CSX’s intermodal revenues in 2Q17
In this section, we’ll review the performance of CSX’s (CSX) intermodal segment in 2Q17. The company’s intermodal revenues rose to $448.0 million in 2Q17, up 7% from $419.0 million in the second quarter of 2016. When compared with last year, the intermodal segment’s share in CSX’s total operating revenues remained unchanged at 15% in 2Q17.
CSX’s intermodal volumes in 2Q17
CSX’s Intermodal segmental volumes rose 3% in the second quarter of 2017 to 718,000 units. The segment’s per unit revenue also rose by an equal percentage to $624.0 per unit. These figures suggest that the intermodal business is facing severe pricing pressure in the market.
The company’s intermodal segment competes mainly with arch rival Norfolk Southern (NSC). Apart from NSC, CSX also competes with trucking companies such as J.B. Hunt Transport Services (JBHT), Swift Transportation (SWFT), and Landstar System (LSTR).
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Intermodal segment in detail
Although CSX’s domestic intermodal volumes rose 2%, CSX’s International Intermodal business saw a 7% jump in volumes in 2Q17. Domestic intermodal volumes were 60% of the total intermodal volumes in the same quarter.
The domestic volumes rose on account of business growth from existing customers, plus highway-to-rail conversions. However, it was partially offset by the short-haul loss to competition last year. Business growth from existing customers along with a new customer addition fueled the growth in CSX’s international intermodal volumes.
The intermodal growth for CSX and its peers has been below mid-single digits in the first half of 2017. Full clearance for CSX’s double-stack container traffic on the East Coast by the end of 2017 could push the company’s intermodal volumes going forward.
The December 31, 2017, deadline regarding ELD (electronic logging devices) implementation by truckers is drawing near, which could create service issues in the trucking sector, as drivers will no longer be able to work beyond their legal hours. The intermodal business of railroads like CSX could benefit in this situation.