CSX Corp. reported slightly lower revenue and earnings in the fourth quarter of 2023, but CEO Joe Hinrichs is optimistic about trends for 2024.
“We have momentum coming into the year,” Hinrichs said in a Jan. 25 telephone interview.
Hinrichs said demand for the Jacksonville-based railroad company’s freight transportation services was encouraging in the last two months of 2023 and operations are in good shape.
“We feel good about where the network is, where our manpower level is,” he said.
Late Jan. 24, CSX reported that fourth-quarter earnings fell 13% to $886 million, or 45 cents a share, with revenue falling 1% to $3.68 billion.
The company said lower intermodal storage revenue, reduced fuel surcharges, lower coal prices and a drop in trucking revenue offset volume growth and favorable merchandise pricing.
“The core parts of our business have been up all year,” Hinrichs said, and business segments that had been lagging including chemicals and forest products were trending up in December.
“We’re encouraged by what we’re seeing on the volume side,” he said.
Hinrichs was also encouraged by a Jan. 25 report from the U.S. Bureau of Economic Analysis that the nation’s gross domestic product rose at a 3.3% rate in the fourth quarter, higher than economists had forecast.
“We’re seeing that in the demand side of our business,” he said.
Hinrichs said CSX’s improved customer service is attracting freight customers.
Its operating metrics showed on-time arrivals of trains jumped from 52% in 2022 to 71% in 2023.
CSX’s carload trip plan performance, which measures cars that complete their plan for customers at or ahead of the estimated arrival time, rose from 64% to 84%.
“We’re an industry leader there,” Hinrichs said.
Hinrichs joined CSX in September 2022 and spent much of his first full year on the job meeting with employees at the company’s operations all over the Eastern half of the U.S.
He said that continues to be a key part of his job.
“We’re going to continue to focus on our employees, the culture we have,” he said.
“We believe engaged employees working together can serve the customer well.”
Besides seeking to improve the employee culture, Hinrichs also had to work on new labor contracts with multiple unions.
CSX and the other major railroads reached contract agreements late in 2022 but the company had to negotiate individual contracts with unions in 2023 over issues including paid sick leave.
The main union contracts cover the years 2020 through 2024, so CSX will soon have to negotiate new deals.
Hinrichs said CSX and other railroads have begun conversations with the unions about the next contract.
“I’m optimistic that nobody wants to repeat what happened last time,” when it took three years to renew the contract that expired at the end of 2019.
“I think the industry has come a long way,” he said.
“I’m optimistic we’ll find solutions.”