conductors are hired and fully trained. CSX’s performance metrics continue to lead the industry in most areas, Foote says, adding that he hasn’t received service complaints from shippers.

But there was no doubt that crew shortages hurt the railroad’s ability to take on more volume.

“We’re clearly constrained. There was more business out there this quarter … and throughout this year, that we could not handle,” Foote says. “And the primary reason for that is our inability, like everyone else in the world right now, to ramp up our workforce coming out of the steep declines of the early phases of the pandemic.”

CSX has revamped its hiring process and expects the labor crunch to ease by early next year.

Kevin Boone, executive vice president of sales and marketing, says CSX has taken several steps to alleviate bottlenecks in the supply chain.

Among them: Adding container storage yards at 13 intermodal terminals across its system, working with the Georgia Ports Authority to use inland rail yards to free up truck capacity and reduce congestion at Savannah; running port-to-port service to allow shippers to dodge congestion; increasing steel wheel interchange with Western railroads; and adding Transflo transload capacity in the merchandise network.

CSX also increased the size of its customer service team by 40% and added workers at intermodal terminals.

CSX is adding automated equipment at its hump yards and intermodal terminals, including autonomous cranes, and is adding new passing sidings and extending others, mostly in the Mobile, Ala., area to accommodate traffic growth and maintain fluidity, says Jamie Boychuk, executive vice president of operations.

6 thoughts on “CSX profits surge as railroad steps up crew hiring effort

  1. This is great news! This means CSX can easily afford to pay their workers a lot more, recognize them monetarily for working through the pandemic & their idiotic PSR mess, and pay for all of their healthcare without any employee cost sharing…. ….right?

  2. The railroads are the reason they have no employees to operate, they furloughed them all and expect them to wait around for their beckon call.

  3. Foote is a consistent BS liar and the STB knows it. But no one has the guts to slap CSX with big fines for their consistent failures to force them to fix the PSR problems THEY created.

  4. It doesn’t matter how many trains they run but what matters is how profitable are the ones they do run. It looks like success to me.

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