CSXÆS FIRST-QUARTER EARNINGS DOWN 61%
CSX Corp. said Monday that its net earnings for the first quarter were $29 million, down 61 percent from $75 million for a comparable period in 1999.
Operating income for the first quarter, ending March 31, totaled $180 million, compared to $276 million a year ago. First-quarter 1999 results do not include revenues from Conrail properties, which CSX acquired last June. First-quarter 1999 results did include results from Sea-Land's international liner operations, which was sold to Maserk Line in December.
“This is probably a low point for us,” John W. Snow, CSX Corp.’s chairman, president and chief executive officer, told financial analysts in New York. “The basic metrics haven’t been improving at the rate we hoped. We simply aren’t getting the railroad fixed at an acceptable pace.”
“I’ve assumed a hands-on role until these problems are behind us,” Snow said. He noted that CSX had moved quickly to correct recent track defects pointed out by federal safety authorities, and does not anticipate any civil penalties. CSX has earmarked up to $30 million, 10 percent of its operating budget, for on-going track inspections.
Snow fired Ron Conway, formerly president of CSX Transportation, because Conway didn’t appear to realize how poorly the railroad was performing, the CSX chairman told American Shipper.
Snow made a distinction between the northern portion of CSX, comprising Albany, the Great Lakes, Detroit, Chicago, Baltimore, and Indianapolis, and the southern portion, comprising Atlanta, Nashville, Jacksonville, Florence, Louisville, and Cumberland.
“We’re seeing improvements at the northern end,” he said, referring to terminal dwell times, but progress in the south “has been nonexistent — it’s getting worse.”
In defining the railroad’s new metrics, Snow said that “you’re going to be hearing more about cars on line, terminal dwell time, and velocity in the system, and less about cars per crew and minimum train lengths.”
“There’s going to be less emphasis on long trains and more emphasis on running to plan,” Snow said.
As for the issue of raising prices at a time when many shippers are dissatisfied with CSX’s service levels, Snow said that because truckers had hiked their rates as well, the railroad remained competitive and would retrieve business lost to the highways.
CSX Lines, CSX's domestic waterborne-shipping subsidiary, reported a loss of $1 million and revenue of $162 million for the first quarter of the year, “which is typically seasonally weak,” Snow said. Volumes in the Alaska and Hawaii/Guam trades remain strong. Some softening has occurred in the Puerto Rico trade.
CSX World Terminals reported first-quarter operating income of $14 million and revenue of $74 million.
CSX Corp.’s contract logistics subsidiary, Customized Transportation Inc., reported first-quarter revenue of $126 million, compared to $120 million for the comparable period in 1999. Warehousing (up 8 percent) did better than transportation (up 3 percent). Higher fuel prices definitely hurt CTI in the first quarter.