CSX Corp. reported a big increase in revenue for the fourth quarter, but said the recent surge in coronavirus cases is slowing freight volumes.
“We are entering the year with strong demand across the economy, but shippers are facing ongoing challenges and the lack of capacity in labor, materials and transportation,” CEO James Foote said in a Jan. 20 conference call with analysts.
The Jacksonville-based railroad company said fourth-quarter revenue jumped 21% to $3.43 billion, with growth in all major lines of freight business except automobiles.
The revenue growth included $210 million from Quality Carriers, a trucking company CSX acquired July 1. Excluding the contribution from Quality Carriers, revenue still rose 13.9%.
For all of 2021, revenue rose 18% to $12.522 billion.
CSX reported fourth-quarter earnings of 42 cents a share, up from 33 cents in the fourth quarter of 2020.
Foote said CSX expects freight volume growth to exceed growth in U.S. gross domestic product this year, but company officials said the pandemic is impacting operations right now.
“As we exited the fourth quarter, we clearly saw the effects of omicron with December volumes impacted by labor and supply chain disruptions,” said Kevin Boone, executive vice president of sales and marketing.
“These challenges have continued into the new year where we are seeing customers face labor shortages in their operations,” he said.
“As we look across merchandise, intermodal and coal markets, demand signals remain strong. As supply chain challenges normalize, we would expect volumes to align more with demand.”
CSX has been struggling to increase its labor force and Jamie Boychuk, executive vice president of operations, said the company has made progress in attracting more workers.
“Recently, the benefit of these additional employees has been offset by the rapid rise in COVID cases across the network,” he said.
“Average daily cases have increased by several hundred employees since early November and are approaching prior peak levels. That said, there is no doubt that the hiring actions taken to date have allowed us to better manage the current situation.”
CSX reported total employment in its operations across the Eastern U.S. was 20,919 at the end of the year, up 1,637 from the end of 2020. However, that included 1,364 Quality Carriers employees who joined the company at midyear.
Despite the recent challenges, Foote said the outlook for 2022 is strong.
“We remain optimistic about the opportunity to grow this year, driven by a combination of strong underlying economic momentum and supply chain recovery,” he said.
“Volume should build sequentially throughout the year as supply chain bottlenecks ease. As a result, growth in the second half of the year is expected to be greater than in the first half.”