Eastern Railroad Discussion > CSX reports earnings, July 15

Generally good report, with chemicals and auto business way up, oil business way up, intermodal traffic up, domestic coal traffic up as utilities rebuild their inventories. Export coal down. Although CSX hauled more coal, it made less money doing it. Hopes to continue a "mid 60s" operating ratio, and is now 69.3%. Made nearly a billion dollars for its owners.

Mike Ward also noted on CNBC that he's adding a hundred million to the infrastructure budget this year (more track work, etc). He also said that the natural gas engine testing with GE "is coming along" although he offered no specifics.


Yahoo summary: http://finance.yahoo.com/news/csx-railroads-2q-profit-chugs-210134476.html

CSX release: http://www.csx.com/index.cfm/media/press-releases/csx-corporation-announces-record-second-quarter-results-reaffirms-guidance-and-increases-capital-investments/

Hauling more, enjoying it less: Volume up 8%. Revenue up 7%. Net up only 1+%. Not that confirmation was needed, but the congestion story is borne out by these results. Most of the "traditional" railroad volume leverage on net income is gone. It will be interesting to see the NS results. I expect them to be similar.

The narrative around the report mentions "network congestion" many times. In describing the increase in labor comp, in describing the additional funds for track improvements, etc.

The Q2 financial report, volumes hauled, etc are here:

http://investors.csx.com/phoenix.zhtml?c=92932&p=quarterlyearnings

Capacity Issues are a big buzzword at the Town Hall earnings conference being held this morning.

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I'm still waiting to see some new sidings built, TWC territory eliminated by CTC, and for power switches start to appear in troublesome locations. The railroads should have fought harder against PTC, but they are probably hoping to integrate it with new types of train control and productivity gains. Meanwhile, PTC takes up a lot of valuable capital.

Another observation is that today's freight trains are outgrowing the yards. Most of the longest yards have receiving/departure yards of around 7,000 ft. However, 9,000 foot trains are common now and require doubling, which takes extra time and eats up capacity. Extra safety procedures, while important and helpful to the bottom line, also eat up valuable time. All that adds to the time that crews and engines need to be rested, serviced and turned around.

I think CSX and NS should take a hard look at upgrading, then sharing, the CFE. It starts near Chicago and ends in Crestline, OH where both railroads go on toward the East coast. That could take care of some of the unit trains, at least.

The CFE is definitely an under utilized asset.

What's the situation for current speed, sidings, etc?

No changes to the former PRR to speak of since Conrail stripped it down to the bare bones in the early 1980's, leaving just enough in place to accommodate the 4 daily Amtraks, the Fort Wayne to Elkhart (and return) train and whatever local service was provided.
The signal system was deactivated after Amtrak left in the late 1980's so it's (other than from Crestline to Bucycrus, a bit in Fort Wayne and the portion west of Valpo that NS signaled to make it two main tracks along with the parallel ex NKP) now dark territory.
The signaled portions mentioned above are in decent shape, but the rest has not seen any serious work in nearly two decades.
I'm not familiar enough with the far west end to know if it's current configuration/connections in Chicagoland are useful or not.
To summarize, the PRR is a bare bones railroad with minimal capacity (due to an almost total lack of passing sidings) in marginal condition (fine for what the CF&E does on it though). So the question then becomes, with a finite amount of $ to spend on capacity improvements - does it make sense to spend money there, or on the current CSX main (in addition to whatever it would cost to break the lease with the CF&E early)? And from all indications I've heard, the return on spending for the former PRR just isn't there - so there's a lot of things that will get done elsewhere first....


Lackawanna484 Wrote:
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> The CFE is definitely an under utilized asset.
>
> What's the situation for current speed, sidings,
> etc?

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