Analysis: the message is one of caution as CSX cuts back on capital spending

© Wangkun Jia

US freight rail operator CSX recently reported a trading update that may have pleased some shareholders, but also pointed to a very challenging outlook and highlighted a few risks surrounding its capital allocation strategy into 2017.

A 13% drop in fourth-quarter revenue came on the back of declining fuel surcharge recoveries and lower volumes, which jointly pushed down its top line by $400m, to $2.7bn from $3.1bn a year earlier.

That fall was mitigated by cost efficiency measures – as a result, ...