CSX Transportation is increasing its capital spending plan for this year to $2.2 billion, up from an initial $2 billion, as it locks in more orders for new railcars to haul export coal.
The action comes at a time when overall rail traffic is making a sluggish recovery from the spring slump. While intermodal activity strengthened in June to its highest levels of the year so far, many carload commodities remain below the highs they set before traffic weakened in April and May.
Rail industry sources say while coal demand by domestic utilities has slowed, South American, European and Asian buyers continue to order U.S. coal. Both CSX and eastern-U.S. rival Norfolk Southern Railway have reported strong coal traffic out of Appalachian mine areas heading to ocean port terminals.
CSX said its board “authorized an increase in 2011 capital investment for certain asset purchases – primarily railcars to meet the growing near- and long-term demand for export coal.” T
That is in line with reports from equipment makers like Greenbrier, who say their market continues to strengthen.
It also declared a 12 cent per share quarterly dividend payable on Sept. 15. That is the same payout level as in the prior quarter, when CSX raised the dividend by 38 percent.