CSX Railroad Chief Brushes Off Worries of a Recession Worries

(Bloomberg) -- Recession worries? Don’t look to railroads, one of the economy’s most reliable bellwethers.

CSX Corp. Chief Executive Officer Jim Foote sees no signs of a U.S. slowdown as shipments of steel, lumber, plastics, construction materials, cardboard and other goods are still climbing.

“Across the board there, people are still pretty optimistic about the future,” Foote said in an interview after the company released fourth-quarter earnings results Wednesday. “When you get a real recession, the volumes drop off really fast. That’s not happening.”

U.S. rail demand has remained robust this year in the face of a federal government shutdown, trade wars, a year-end drop in stocks, and concern over slowing economies in Europe and China, Foote said. In the first half of January, U.S. rail carloads rose 6.6 percent from a year earlier, according to data from the Association of American Railroads.

Railroads are often seen as a barometer of the U.S. economy’s health because they haul goods from a wide variety of industries. CSX’s revenue jumped 9.8 percent in the fourth quarter and carloads rose almost 3 percent even as the railroad cut back routes for containerized cargo in October as it sought to make that business more profitable.

Investors aren’t totally sold. The shares fell as much as 3.4 percent to $63.14 for the biggest intraday decline in a month. CSX advanced 13 percent in 2018, the most on a Standard & Poor’s index of major U.S. railroads.

From what Foote is seeing, demand remains robust.

“There are all these noisy things out there that people are focusing on that say this must be the beginning of a bear market,” he said. “Certainly, we’re aware of that and are taking the necessary steps to monitor the situation and have plans in place.”

“In the meantime my customers are saying, ‘I want to ship a lot of products,’ so I’m going to ship a lot of products.”

To contact the reporter on this story: Thomas Black in Dallas at tblack@bloomberg.net

To contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Susan Warren, Tony Robinson

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