Copyright 2006, Traffic World, Inc.
Strong intermodal demand and higher prices boosted first-quarter profits at Florida East Coast Railway by 26 percent to $18.8 million compared with a year ago.
"The railway had stronger-than-expected results, driven by robust aggregate and intermodal revenues, and operating profit benefited from a restructuring of our fuel policy to more accurately match rising fuel prices with fuel surcharges," said Adolfo Henriques, chairman, president and CEO of FECR parent Florida East Coast Industries.
Increased fuel expense of $2.5 million in the first quarter was more than offset by higher fuel surcharges and the railroad''s forward purchasing program, Henriques said.
Intermodal revenue, including drayage, increased 20.7 percent compared with the prior year period, reflecting primarily improved pricing and increased local business from the motor carrier, retail and international segments.
The company began operations at the Medley Rock Yard, which transferred the aggregate switching operation closer to the mines, improved the productivity and efficiency of the operations and freed up additional capacity at its Hialeah Yard, he said.
Revenue increased 19 percent to $67.1 million in the quarter, boosted by a 152 percent increase in fuel surcharges, from $2.1 million in 2005 to $5.3 million. FECR''s operating ratio improved to 71.9 compared to 73.5 in the year-ago period.
Volume at FECR grew during the quarter as well, with total carload revenue growing 15.7 percent driven by strong demand for aggregate, vehicles and lumber. FECR said the higher volume also reflects a combination of strong construction demand, new business from existing customers and improved pricing.
FEC expects capital expenditures, before the purchase of land, to range from $48 million to $53 million in 2006. Included in that amount are the purchase of four new locomotives and construction of an additional 11 miles of siding from Indian River to Frontenac, Fla., to support additional growth in the business and maintain the fluidity of the railway, the company said.
During the quarter a federal judge for the Southern District of Florida ruled that several mining permits for aggregate quarries owned by FECR shippers were not adequately evaluated by the U.S. Army Corps of Engineers. A hearing will be held in June to evaluate the status of mining in the area pending additional analysis by the Corps.
FEC was confident a decision can be reached that protects the environment while allowing for mining.