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Thursday, November 07, 2013
Strong energy and intermodal markets help CSX overcome weak coal sectors, CFO Eliasson says
CSX Corp. continues to overcome significant export and domestic coal market headwinds by tapping energy markets that are evolving in favor of natural gas and away from coal, said Executive Vice President and Chief Financial Officer Fredrik Eliasson at the Baird Industrials Conference in Chicago yesterday, according to a press release issued by the railroad.
"During this transition, we have still been able to generate earnings per share growth and value for shareholders as we quickly adapt to market changes and carefully manage the things we can control the most," he said. "We are confident that CSX will emerge an even stronger, more vibrant company as the operating environment stabilizes and the economy improves."
CSX has posted sustained growth in its merchandise and intermodal businesses, which now comprise more than 80 percent of total volume, said Eliasson. Intermodal now accounts for 40 percent of volume and is projected to further grow, "reflecting the attractive economic value of converting freight from highway to rail," he said.
CSX employs a dual intermodal strategy that includes both high-density corridors and a hub-and-spoke philosophy that helps create service density to open opportunities in new small- and medium-sized markets. The Class I is building new terminals to expand its intermodal reach in markets such as central Florida, Pittsburgh and Montreal, and improving existing terminals to further increase efficiency throughout the network, including an expansion of the Northwest Ohio hub that opened in 2011, said Eliasson.
Vice President Joseph Biden and U.S. Transportation Secretary Anthony Foxx visited the North Baltimore, Ohio, hub yesterday as part of a tour that also included stops at ports in Baltimore, Savannah, Ga., and Charleston, S.C. The nerve center of the railroad's intermodal network and cornerstone of its double-stack National Gateway initiative, the Ohio hub has created new routing options and growth opportunities for inland locations, and fostered faster and more reliable transit from the West Coast, allowing shippers to bypass congested areas like Chicago, according to CSX.
During his presentation, Eliasson also reaffirmed CSX's long-term guidance for earnings, which are expected to grow over a two-year period at an average rate of 10 percent to 15 percent, and goals to achieve an operating ratio in the high 60s by 2015 and mid-60s longer term.
For more information on CSX's efforts to generate more intermodal and energy traffic in light of weak coal demand, follow this link to read the cover story in Progressive Railroading's October issue.
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