Sufficient train and engine staffing is the “one thing” CSX needs to bring service back to 2019 levels, and recent hiring initiatives will bring the company closer to that goal, officials said Wednesday. executives during the railroad’s first quarter 2022 earnings call.
“We need more people in the ranks of engineers and conductors. That’s it,” Chairman and CEO Jim Foote told investors on the call.
CSX (NASDAQ: CSX) has no shortage of locomotives or physical infrastructure, and the railroad has the capacity to support additional volumes, Foote added.
Jamie Boychuk, CSX’s executive vice president of operations, echoed Foote’s focus on filling train and engine crew ranks.
The rail freight industry generally considers train and locomotive staffing levels to be the most responsive to market demand.
“It just comes down to the number of hires and getting more [train and engine] people where we need them…. The common theme that we know will get our railroad back to where we need it is to just keep training conductors,” Boychuk said.
There are about 500 trainees now, and up to 400 of them have been qualified by CSX since the start of this year, he said.
Foote said industrial bulk traffic has experienced service issues. Having more employees for trains and locomotives will ensure that there are enough employees to run the trains. This will in turn improve network speed and dwell times, which will inevitably lead to greater network fluidity.
As more adequate levels of staff enter the network, CSX expects to be able to handle the projected higher levels of domestic industrial activity, which had weakened from 2018 amid tariffs. imposed by the United States against China, but is beginning to reach a level commensurate with domestic consumption. request.
Other measures to improve network fluidity have included working with customers to run carriages faster and keeping additional locomotives active at short notice to help balance the network.
“We’re seeing encouraging signs that these metrics are starting to move in the right direction,” Boychuk said. “It’s clearly too quick to call the bottom for sure, but with the success of our hiring initiatives and a continued search for discipline and consistency on the pitch, we see reason for optimism.”
CSX is targeting double-digit full-year revenue and operating profit growth, as well as a capital expenditure target of around $2 billion for 2022, largely unchanged compared to 2021.
According to Kevin Boone, executive vice president of sales and marketing.
There are moving parts, such as the assumption that chassis will be available and drayage capacity will return to the market, but CSX is hoping that higher levels of auto production and domestic intermodal activity will support volumes and company revenue, Boone said.
Other opportunities CSX could explore are corporate efforts for nearby manufacturing operations and opportunities to export bulk commodities, such as grain and steel, to Europe through ports in the region. East Coast in the context of the uncertainties linked to the Ukraine-Russia conflict.
“We are looking at everything that is going on [East Coast] ports today and how that might change” over the next six to 12 months, Boone said.
CSX First Quarter 2022 Financial Results
The Eastern US Railroad reported net income of $859 million, or 39 cents per diluted share, in the first quarter of 2022, an increase of nearly 22% from $706 billion , or 31 cents per diluted share, in the first quarter of 2021.
Revenue rose 21% year-over-year to $3.41 billion despite a 2% decline in volume, although expenses rose 24% to $2.1 billion in due to increased expenditure on purchased services.
Operating profit increased 16% to $1.28 billion and included $17 million of expenses related to increased environmental reserves and a $20 million gain from sales of CSX 2021 properties to the state of Virginia.
The operating ratio (OR) increased to 62.4% from 60.9% due to higher fuel prices and the acquisition of Quality Carriers in 2021. Investors sometimes use OR to assess the financial health of a company, a lower OR implying an improvement in financial health.
“We are pleased with our results this quarter, although we are not yet pleased with the performance of our services,” Foote said. “The effects of COVID and inclement weather on much of our network have clearly led to a difficult start to the year. But as we progressed through March, operating conditions began to gradually improve, and we are seeing signs that this momentum is continuing. »
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