Cowford wrote:First quarter earnings call today was very interesting - worth a listen. OR 59.5, and service levels are good (not just according to CSX). It's hard to argue against the fact that CSX has been positively transformed (though some will).
CSX 1Q2019 operating ratio 59.5 down from 63.7 1Q2018 vs. NS 1Q2019 operating ratio 66 down from 69 1Q2018. CSX's operating ratio improvement composition 49% growth, 20% unit revenue increases (traffic mix, fuel surcharges, rate increases), and 31% cost reductions vs. NS' operating ratio improvement composition 19% growth, 81% unit revenue increases (traffic mix, fuel surcharges, rate increases), and 0% cost reductions.
CSX highlights 6% carload revenue increase from 58% growth/42% unit revenue increase with Agriculture/Food traffic, up 7%, and Forest Products traffic, up 6%, leading the way; 6% coal revenue increase attributable 83% to growth and 17% to unit revenue increase; and, cost reduction with labor costs down 3%, fuel costs down 9%, and, equipment costs down 1%. CSX lowlights intermodal volume down 5% and unit revenue flat.
NS highlights 5% carload revenue increase attributable to 100% unit revenue growth offset by a 1% volume loss driven by a 5% loss of auto traffic, and 6% intermodal revenue growth attributable 33% to growth and 67% to unit revenue increases. NS lowlights coal revenue flat with unit revenue growth offset by volume losses and reductions of 1% labor costs and 6% fuel costs offset by 6% increase in purchased services and rental costs.
Post-EHH, in this quarter CSX continued to outpace NS in lowering the operating ratio, however now with growth providing half the progress, though half of that growth from long-term downward-trending coal, and with intermodal lagging, and, NS relying upon carload and intermodal unit revenue growth to a major degree and intermodal growth to a smaller degree in a market turning toward increasing trucking competition pressures. Moving through the year we can anticipate CSX beginning to pivot with its intermodal business, while at NS, full implementation of PSR with its resulting cost reductions and potential traffic impact.
When it comes to the long battle between CSX and NS, post-EHH continues to be an interesting time, and I agree, Cowford, that it's hard to argue against the fact that CSX has been positively transformed by PSR.