CSX CEO: Stagnant industrial performance is limiting the expansion of railroad freight

CSX CEO Steve Angel Discusses Challenges Facing Railroad Freight Growth

Steve Angel, the Chief Executive of CSX, recently addressed the ongoing difficulties railroads face in increasing their freight volumes, noting that these struggles are consistent with global trends.

Speaking at an investor conference, Angel highlighted that worldwide economic expansion has been minimal. He pointed out that China no longer drives growth as it once did, Europe has never been a major contributor, and while countries like India are developing, their economies are not yet comparable in size to China, the European Union, or the United States.

Angel, who previously led Linde and came out of retirement to take the helm at CSX, explained that many industrial sectors are experiencing stagnant growth. He emphasized that this is not an issue unique to railroads, as industrial production has remained largely unchanged both globally and within the U.S. for several years.

Despite overall economic progress and increased trucking activity, major U.S. railroads have seen little change in freight volumes over the past decade. Angel attributed this to the maturity of merchandise traffic, which depends on established industries—some of which, like forest products, are declining, while others, such as chemicals, face intense international competition.

Angel remarked that he is not relying on significant volume increases to ensure success. Instead, he believes the railroad industry, along with other industrial sectors, has adapted to operating in an environment with limited growth. If opportunities for higher volumes arise, CSX is prepared to take advantage of them.

Outlook for U.S. Economic Growth

According to Angel, the United States continues to offer the greatest potential for economic expansion, including efforts to revitalize manufacturing. He noted that CSX’s network is well-positioned to benefit from these developments, but acknowledged that progress will be gradual and require patience.

Angel also stressed that consistent service improvements, especially in intermodal operations, are essential for attracting more business. “Delivering reliable performance is crucial,” he said.

Reflections on the Railroad Industry

Having spent nearly five months at CSX and with prior experience in locomotive sales at GE Transportation, Angel shared his admiration for the railroad sector. He described railroads as a unique and vital part of the American economy, rich in history and tradition. Unlike many modern tech companies, the railroad industry is characterized by multi-generational employees and a deep sense of heritage, which Angel finds both fascinating and rewarding.

Leadership Approach and Industry Consolidation

Angel admitted that his passion for railroads drew him out of retirement, joking that retirement did not suit him. His current priorities are focused on strengthening CSX as an independent company and enhancing daily operations, rather than being preoccupied with potential mergers, such as the proposed Union Pacific-Norfolk Southern deal.

He acknowledged that industry consolidation can introduce risks that need to be managed, but also presents new opportunities. Angel emphasized the importance of balancing these challenges with the potential benefits.

Strategic Partnerships and Future Prospects

CSX has expanded its intermodal business through a partnership with BNSF, resulting in increased domestic intermodal volumes and new service routes connecting the West Coast with the Ohio Valley, Southeast, and Northeast.

Angel cautioned that the process of industry change will be lengthy and uncertain, with regulatory bodies like the Surface Transportation Board considering feedback from rail customers as part of any merger discussions.

These remarks were delivered at the Barclays 43rd Annual Industrial Select Conference in Miami on February 18.