However, Chairman, President and CEO Michael Ward said the lower earnings were a "conscious choice" by the Jacksonville-based railroad company.
CSX late on Wednesday reported earnings of 42 cents a share, down from 44 cents in the fourth quarter of 2012.
The fourth quarter 2013 earnings were lower because the 2012 results included 6 cents a share in real estate gains. However, the earnings were also lower than the average analysts' forecast of 43 cents, according to Thomson Financial.
CSX's stock reached a record high Wednesday, before the earnings announcement, but it fell $1.99 to $27.24 Thursday after missing the forecast.
In an interview Thursday, Ward said earnings were below expectations because CSX made the choice to spend more money to maintain strong service levels for its freight customers.
One issue, he said, was the early onset of winter. In cold weather, CSX has to run shorter trains because of braking issues. So, to keep up with freight volume, the railroad had to run more trains in the fourth quarter and bring more locomotives into service, he said.
The volume of freight moved by CSX grew by 6 percent in the fourth quarter, producing 5 percent growth in revenue to $3.03 billion.
For all of 2012, revenue grew 2 percent to $12.02 billion.
CSX's biggest business segment, coal, continues to suffer from a drop in demand. Revenue from coal shipments fell 9 percent last year to $2.9 billion.
However, CSX is offsetting the drop in coal with increases in other business sectors. Most notably, revenue from chemicals shipments jumped 13 percent last year to $1.9 billion.
That includes the fast-growing segment of crude-by-rail shipments. Ward said the volume of crude oil tanker car shipments rose from 9,000 in 2012 to 46,000 last year, and he is expecting 50 percent growth this year.
"It is a very important sector," he said.
Ward said CSX takes crude shipments from other carriers in Chicago and transports them to refineries on the East Coast. He said the company is currently running two trains a day with crude and based on demand from the refineries, it could ultimately run as many as 14 trains in the future, so there is strong potential for growth.
However, recent accidents involving trains carrying crude in the U.S. and Canada have raised concerns about safety in the industry.
"There is a lot of attention being paid to it," said Ward. One possibility is new government regulations requiring railroads to retrofit tanker cars with more safety equipment, he said.
Ward doesn't expect safety concerns to derail the business, because more than 99 percent of crude shipments are done safely.
"We're purer than Ivory soap," he said. "Rail is very safe moving the stuff."
Beyond the potential for oil shipments, Ward is encouraged by the outlook for other sectors, such as home construction and automobiles. Forest product shipments grew by 7 percent in the fourth quarter, based on housing demand, and automobiles grew by 4 percent. Both sectors are expected to grow more in 2014, he said.
"We see some good growth in a number of markets," Ward said.
"At this point we're feeling pretty good."
CSX Corp. reported fourth-quarter earnings that were a penny below analysts' expectations, sending the stock lower Thursday.