CSX won’t rule out merger options

JACKSONVILLE, Fla. — CSX may not be out shopping for a merger partner, but the railroad will consider proposals that would raise shareholder value, improve service, and lead to profitable growth.

“We know there’s been a lot of rumor and speculation about consolidation in the railroad industry in recent weeks,” CSX CEO Joe Hinrichs said on the company’s earnings call today. “While we cannot comment, we want to be clear that at CSX we are absolutely focused on delivering shareholder value and are always open to anything that can help us achieve this objective.”

In prepared remarks and subsequent comments on the earnings call, Hinrichs did not directly address any specific merger scenarios. But he returned to the theme of openness to possibilities that could help CSX grow profitably, serve customers better, and compete more effectively with trucks.

Among them: Working more closely with other railroads to improve service and make it easier for customers to do business with railroads. “We think there are all kinds of opportunities to work together to make it better for our customers and we’re open to talking about all those possibilities,” he says.

The comments come amid heightened interest in industry consolidation following recent media reports that Union Pacific is in merger talks with CSX’s Eastern rival, Norfolk Southern.

Hinrichs emphasized that CSX’s current strategy is rooted in strengthening its existing network.

“We have a strong franchise that we believe is the best in the East, and we are making it stronger every day,” he said, pointing to industry-leading customer service metrics, expanding industrial development partnerships, and ongoing capacity projects such as the clearance work in the Howard Street Tunnel in Baltimore.

At the core of CSX’s strategy, Hinrichs says, is the belief that improved service and easier customer interactions are the keys to long-term rail growth.

“Our thesis all along has been that improved customer service and making it easier to do business with railroads are paramount,” he says. “There are opportunities … to work together with the entire rail ecosystem to improve that.”

Hinrichs, who was an auto industry executive for more than three decades before coming to CSX in 2022, has frequently said that he has been puzzled about why railroads don’t work more closely together to improve their interline service.

While reiterating that CSX would not speculate publicly on mergers, Hinrichs says that management and the board would be open to various options.

“While we are confident in the CSX path forward, we welcome all opportunities that would allow us to deliver value for our shareholders, drive profitable growth, and serve customers better,” he says. “We actively evaluate these opportunities for their upside potential.”