Should I sell my coal hoppers?

As a Analyst by trade I see no need for you to keep coal hoppers clogging your sidings. Transfer them to my railroad as we need them badly!!!

On my layout it's always 1956, therefore, I have no such problems.

Good Day Alfred,

I think your safe to sell a few coal hoppers!

Regards,

Swafford

From the CSX Corp 4th Quarter 2012 Presentation:

Clarence Gooden - Chief Sales and Marketing Officer

And now, let’s take a look at the overall revenue. Total fourth quarter revenue of nearly $2.9 billion was 2% lower compared to the prior year. Starting at the left of the chart, volume-related revenue had an unfavorable impact of $84 million in the quarter as volume growth in automotive and intermodal was more than offset by the decline in domestic and export coal. Moving to the right when combined, the impact of rate and mix net to zero in the quarter with the benefit of core pricing gains offset by the unfavorable mix associated with intermodal growth and lower coal volume. Finally, fuel recovery increased $17 million in the quarter.

Now, let’s turn to pricing. Core pricing, on a same-store sales basis, remained solid across nearly all the markets. Recall that the same-store sales are defined as shipments with the same customer, commodity and car type, and the same origin and destination. These shipments represented approximately 80% of CSX’s traffic base for the quarter. Looking at the chart, overall pricing, shown as the blue bars, increased 1.6% in the fourth quarter. Lower overall pricing is attributed to the more dynamic export coal market, where pricing is impacted by changing global conditions. The gold bars, which exclude export coal show pricing gains of 4% in the quarter exceeding rail inflation and consistent with the performance in the second and third quarters. Looking forward delivering a strong product that creates relative value for our customers provides a solid foundation for pricing above rail inflation over the long term. Given our confidence and the value of our product offering and the need for ongoing investment in the business. We will not sacrifice price for short term volume gains. Let’s turn to the next slide and take a closer look at the volume. Total volume declined 3% in the quarter versus the same period last year and performance across the markets we serve was mixed. Export coal volume fell 10% after growing in previous quarters. Both Intermodal and the Industrial sector continued to grow in the quarter but at lower rates than we saw in the first half.

The agricultural and construction sector remained challenged while these sectors declining 4% each. Finally domestic coal declined 21% although the rate of decline moderated somewhat from what we saw earlier in the year. Now let’s take a closer look at some of the individual markets in more detail and let’s start with coal. Coal revenue declined 18% to $747 million. Domestic volume declined 21% as natural gas prices remain low leading to the continued displacement of coal and high stockpiles at many utilities. In addition, electrical generation declined in the Eastern United States. Export coal volume declined 10% as demand for metallurgical coal softened particularly in the Asian markets. Total revenue per unit was flat as core pricing gains in domestic markets offset lower export rates. Looking ahead at this point export coal volume is expected to decline in the first quarter and our best estimate of full year volume is about 40 million tons.

Furthermore we anticipate our rates to be pressured as we work with producers to keep U.S. coal competitive globally in an environment where underlying commodity process for thermal and metallurgical coal are low. At the same time domestic coal headwinds will persist but we expect them to continue to moderate throughout 2013. As a result we anticipate domestic volume will decline in the 5% to 10% range for the full year.

Next let’s look at merchandize; overall merchandize revenue increased 4% to $1.66 billion. Automotive was the key driver in the industrial sector growing 10% as North American light vehicle production increased 8% in the quarter. In addition, the chemicals market grew 6% on strength and energy related petroleum products. In the agricultural sector ethanol shipments declined as a result of lower production, increased competition from imports and lower gasoline demand. In addition, FEED grain shipments to the South-East were lower as a result of the severe drought in the mid-west. Regarding the construction sector, building products rebounded on the strength of a slowly improving housing environment. However this was more than offset by lower aggregate shipments associated with lower infrastructure spending and lower salt shipments due to the high inventories from 2012 winter. Looking to the first quarter of 2013 in the industrial we continue to see growth opportunities in chemicals particularly in commodities related to the oil and gas industry. The automotive market will remain strong although we’re now cycling tougher comparable.

We expect the agricultural sector to remain soft with lower grain shipments and continued weakness in ethanol, more than offsetting the increased fertilizer demand. Finally, we anticipate a slow steady recovery in the construction sector that will drive growth and building products and aggregates. Moving to the next page, let’s review intermodal. Intermodal revenue increased 6% to $398 million; domestic volume was up 2% driven by highway to rail conversions which continued despite a softening economic environment and the impact of Hurricane Sandy. International volume grew 6% on growth related to the Maersk business. Total intermodal revenue per unit increased 2% due to core pricing gains in higher fuel recovery. Looking forward our strategic network investments such as the double-stack clearing have routed to New England, the terminal expansions in Wister and Columbus, Ohio will help increase our capacity and network fluidity while improving service for our customers. At the same time as we maintain our focus on profitable growth, we’re excited about our highway to rail or H2R initiative. We’re working collaboratively with our channel partners to market the compelling value of the intermodal rail transportation to targeted customers and its new initiative, which will be a key driver for CSX in tapping an estimated $9 million truckload opportunity.

Let’s turn to the outlook for the first quarter. Looking forward, we have recognized the economic environment has moderated and uncertainty remains. While we expect stable to favorable conditions for 71% of our markets, we expect an unfavorable environment for the remaining markets and an overall neutral outlook for the first quarter. Intermodal growth will leave the way as our strategic network investments and strong service delivery will continue to support highway-to-rail conversions. In addition, the chemicals market will grow as we capture opportunities created by the expanding domestic oil and gas industry.

Automobile and light truck production will remain strong, but year-over-year comparisons become more difficult in 2013. In emerging markets, we expect a continued recovery in demand for construction and building materials while waste shipments will remain challenging. The overall outlook for agricultural products remains unfavorable with low corn supply and high prices caused by last year’s drought impacting shipments to feed mills and ethanol shipments impacted by lower demand and higher corn prices. Finally, export coal volume will be lower on softer demand for thermal coal and domestic coal volume is expected to remain below prior year levels, although the headwinds will moderate throughout the year.

Now, I am wrapping up. Looking at the state of the economy, the indicators we follow generally point to continued expansion, but at a more modest pace. Overall, the first quarter volume outlook is neutral, while the outlook for 71% of our markets is neutral to favorable. We anticipate total volume will be flat to slightly down year-over-year with declines in unfavorable markets offsetting the gains in the favorable markets. Utility coal volume will continue to be challenged by low gas prices and high utility stockpiles. Although we expect these headwinds to moderate somewhat through the balance of the year, we anticipate they will continue well into 2013.

At the same time, much like we saw in 2012, we expect our merchandise and intermodal markets to continue to grow at a rate that is above the general economy. Finally, we continue to deliver high levels of service, which creates compelling value for our customers and will drive long-term profitable volume and revenue growth for the shareholders.

Yeah, me too only I'm 1966