Q3 intermodal revenue for the Jacksonville-based firm, one of the nation's four largest rail freight carriers, totaled $399 million, up from a record $385 million in Q2 and $337 million in Q3 2007. Intermodal income was $97 million, up from $63 million in the same period a year ago.

At the same time, the company says it expects profits to hit only the lower part of its projected earnings guidance range for the full year due to the weakening economy. It also acknowledges intermodal revenue increases were driven primarily by increased fuel recovery and yield management rather than increased cargo. In fact, it says, freight volumes were down due to the drop in imports. Nonetheless, it expects to generate 15% to 20% operating income growth through 2010.

In regard to the National Gateway, CSX has committed $300 million to the project and will work with state and federal agencies to secure the additional $400 million of funding. The project entails enhancements to three existing rail corridors running through North Carolina, Maryland, Virginia, West Virginia, Pennsylvania, Ohio. The company says the project will provide increased rail freight capacity to and from the Midwest, reduce truck traffic and create thousands of jobs, as well as improve logistics and energy efficiency.

"More and more, the nation is becoming aware of the tremendous safety, economic and environmental benefits that railroads create," says CSX chairman, president and CEO Michael J. Ward. "Our trains can move a ton of freight 423 miles on a single gallon of fuel, and one train can carry the load of more than 280 trucks."

Even though intermodal volumes declined last year, CSX Intermodal president James Hertwig says the drop has not deterred railroads from investing capital in future growth. He reports the industry as a whole invested $9 billion in '07 to increase lift capacity, double-track key corridors, expand intermodal rail facilities and increase overall network capacity. CSX alone invested $1.6 billion, he says, adding he anticipates '08 results will show similar levels of overall industry investment.

In his opinion, lower cargo volumes have actually helped the rail industry by enabling carriers to focus on improving service rather than simply trying to keep up with demand. "High traffic volumes made it difficult to schedule maintenance and construction projects," he tells GlobeSt.com. "The slowdown allows us time to get the work done without overly interfering with deliveries."

In addition to the National Gateway project, CSX has been working with its rival, Fort Worth-based BNSF Railway, on a joint venture to reduce freight transit time between Southern California and Atlanta by one day. It has also undertaken the Northwest Ohio Interchange project to improve east-west transit times through Chicago by one to two days.

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Growing Role of Rail Boosts CSX Capital Investment

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