OMAHA, Neb. (AP) — CSX railroad's profit fell 27% in the first quarter as two major construction projects forced them to reroute some trains and constrained its response to flooding and other weather challenges, curtailing shipments.
The Jacksonville, Florida-based railroad said it earned $646 million net income, or 34 cents per share, during the quarter. That's down from $880 million, or 45 cents per share, a year ago, and the results fell short of Wall Street expectations.
The analysts surveyed by FactSet Research predicted CSX would earn 37 cents a share.
CEO Joe Hinrichs said the quarter was disappointing but the railroad is committed to improving its performance. And even with the delayed and missed shipments Hinrichs said shippers still gave the railroad good marks on a customer service survey because CSX worked to keep them updated on problems.
CSX is in the middle of expanding a key tunnel in Baltimore, so it will be able to carry double-stacked shipping containers, and the railroad is completing repairs related to Hurricanes Helene and Milton. Both those projects are scheduled to wrap up in the fourth quarter of this year, so the railroad will be constrained until then.
Edward Jones analyst Jeff Windau said CSX lost the flexibility it normally uses to respond to weather disruptions because of the construction projects.
Hinrichs said that right now two of CSX's main north-south routes are closed on the East Coast so it had to shift traffic over to the central and western parts of its network, which are now crowded. Then when customers weren't getting their empty rail cars returned on time because of the delays they added additional cars and added to the congestion.
“The resiliency of our network has been diminished because we lost some routes,” Hinrichs said in an interview with The Associated Press. Later he added “The shocks are what we are having trouble responding to.”
Hinrichs said he still expects volume to increase overall this year, but it's hard to predict how much because of all the uncertainty about trade policy. But right now demand is still holding steady across most sectors while companies wait to see which tariffs are going to stick.
President Donald Trump's trade war could lead to a drop in shipments of imported goods, but so far the railroad said demand remains fairly steady. And in the long run, CSX could benefit from the expected increase in U.S. manufacturing because the railroad will haul raw materials and finished products for those factories.
But during this first quarter, deliveries of shipping containers actually grew 2% as some companies tried to get more of their shipments ahead of Trump's tariffs.
CSX said the total volume of shipments it delivered slipped 1%, and revenue dropped 7% to $3.42 billion as coal and fuel surcharge revenue fell. That also came in lower than the $3.45 billion that analysts expected.
CSX and the other eastern railroad, Norfolk Southern, could also benefit long term if more of the country's exports shift from China toward Europe and India because those destinations would be served through East Coast ports. Currently, Trump has maintained high tariffs on China, which responded in kind, but he gave the rest of the world a 90-day reprieve to allow time to negotiate new trade deals.
CSX is one of the nation's largest railroads with tracks crisscrossing the Eastern United States.
FILE - A CSX train engine sits idle on tracks in Philadelphia, Sept. 14, 2022. (AP Photo/Matt Rourke, File)
