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CSX Intermodal Volumes Increase on Domestic Shipments

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Dec. 4 2020, Updated 10:43 a.m. ET

Volumes up, prices down

CSX Corporation’s (CSX) Intermodal division competes with and provides an alternative to transporting freight on highways using trucks. According to the company’s January 12, 2016, earnings release, the division reported revenues of $446 million in 4Q15 compared to $465 million in 4Q14. Overall volumes increased by 4%, which was offset by a decline in prices by 8% to $612 revenue per unit.

CSX’s domestic volume increased by 14%, mainly driven by continued success with CSX’s highway-to-rail (or H2R) conversion program, growth with existing customers, and new service offerings. However, its international volume declined 9%, mainly due to prior competitive losses and a weak peak shipping season.

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Investments and outlook

CSX expects its strong intermodal performance to continue, as its strategic network investments support H2R conversions and growth with existing customers. The division is expected to experience higher growth in the upcoming quarters. International volumes are expected to stabilize in the next few quarters. Electronic reporting required in 2016 will put more stress on the industry, particularly the smaller truckload carriers, which should make CSX’s Intermodal business more attractive.

The pricing structure from truckers will be 3%–5% higher in the current year, which should result in increased demand for intermodal activity. The trucking industry is going through a strong consolidation phase, after which prices are expected to increase for existing offerings. CSX’s spot market in trucking door-to-door products has been very strong this year. The company’s trans-con (transcontinental) product has been down because it’s still rebuilding its owner-operator base in the Los Angeles basin after the strike.

Credit ratings

CSX has a BBB+ credit rating from Standard & Poor’s. Below are the credit ratings of its peers:

  • Canadian National Railway (CNI): A
  • Union Pacific (UNP): A
  • Canadian Pacific Railway (CP): BBB+
  • Norfolk Southern (NSC): BBB+
  • Kansas City Southern (KSU): BBB-
  • Genesee & Wyoming (GWR): BB

Together, these companies form 14.9% of the VanEck Vectors Morningstar Wide Moat ETF (MOAT).

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