By John Galt
July 21, 2011
The Q2 report from CSX (available from the SEC at this link) indicates some unique divergences which should cause even the most casual observer a moment to pause and reflect. It would appear that the railroad behemoth is not preparing for a stronger economy for the remainder of this year. The data is still considerably trailing the pre-recession period and that might be what is causing caution on their part.
I. COMMODITIES HAULED
The data is trailing the 2007-2008 time period by about some amazing figures in the number of shipments hauled.
Automotive trails the Q2 2007 peak by 27%.
Forest Products trail Q2 2007 by 24%.
Metals trail Q2 2007 by 27%.
Chemicals trail Q2 2007 by 12%.
(All data extracted from the CSX Q2 2011 Exhibit 99.2 filing with the SEC)
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II. DOMESTIC COAL SHIPMENTS FOR UTILITY USE
The increase was provides an interesting possibility that industrial production and output should register decent gains in the second quarter. That or the utilities were stocking up while prices were relatively chip before the next wave of inflation hit.
(CLICK ON GRAPH TO ENLARGE)
III. FREIGHT CARS LEASED/OWNED AND ON LINE
Based on the declining numbers leased and cars on line, it would appear that the company is not preparing for a massive economic expansion based on the number of units owned and leased. The lower number of average units on line also indicates that they attempts to rotate current units for re-use as quickly as possible impacted the service also.
(CLICK ON GRAPH TO ENLARGE)
IV. ON TIME PERCENTAGE
This number has to be a disappointment to management as this is the lowest number for on time arrivals at 56% recorded in five years. The cost cutting in operations is having a massive impact on service but thankfully not safety at this point in time.
(CLICK ON GRAPH TO ENLARGE)
Just perusing the report and gleaning these figures provides me with the main piece of information I was looking for:
CSX is not expecting a massive second half rebound in the economy and might well be retrenching into the 2008-2009 hunker-down mode many transportation companies sought as the economy deteriorated rapidly. Hopefully this does not reflect a trend but it is noteworthy because of their shipping patterns in the Midwest and Eastern United States.
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