Economy
Related: About this forumCSX Railroad's 4Q Profit Down 3 Pct.
COAL CONCERNS: CSX railroad says coal revenue fell 18 percent in the fourth-quarter, but growth in intermodal and merchandise shipments nearly offset that. CSX says net income declined 3 percent to $443 million, or 43 cents per share.
http://www.nytimes.com/aponline/2013/01/22/business/ap-us-earns-csx-summary-box.html?hp
Wish the story said something about WHY coal was down, but thought story interesting.
jschurchin
(1,456 posts)A couple of reasons. First, power generation in the United States is moving towards natural gas and away from coal. Most people don't know that nearly all conventional electrical generation plants are dual fuel compatible. They can use whatever is cheaper, and right now that is natural gas.
Second, demand from China has moved from the US to Australia. Although we still ship coal to China, it isn't nearly the amount we did just a few years ago. We are still moving the same amount to europe, but it's the China market and the US generation market that is the cause of the decline in rail shipments.
I work for one of the Big 5, and this is the explanation that has been given to us.
elleng
(130,895 posts)Which one? I worked for ICC for 20+ years, and regulated railroads (more than motor.)
Was HOPING the answer would be overall reduced rail haulage (tho this distresses states like West Virginia.)
Thanks
And the information comes from people in a position who would know. Our intermodal and new automobile traffic is up substantially, however coal is down. Being my RR is primarily a coal hauler this downturn in coal has put a substantial dent in our bottom line. We are pursuing other commodities to fill the gap i.e. fracking sand, but it is still ramping up so it will be a few quarters until we begin to see a effect on the bottom line.
We are not hurting, not by a long shot, but it is troubling.
elleng
(130,895 posts)Sorry I'm retired and away from my colleagues; they'd be very interested to hear this. Had noticed increase in intermodal and auto recently. How's CSX doing, generally?
jschurchin
(1,456 posts)As far as I know they are doing ok. They have a big advantage over us because of the way Conrail was broken up. CSX got the better part of the old Central system and being the Marcellus shale lies under a good part of Western Pa. and Western NY their railroad is right in the middle of it.
We will get a portion of the fracking sand traffic but not as much as them. The question is will they take advantage of the oppoutunity. My guess would be yes.
As far as coal, they are in the same position as us, so I would guess they are missing about 6-8% of their revenue also. They will adjust. Hedge fuel, increase productivity, reduce overhead etc. Thing's could be a whole lot worse.
elleng
(130,895 posts)After ICC shut down, I worked as a contract attorney w DC law firms doing ICC/STB rail merger work, and worked for firm that first represented NS in Conrail matter; later, NS and CSX decided to 'shake hands,' you probably recall, so I continued working on that matter.
Interesting that both carriers involved in 'bad' stuff, environmentally, but that's just life in that part of the northeast, I guess; kind of like Saudia Arabia and Iraq being where they are, and Israel where IT is!
If, for the heck of it, you're ever in or around DC, maybe we can do lunch. I'm in MD suburb.