CSX Corp. reported lower first-quarter earnings that were below expectations, but the global trade war is not having a big impact, CEO Joe Hinrichs said.
“In the near term, our demand is pretty strong from most of our customer segments,” Hinrichs said in an April 17 interview.
However, predicting future results is difficult.
“The key word you’re hearing from everybody is uncertainty,” he said.
The Jacksonville-based railroad company reported first-quarter earnings dropped 27% to $646 million, or 34 cents a share, with revenue falling 7% to $3.42 billion.
Earnings were lower than the average analyst’s forecast of 37 cents a share, according to Yahoo Finance.
“A little more than half of the reduction in earnings were due to things we don’t control,” Hinrichs said.
“We’re working on things we can control.”
The key issues out of CSX’s control were reduced coal shipments and lower recoveries from fuel surcharges.
Another issue impacting CSX’s operations is two infrastructure projects that are disrupting its rail network, one planned and one unexpected.
The planned disruption is a 125-year-old tunnel in Baltimore that has been closed for a modernization project.
“It’s well over a mile long and it goes underneath the city, so it’s an important project,” Hinrichs said.
Under normal circumstances, some of the traffic being diverted from Baltimore would have been sent through CSX’s Blue Ridge subdivision line, but that line has been closed because of damage from Hurricane Helene in Tennessee last year.
“Both those projects should be completed in the early part of the fourth quarter,” he said. “Everything is going according to plan, which is good.”
But in the meantime, rail traffic that would have been moving through the Interstate 95 corridor in the eastern U.S. is being diverted further west from Baltimore and Tennessee.
“We’re adjusting to it and we obviously have to deal with it for another six to seven months,” Hinrichs said.
The global trade war could affect CSX’s international intermodal business, where the company transports goods to and from ports, he said.
With high tariffs focused on China for now, it may not have a big impact on CSX.
“Most of the Asian traffic goes to the west,” Hinrichs said.
But Asian imports destined for Eastern markets are transferred to CSX’s rail lines in Chicago, he said.
CSX would feel the effects of tariffs on the automobile industry.
“We’re watching that one very carefully,” Hinrichs said.
CSX continues working to finalize agreements with its labor unions after the latest five-year agreements expired at the end of 2024.
Hinrichs said contracts have been ratified with 10 of its 13 unions and a signalmen’s union will soon vote on its agreement.
That leaves agreements covering conductors and engineers which need to be completed, but Hinrichs is happy the company’s efforts to get contracts done.
“We’re really pleased with the progress we’ve made,” he said.