CSX (CSX) UBS Global Industrials and Transportation Conference summary

Market and demand trends

• Volume growth guidance for the next three years is driven by strong customer partnerships and superior service, with industrial development expected to add 1–2 points of tailwind annually through 2027.

• Recent hurricanes caused $50 million in combined impacts, but volumes are recovering, with intermodal and chemicals showing notable strength.

• Coal and ag/food markets underperformed expectations, while auto and aggregates are showing positive trends.

• Industrial development activity is expected to accelerate, with nearly 550 active projects and significant volume growth potential.

• Customer sentiment is optimistic post-election, with expectations of stable tax and regulatory environments, though investment plans remain cautious.

Operational performance and efficiency

• Despite network disruptions from hurricanes and ongoing Blue Ridge Subdivision repairs, network resilience has improved, with customer service metrics in the 90–95% range.

• Efficiency gains are evident, with crew starts down 3% while volumes rose 3% in Q3, and asset utilization improvements are ongoing.

• Headcount is expected to remain flat in 2024, with improved hiring analytics and attrition management, especially among new hires.

• Initiatives like conductor mentorship and better candidate screening are reducing training attrition and improving workforce quality.

• Crew availability is being addressed through planning and union negotiations, aiming for more predictable schedules and operational consistency.

Financial outlook and headwinds

• Three-year EPS growth guidance remains high single to low double digits, with merchandise and intermodal pricing expected to outpace inflation.

• 2025 faces headwinds: $10M/month in costs from Blue Ridge and Howard Street Tunnel disruptions, a potential $200M export coal price headwind, and $75M in fuel headwinds, mainly in the first half.

• Howard Street Tunnel project will temporarily increase costs but is expected to unlock significant intermodal growth and efficiency post-completion.

• Pricing for merchandise and intermodal is set to exceed inflation, with contract renewals underway and a lagged benefit expected from truckload market improvements.

• Ongoing cost initiatives target asset utilization, overtime, dwell, and support costs, with a focus on driving efficiency gains above inflation.