Stuart Chirls
7 min read
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Rebuilding from hurricane damage and a major tunnel project cost CSX a million dollars a day in lost revenue in the first three months of the year, the railroad’s top financial executive told an investor conference.
“We got hit in the first quarter; it was a difficult winter,” said Executive Vice President and Chief Financial Officer Sean Pelkey, speaking at the Bank of America conference in New York. “There were a hundred million dollars in revenue opportunities we missed, a million dollars a day, because of constraints on our network.”
The railroad (NASDAQ: CSX) continues to rebuild its 60-mile line through eastern Tennessee and western North Carolina after Hurricane Helene devastated the region in September 2024.
Pelkey said reconstruction is expected to last “through the better part of this year” before completion in October or November. “There’s a massive amount of work there,” he said.
Detours of trains around the rebuilding of Baltimore’s Howard Street tunnel also hurt network performance. Pelkey said tunnel construction to accommodate doublestack trains is expected to be completed in eight months, slightly ahead of schedule. “Some clearances need to get done, and there is work on some bridges; we’re relying on the state for that. We see reopening the beginning of the fourth quarter.”
After a difficult start to the year, CSX saw a reset in April.
“We needed fewer cars online, sitting in yards and at customers’ facilities,” said Pelkey. “We saw 80% trip length compliance for the fourth week in a row; we were at the 60 percents earlier this year. We are getting back to scheduled railroading, not that we got away from it, but we were dealing with difficult operating conditions.”
Normal seasonality has seen volumes pick up in unit coal trains, metals and fertilizers, among other commodities.
Just as the winter was receding, CSX got hit by more severe weather, from flooding to tornadoes across portions of its territory.
“The team was hunkered down in Jacksonville [Florida operations center], and we were like, ‘Crap, we gotta deal with this now?’ We did see some effects. For example, one of our interchange partners had a bridge out in a key part of our network.”
The pause in tariffs agreed to this week by China and the United States is expected to have less of an impact on East Coast-based CSX, Pelkey said. “There is probably a lot of inventory sitting in West Coast warehouses that will come east. If we see a little lull in intermodal across Chicago, there may be an opportunity to pick up some incremental business and combine trains.”
