CSX Corp. reported a big increase in third-quarter revenue, but it could have been better.
“We’re clearly constrained,” CEO Jim Foote said in the company’s quarterly conference call with analysts on Oct. 20.
“There was more business out there this quarter. There has been more business out there throughout this year that we could not handle,” he said.
“The primary reason for that is our inability, like everyone else in the world right now, to ramp up our workforce coming out of the steep declines of the early phases of the pandemic.”
After several years of job cuts, the Jacksonville-based railroad company has been trying to beef up its staff again this year but has had trouble finding new workers.
CSX reported revenue in the quarter jumped 24% to $3.29 billion. That was due in part to its July 1 acquisition of trucking company Quality Carriers, which transports liquid chemicals.
Quality Carriers contributed $200 million in revenue in the quarter.
With the higher revenue, CSX reported earnings of 43 cents a share, up from 32 cents in the third quarter of 2020.
Earnings were five cents higher than the consensus forecast of analysts, according to Zacks Equity Research.
Foote said CSX is dealing with several issues as it tries to satisfy customer demand to transport freight.
“Across virtually every industry, there are challenges presented by extended lead times, port congestion, shortages of the labor and key materials and lack of storage capacity,” he said.
The summer spread of COVID-19 also impacted operations.
“The past quarter was further impacted by a rise in COVID mark-offs due to the delta variant,” said Executive Vice President of Operations Jamie Boychuk.
“At peak, we had several hundred employees marked off, including regional concentrations that required us to adjust our network plan in real-time to get customers their freight,” he said.
CSX’s employment level was basically flat in the quarter despite its efforts to hire more workers.
The company’s headcount was 20,506 at the end of the third quarter, up from 19,181 as of June 30. However, that included 1,377 Quality Carriers employees who joined CSX’s payroll during the quarter.
Foote expressed optimism about CSX’s hiring efforts moving forward.
“We have a strong hiring pipeline and we will hire until we have staffed the network to match demand. We expect to hire above attrition throughout the rest of this year and into next year,” he said.
“We fully expect that that trend will continue as we go forward unless there is some other crazy curveball gets thrown at us, and be in a much, much better position as we exit this year and move into next year.”
Jacksonville’s other large freight transport company also on Oct. 20 reported a big jump in third-quarter revenue.
Trucking company Landstar System Inc. said revenue rose 60% to $1.734 billion.
Landstar reported earnings of $2.58 a share, up from $1.61 in the third quarter of 2020.
“We attribute this unseasonal increase in volume to ongoing, broad-based demand for freight transportation services, with particular strength in sectors benefiting from consumer spending that has continued to be a big driver of freight activity.” CEO Jim Gattoni said in a news release.
“As we look to the 2021 fourth quarter, we anticipate continued solid performance on the expectation that broad-based economic strength will support a strong freight environment for the near future. In addition, we will likely continue to be in a capacity-constrained environment, which should continue to support elevated truck revenue per load in the fourth quarter,” he said.