Safetee wrote:In a booming economy, you would expect real growth in terms of actual traffic increases. CSX traffic has been flat at best. Sure the financials look great based on cost cutting and rate increases. When the economy finally does tank, CSX will find itself in the unenviable position of having to meet lower truck rates and or further loss of traffic. CSX should have one of the best car load markets in the country. But the genius disciples of EHH are turning CSX into their vision of the slow but sure "huge" trainload market with far fewer trains, cars, employees, and customers. Whether or not this will translate into a further love fest on Wall Street rermains to be seen.
As CSX continues to transition their plan is to grow. And, while CSX 2018 merchandise volume was flat with revenue growth 100% attributable to higher unit revenue from traffic mix, fuel surcharges and rate increases, in comparison only 17% of NS' 2018 merchandise traffic revenue growth was attributable to increased volume, so not that big of a gap, really. And, when you look at 4th quarter results and what they may portend moving forward through CSX's transition, CSX merchandise volume was up 4% while NS' merchandise volume was flat. Additionally, I think some of CSX's 2018 successes in merchandise traffic growth with forest products (up 8%) and metals (up 4%) while NS was flat and down, respectively, have been masked by a big hit they took with the closing of a large fertilizer plant. Similarly, I think you have to take that position at this point with intermodal, too, in that there was still growth despite the early stages of transitioning in that sector.
When the economy tanks, or when the industry has to face the serious challenges looming on the horizon, (or competing in a favorable economy, for that matter) why would a more productive railroad face any greater challenge than the next guy? Does CN's performance during the Great Recession provide some measure of insight into what we could expect?
To eolesen's point about fuel costs, in 2018 they were up 21% at CSX on a 1% increase in volume and up 29% at NS on a 4% increase in volume.