The U.S. economy is on track for continued gradual recovery while international demand escalates, pointing to another year of robust shipments and core pricing gains for CSX Corp , the U.S. railroad company’s chief executive said.
The company reported fourth-quarter profits and revenue that beat analysts estimates and forecast record results in 2011 after the markets closed on Monday. It plans to increase its capital investments on infrastructure to help handle the expected volume increase.
“We’re seeing continued strength in the economy,” CEO Michael Ward said in an interview. “We’re feeling it’s not anything dramatic, but it’s going to be a continual gradual recovery that we’ve seen the last six or seven quarters.”
U.S. consumer confidence climbed to an eight-month high in January, according to the Conference Board, and the government is seen reporting a solid 3.5 percent annual growth rate for the economy in the fourth quarter.
CSX expects its carload volume to surpass gross domestic product and industrial production growth this year, and core pricing gains to exceed rail inflation.
Between 2008 and 2009, the company’s carload volume sank 15 percent. Last year, it recouped about half of that.
The company plans on hiring 2,900 union workers this year, though mostly to replace an expected 2,500 jobs lost to attrition.
High fuel prices should compel more companies to shift more shipments to rail as relative trucking costs rise, he said.
Coal, which represents about 31 percent of CSX revenue, with around 166 million tons shipped in 2010, has seen a resurgence of international demand, Ward said.
The company exported 22.5 million tons of coal in 2009, 30 million in 2010 and expects that to grow to 35 to 40 million tons this year.
In China and India “they are building a coal-fired plant about every other week, and China is building new steel-making facilities as well,” said Ward. “If you go back four or five years ago, China was an exporter of coal and now they are an importer of coal.”
The ripple effect from Australia flooding is uncertain, he added, but could boost CSX exports as it will clearly affect that country’s ability to supply coal on the world market.
With 600 coal cars in storage and just over 1,000 additional cars being delivered this year, CSX is confident it can handle the increased volume this year, Ward said.
Of the up to 40 million tons of expected coal exports, half of it would likely be shipped to Europe and the remainder split between Asia and South America, he said. (Reuters)