CSX freight volume growth: Angel sees intermodal gains

CSX freight volume growth has been tough to move meaningfully higher, and CSX CEO Steve Angel says that reflects the broader industrial backdrop rather than something unique to railroads.

Angel laid out that view at an investor conference last week in his first detailed public remarks outside of earnings calls since becoming CEO in September, as reported by Trains.

Meanwhile, he said global growth is limited. China is no longer a growth engine, Europe has not been a source of growth, and economies such as India are expanding but do not have the scale of China, the European Union, or the United States.

Flat global industrial production and mature freight markets

In addition, Angel connected freight demand to flat global industrial production, including in the United States, as noted by Railway Supply. “There’s a lot of industrial companies that are struggling with growth because industrial production has been flat pretty much around the world and in the United States for several years,” says Angel, a former Linde chief executive who came out of retirement to lead CSX. “So it’s not a phenomenon that’s unique to the railroads.”

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For example, he pointed to the recent volume picture at home. U.S. Class I railroads, he said, have had relatively flat volumes for the past decade even as the economy and truck tonnage have increased. Merchandise traffic, in his view, is a mature business tied to mature industries. Some, like forest products, are in decline, while others, including chemicals, face pressure from global competition.

At the same time, Angel said he is not framing CSX’s outlook around the idea that freight demand suddenly snaps back. “At the end of the day, I’m not sitting here saying, ‘Gee, if you just give me 5% volume, I’ll be fine.’ I’m sitting here thinking I don’t really need that much,” Angel says. “I’ll take it. And if it comes, we’ll capitalize on it. But I think a lot of people in the railroad industry and people in the broader industrial world, generally speaking, have gotten used to having a low-growth environment to work in.”

CSX freight volume growth and long-term reindustrialization bets

Separately, Angel said he still views the United States as the best long-term growth opportunity, including U.S. reindustrialization opportunities that can take time. He pointed to the CSX industrial development pipeline, saying it remains full and that the railroad is working those projects from a development standpoint. “If it’s going to happen, it’s going to happen on our network. And it is,” Angel says of the railroad’s industrial development pipeline, which remains full. “We do see those opportunities coming along. We work on a lot of it from a development standpoint. But it’s going to be a long game. It’s a long process. It takes time.”

Still, he stressed that service execution matters, particularly for intermodal volume gains. “Being consistent in our performance is really important.”

Intermodal strategy, industry impressions, and merger uncertainty

As a relative newcomer in the CEO role, Angel — who once worked in locomotive sales at GE Transportation — was asked what has stood out about the railroad business after nearly five months on the job. He described an industry with a distinctive role in the economy and deep cultural roots. “There’s nothing like railroads anywhere anywhere on the planet. I’ve never seen an industry like this,” he says. “In many ways, railroads are the heartbeat of the American economy. And, you know, the U.S. was built on railroads. There’s a lot of lore and history in this industry. You’re not going to walk into the offices at Meta or Google and meet fourth- and fifth-generation employees. It’s that kind of heritage. It runs that deep. And, you know, it’s a fascinating industry, and I enjoy it.”

That fascination, he said, helped bring him back from retirement. “I flunked retirement,” Angel says. “I tried that. It’s boring.”

Meanwhile, Angel said his near-term focus is on running CSX better each day and proving it can succeed as a standalone company, rather than getting locked on hypothetical outcomes of the proposed Union Pacific-Norfolk Southern merger. Still, he said consolidation can create risks that need managing, while also creating opportunities. “Anytime you have consolidation inside an industry, for the rest of participants it can create some challenges in terms of risk that you need to go manage, which is what CSX will do,” Angel says. “But it also creates opportunities at the same time. And so you need to manage the risk, manage the challenges, and capitalize on the opportunities.”

For example, he pointed to the BNSF intermodal alliance as an example of that approach in practice. CSX, he said, has boosted domestic intermodal volumes as new interline service was added between the West Coast and points on CSX in the Ohio Valley, Southeast, and Northeast.

On the merger process, Angel said it may take time and that the end result is uncertain. “It’s going to be a long process. We really don’t know how it’s going to play out in the end,” Angel says. He added that the Surface Transportation Board will listen to comments from rail customers, who can shape the merger debate.

Angel spoke at the Barclays 43rd Annual Industrial Select Conference, according to CSX.

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