uploads///CSX Intermodal

What Led to CSX’s Higher Intermodal Revenue in 3Q17

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Oct. 18 2017, Updated 4:57 p.m. ET

CSX’s intermodal revenue in 3Q17

In this article, we’ll discuss CSX’s intermodal revenue in the third quarter of 2017. The company’s intermodal revenue rose 5% to $446.0 million in 3Q17 from $425.0 million 3Q16. On a YoY (year-over-year) basis, intermodal’s share in CSX’s operating revenue rose to 16.3% from 15.7% in 3Q16.

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Intermodal volumes in 3Q17

CSX’s Intermodal vertical’s volumes grew 5% in the third quarter of 2017 to 718,000 units. However, its revenue fell 0.5% to $621.0 per unit from $624.0 per unit in 3Q16. The fall in the company’s per-unit intermodal revenue reflects stiff competition from the trucking industry (XTN). CSX’s intermodal business faces tough pricing pressure, as you can see from the per-unit revenue slump.

Volumes of the Domestic Intermodal business rose 1% in 3Q17. Business growth from existing customers, along with better highway-to-rail conversions, drove volumes up in the reported quarter. However, the volume rise was offset by competitive losses resulting from CSX’s transition to the Precision Schedule railroading model.

International Intermodal volumes were up 11%, largely due to the addition of new accounts and volume rises from eastern ports.

Peers’ intermodal revenue

The excess capacity in trucking will most likely keep intermodal pricing in check. But railroad companies will likely witness higher volumes going forward, and the intermodal revenue per unit may not rise in tandem. In 2Q17, CSX registered a 7% rise in intermodal revenue. Let’s take a look at the peer group’s intermodal revenue in the same quarter.

  • Canadian National Railway (CNI): up 17%
  • Canadian Pacific Railway (CP): up 8.0%
  • Kansas City Southern (KSU): down 1.0%
  • Union Pacific (UNP): up 3.0%
  • Norfolk Southern (NSC): up 10.2%

Management outlook

CSX expects sequential growth in its overall intermodal revenue in 4Q17 with the addition of two new intermodal customers. The company believes capacity tightening in the truck market will push domestic intermodal revenue. Notably, in the 3Q17 earnings call, CSX spoke of further developments on the intermodal front in its analyst conference call next month.

Read on for an update on CSX’s Merchandise segment’s revenue in 3Q17.

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