First quarter earnings for US Class I railroads ended on a
positive note as CSX, Kansas City Southern, Norfolk Southern and Union Pacific
all reported gains in revenue. Increases in revenue, however, were mainly due
to rate increases. For CSX, quarterly revenue increased 5.6% to $2.9bn; Kansas
City Southern revenue increased 12.1% to $547.5m; Norfolk Southern revenue
increased 6.5% to $2.8bn and Union Pacific’s quarterly revenue increased 13.9%
to $5.1bn.
A recurring theme for the Class I railroads was declining
coal and agricultural goods volumes. Declining
volumes of coal was due in part to low natural gas prices and environmental
regulations; whereas agricultural goods were negatively affected by severe
drought conditions.
Meanwhile, the US oil boom has resulted in increases in
chemical volumes for all carriers. Norfolk Southern reported a 10% in chemical
volumes while CSX reported an 11% increase and Union Pacific reported a 12%
increase.
Finally, intermodal volumes were also strong for the
railroad providers. CSX noted a 2.5%
increase in volumes due mostly to a 5% increase in domestic intermodal while Norfolk
Southern’s intermodal volumes were up 9% as domestic intermodal increased 7%
and international intermodal increased 13%. Union Pacific’s intermodal volumes
increased 4% primarily due to an 8% increase in international intermodal and
flat domestic intermodal volumes.
Kansas City Southern continues to achieve success with its
cross-border transport. Its cross-border revenue increased 11% because of its
automobile and intermodal segments and its revenue from Mexico’s Lazardo
Cardenas port increased 14%.
The railroad operators were fairly optimistic in their
outlook beyond the first quarter and most believed coal volumes would improve
throughout the year. Also, Kansas City Southern noted growth areas of crude
oil, automotive and cross-border intermodal while Union Pacific noted several
European companies have contacted it about looking at possible manufacturing
sites along railroad lines.
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| Source: Ti Dashboard |
