News / Intermodal services in a dip as CSX 'rationalises' its network to regain reliability

© Jonathan Weiss

US rail operator CSX’s intermodal division may have closed 2018 on the up, but this year has begun with “leaves on the line”.

Its first-quarter earnings statement reveals a 5% dip in revenue ($428m) and volumes, and points the finger of blame at the “rationalisation” of its domestic network.

Chief executive James Foote told investors: “Despite international growth, intermodal declined due to the additional lane rationalisations implemented following peak season.

“Intermodal revenues are expected to remain muted, as we work our way through the impact of these lane rationalisations.”

However, Mr Foote remained “clearly pleased” with the progress in turning around the division. He noted that having removed about 8% of services, the 5% drop in Q1 meant CSX was “sort of ahead by 3%”, and added that the team was not yet “satisfied”.

“This is a long game – these changes are going to take place over the next several quarters and years,” he continued. “And we hope that the profitability of that segment will continue to increase over time.”

The 8% reduction in capacity was carried out in two instalments, the bulk in October and a second cut in January.

Mr Foote stressed that it was “important to rectify reliability issues” across CSX’s North American railroad operations, and said the measures under way would achieve this.

“Whether you’re a plastics shipper or a steel shipper, you’re not going to use the railroad if it’s not reliable,” he said.