CSX (NASDAQ:CSX) Chief Commercial Officer Maryclare Kenney said the railroad’s network is “running well” overall, despite repeated weather disruptions early in the year that affected both operations and customer activity in several markets.
Weather disruptions weighed on early-year activity
Kenney said CSX entered the year with a solid start in early January, before two back-to-back storms disrupted the network and made it harder for some customers to load and maintain typical shipping volumes. Additional weather impacts continued into February, but she said the operating team has improved resiliency and “really [gotten] it back up to strong levels of service performance.”
- Aggregates: Frozen ground slowed production, contributing to a slower start than planned.
- Waste: More sensitive to weather-related disruptions.
- Coal: Cold weather and higher natural gas prices increased demand for coal, but “frozen coal” created unloading challenges at both origin and destination.
Energy price volatility: risk for some segments, support for coal
Kenney said CSX is monitoring end markets that could be affected by higher energy prices, pointing to chemicals (including plastics), intermodal (given its consumer linkage), and metals, where manufacturing is energy intensive. She said CSX has nonetheless seen a “pretty good start” in parts of its metals portfolio, including demand in scrap and pipe.
She also said higher natural gas prices can be a positive for domestic coal and that CSX expects domestic coal demand to remain strong through the year. Kenney noted that a couple of utilities on CSX’s network are scheduled to retire this year, and said the key uncertainty is whether those retirements occur as planned or are extended. She said visibility has typically been limited to 90-day extensions, with CSX currently able to see into late spring for some locations.
Fuel surcharge lag creates near-term headwind
On fuel, Kenney said recent volatility creates a timing issue because CSX burns fuel in real time while fuel surcharge programs adjust with a lag. At current fuel prices, she said the company would see a $20 million to $30 million headwind to the current quarter as fuel surcharge programs “re-index” to current highway diesel rates. However, she added CSX expects to recover that impact over the course of the year.
Industrial outlook: limited improvement, with pockets of strength
Kenney said CSX’s performance roughly two and a half months into the year was “pretty close” to internal expectations, and she did not describe a robust improvement in industrial markets. She reiterated headwinds tied to automotive and housing.
In automotive, she said recent forecasts show production down about 1.5% and sales down about 2%. She also noted CSX has a large auto plant on its network that will be down for retooling throughout this year and into the first quarter of next year, which she called a headwind. Kenney said the company saw some customer impacts tied to aluminum shortages earlier in the year, which she described as a larger current concern than semiconductor availability, though chips remain something CSX watches.
In housing-related demand, she pointed to forest products, noting roughly half of that business is building products. She said customers are not optimistic about 2026 and are more focused on potential improvement in 2027. She added that paper and pulp volumes remain challenged as CSX laps mill and plant closures that occurred in 2025, with headwinds expected through the third quarter.
Kenney highlighted infrastructure investment as a support for minerals such as aggregates and cement, calling the current year the “peak year” of Infrastructure Investment and Jobs Act (IIJA) spending. She said CSX expects that market to be strong for the full year despite a slower weather-affected start.
Pricing, intermodal bid season, and network expansions
On pricing, Kenney said CSX expects pricing in 2026 to be stronger on a same-store sales basis than in 2025, while noting that business mix can influence results. She said higher-growth areas like minerals tend to have lower revenue per unit than markets such as chemicals and forest products.
Kenney said the truck market remains an important variable, particularly for intermodal. She noted channel partners appear more optimistic than they were a year ago, though she described an overall “wait and see” posture after repeated expectations for back-half recoveries in prior years. She said CSX has seen a positive bid season with more bids and opportunities, as shippers take a closer look at over-the-road freight that could move via intermodal.
Kenney also discussed growth initiatives tied to service and infrastructure:
- Howard Street Tunnel expansion: Kenney said the project is nearly complete and will enable double-stack service across CSX’s B&O route to Baltimore, eliminating a prior Chicago cross-town step and improving efficiency. She said it will also add capacity on the I-95 corridor and support new lanes such as Atlanta to Northeast markets including New Jersey, Philadelphia, and Chambersburg. One remaining bridge project is expected to finish “later next month,” after which new solutions can be unlocked. Kenney said new products typically take a couple of bid cycles to fully ramp.
- Southeast Mexico Express with CPKC: Kenney said service began in late 2024 and has been operating for just over a year in both intermodal and carload. She said improved interchange connectivity has supported growth, with additional offerings such as Charlotte planned. She also said CSX has been investing in infrastructure tied to the Meridian & Bigbee Railroad, following STB approval of its purchase in 2024, to improve speed and reliability and increase the opportunity to convert highway freight to rail.
Kenney framed CSX’s broader truckload conversion effort as centered on understanding customer truck usage and consistently delivering reliable service. She said CSX engages shippers through a national accounts program and uses an “optimizer” tool to evaluate which truck lanes are suitable for intermodal conversion based on factors like length of haul and dray distance.
On the industrial development pipeline, Kenney said CSX remains “very happy” with current activity, describing about 600 projects in the pipeline across stages from early concept to active construction. She said CSX has not seen a material change in project count despite broader economic “noise,” though some projects ramped more slowly than expected in the back half of last year. She said the company continues to qualify sites to shorten the timeline from decision to implementation.
About CSX (NASDAQ:CSX)
CSX Corporation is a leading North American transportation company that provides rail-based freight services and supply-chain solutions. Its operating subsidiary, CSX Transportation, moves a wide range of goods for customers across multiple industries, using a combination of long-haul rail service, intermodal operations and terminal and yard services. The company focuses on delivering efficient, reliable freight transportation between major production centers, consumption markets and port gateways.
CSX’s freight portfolio includes intermodal containers and trailers, bulk commodities, industrial products and specialized unit trains.
