John D. Boyd | Jul 20, 2011 3:32PM EDT
CSX Transportation expects the upcoming intermodal peak season to kick in later than last year and not last as long, but says the peak will be “very strong.”
That’s because retailers must rebuild thin inventories ahead of yearend sales, Clarence Gooden, the railway's executive vice president and chief commercial officer, said in an earnings conference call with analysts on Wednesday.
Gooden cited PIERS and Journal of Commerce data showing that the trans-Pacific intermodal business in particular has slowed, with a decline in ocean rates.
But he said a positive sign is that customer inventories “are still at historically low levels, so they’ll have to be replenished before the Christmas season comes in. So we expect a later start in that season.”
Asked what caused a slowdown in intermodal growth during the final weeks of the second quarter compared with 2010, Gooden said it was mainly because international traffic, particularly trans-Pacific trade, was weaker.
However, he said “the domestic side of the business, with highway conversions (to rail intermodal) and with highway fuel costs the way they are right now, is actually showing a positive move for us.”
In the second quarter, CSX’s intermodal volume grew 8 percent from a year earlier but average revenue per unit jumped 15 percent, for a total revenue gain from that segment of 24 percent.
-- Contact John D. Boyd at jboyd@joc.com. Follow him on Twitter www.twitter.com/jboydjoc
