CSX (NASDAQ:CSX) is looking to build on freight volume growth and pursue higher prices in 2027, as tight trucking capacity creates opportunities to move more goods by rail, Chief Financial Officer Kevin Boone said at a Baird transportation conference.
Boone said infrastructure spending, strong aggregates shipments and freight converted from trucks have supported the railroad’s merchandise business, even though housing and automotive markets have not provided their usual boost. Consumer demand has also supported intermodal volumes, he said.
“From a backdrop of an industrial economy, we’re not seeing a lot of tailwinds right now,” Boone said. He added that lower interest rates could eventually support housing and automotive activity.
Pricing and intermodal opportunities
Boone said CSX aims to secure prices that cover cost inflation, noting that pricing has not necessarily exceeded inflation over the past two or three years. The company must deliver reliable service to justify those increases in a competitive market, he said.
In domestic intermodal, Boone described the shortage of trucking capacity as a potentially lasting trend rather than a typical cyclical constraint. He said customers are recognizing that moving more freight by rail can help insulate them from volatility.
CSX is seeing positive pricing on business it can currently reprice, Boone said, while other pricing changes will take longer to appear. He cautioned that international intermodal contracts are less directly tied to trucking-market conditions, which could dilute the effect of domestic pricing gains.
Boone also said CSX would compete for business that moved away from the railroad this year and seek to support partners that continue to work with it. The company is focused on reducing the time drivers spend at terminals and earning an appropriate return on its investments, he said.
Technology outage and recovery
Boone said a recent technology outage was related to cloud services and was not caused by an outside actor. Positive train control and dispatching were not affected, but other systems were disrupted, making it difficult for operating teams to run trains.
CSX knows the root cause and has a fix, Boone said, without providing further details about the cause. He said the company was recovering, though clearing accumulated inventory could take another couple of weeks.
CSX plans to invest in its technology infrastructure and bring in outside experts to assess potential vulnerabilities, Boone said. He added that about 90 employees volunteered to help with tasks including calling crews after the outage.
Coal and merchandise outlook
Domestic coal demand remains largely dependent on weather and natural gas prices, Boone said. He sees longer-term opportunity in coal exports, supported by CSX’s access to four major terminals and demand from markets including India.
Although global coal prices could rise over time, Boone said CSX is not incorporating such an increase into its 2027 assumptions. He also said growing power demand from artificial intelligence could increase utilization at some coal plants the railroad serves.
On the merchandise side, Boone said industrial development projects contributed to growth this year and should contribute more next year. He pointed to strength in metals, some growth in forest products as customers shift freight from trucks to rail, and opportunities in markets including waste and agriculture.
Boone said investments in projects such as the Howard Street Tunnel and the SMX service from Mexico, operated through a relationship with CPKC, are beginning to pay off and should provide benefits over the next several years.
Merger review and spending priorities
Asked about the proposed Union Pacific and Norfolk Southern merger, Boone said CSX planned to submit a filing within a week. He said the proposed transaction could leave customers with fewer options and that CSX would present a fact-based case identifying its concerns.
For 2027, Boone said CSX will continue pursuing cost improvements and more efficient capital spending while maintaining the railroad safely. He said return on invested capital remains a major focus and that the company has more than 100 cost opportunities in its pipeline, although the benefits may not be as large as those achieved this year.
About CSX (NASDAQ:CSX)
CSX Corporation is a freight transportation company that operates one of the largest rail networks in the eastern United States. Its rail system serves customers across much of the eastern U.S., as well as parts of Canada, and connects with other railroads and ports. CSX transports a broad range of goods, including chemicals, agricultural and food products, automobiles, minerals, forest products, coal and intermodal freight. Its services include rail transportation, intermodal shipping that combines rail and truck transport, and related logistics and supply-chain services.
