Intermodal provider Pacer International saw its third-quarter net income jump 83 percent to $1.1 million while revenue fell, but said it would have done better had not Hurricane Alex disrupted its traffic in and out of Mexico last summer.
Alex struck on June 30 and knocked out a key rail bridge for Kansas City Southern de Mexico, forcing KCS and other rail operations to detour or delay traffic for more than three weeks. Pacer said network delays continued into August.
“We estimate that the disruption of rail service caused by Hurricane Alex reduced intermodal operating income by $3.5 million to $4 million," said Chief Financial Officer John J. Hafferty.
By The Numbers: U.S. Intermodal Container Traffic.
Pacer posted revenue of $364.8 million in the July-September period, down from $418.7 million a year earlier. Its gross margin for intermodal and logistics services, after accounting for purchased transportation, was $40 million, down from $45.7 million.
The intermodal middleman has also been transitioning out of some loads it previously carried when it had a low-rate, long-term contract with Union Pacific Railroad. Pacer and UP struck a deal last autumn under which UP is absorbing more of that traffic over time.
Excluding the effects of that transition, intermodal volume increased 1.6 percent in the latest quarter from the 2009 period. But “in the absence of Hurricane Alex, we estimate our volumes would have increased between 5.6 percent and 6.5 percent,” Pacer said.
Pacer recently said it is expanding its international ocean and freight forwarding lines of business. Daniel W. Avramovich, chairman and CEO, said that is being done to “capture more freight at origin points, in order to take full advantage of our ability to provide integrated global door-to-door transportation and logistics solutions.”
Third-quarter income for its intermodal segment was $19.5 million, up from a $184.5 million operating loss a year earlier when it booked a large goodwill impairment charge against earnings. Logistics revenue this quarter was $1.2 million, compared with last year’s quarterly loss of $36.3 million.
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