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Rail News: Rail Industry Trends

Katrina costly for CSX, potential revenue stream for RailAmerica road


It’s going to cost CSX Corp. big bucks to recover from Hurricane Katrina — as in $250 million big. The company estimates expenses to total that amount after adding up the capital costs to rebuild rail infrastructure, losses from business interruption and other storm-related expenditures. CSX’s insurance coverage limits of $25 million won’t make much of a dent in the expenses.

CSX officials estimate third-quarter losses associated with business interruptions and other costs will reduce quarterly operating income by about $25 million. Certain insurance recoveries related to business interruption losses will not be included in quarterly results until the company receives cash during the next several months.

Service-wise, CSX Transportation continues to re-route traffic around storm-affected Gulf Coast areas.

“Service to local customers will be restored as repairs are made in phases over an estimated six-month period,” said CSXT Executive Vice President and Chief Operating Officer Tony Ingram in a prepared statement. “The re-routed trains will be brought back to the original lines when all major repairs are completed.”

Meanwhile, RailAmerica Inc.’s Alabama Gulf Coast Railway expects to spend $200,000 on track clean up and lose about $100,000 in revenue because of the storm. But the region’s rebuilding process will increase demand for lumber, roofing materials and aggregate moves, RailAmerica officials believe. In addition, freight previously moving south from the Midwest via barge might be diverted to rail.

Contact Progressive Railroading editorial staff.

More News from 9/16/2005