CSX (CSX) Baird 2024 Global Industrials Conference summary

Structural advantages and network optimization

• Network serves two-thirds of the U.S. population, offering significant growth potential and operational flexibility.

• Recent re-engineering has reduced train starts, creating capacity for growth at 50%-70% incremental margins.

• Focus on making the network more linear and efficient, with ongoing efforts to optimize yards and eliminate redundant processes.

• Technology investments provide real-time data visibility and machine learning to enhance planning and operations.

• Surge capacity and infrastructure improvements at key terminals like Waycross support resilience during disruptions.

Cultural transformation and customer engagement

• Emphasis on a culture of accountability, empowerment, and cross-functional collaboration to drive efficiency.

• Customer partnerships have improved, with evidence of increased willingness to collaborate and convert truck freight to rail.

• Training and leadership development programs are in place to build a strong bench of future railroaders.

• Low attrition rates and hands-on engagement with frontline employees contribute to productivity and cost savings.

Growth drivers and market outlook

• Industrial Development and Select Sites programs provide high visibility to long-term growth, with 540 active projects and 40 Select Sites.

• East Coast port connectivity and inland port expansion drive intermodal growth, with strong incremental margins despite lower revenue per unit.

• Modal conversion from truck to rail presents a multi-million load opportunity, supported by improved service and technology.

• Underlying strength in merchandise, chemicals, aggregates, and intermodal markets, with optimism for metals and autos recovery in 2025-2026.