CSX CSX Corporation

By Paul Page 

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The CSX Corp. board is offering its support for the current management team and growth strategy even as investors show lots of confidence in a bid by Hunter Harrison to take control of the freight railroad. Shares in the carrier surged to all-time highs on news that the rail industry veteran was teaming up with an activist investor in a new run at CSX, the WSJ's Paul Ziobro reports, a move that's will revive talk of consolidation in the industry. Mr. Harrison walked away from an exit package worth $89 million at Canadian Pacific Railway Ltd. to make the new effort. CSX investors are anxious to see if Mr. Harrison can bring the railroad the sort of efficiency gains he wrung from CP, which just reported its best-ever annual operating ratio. CSX remains broadly profitable, but its operating earnings have barely budged this decade and last year were the lowest since 2010. Mr. Harrison sees room for improvement, and investors appear to agree -- whether that means gains for CSX on its own or as part of an even bigger railroad.

Union Pacific Corp. isn't willing to say whether the commodities slump has hit bottom even though figures at North America's biggest freight railroad suggest the long-lagging business is getting better. Union Pacific reported a profit of $1.14 billion in the fourth quarter, up slightly from $1.11 billion, the WSJ's Ezequiel Minaya reports, even as revenue slipped slightly to $5.17 billion. The improvement came mostly because the railroad is continuing to pare back its operations in line with diminishing demand: Union Pacific cut its locomotive fleet by 5% in the quarter from the same quarter the year before, and the railroad is delaying the acquisition of 40 of the 100 new locomotives it planned to add this year. But grain volumes jumped, the slide in coal volume and revenue was more modest and intermodal business was flat. Union Pacific is looking for volume gains this year, and with capacity reductions still in place that would mean the carrier would be on a fast track toward higher pricing.

J.B. Hunt Transport Services Inc. is finding its strongest returns outside the daily freight market . The transport giant improved its net profit slightly in the fourth quarter, the WSJ's Anne Steele reports, but the returns across its various lines highlight the ongoing struggle that companies face in adjusting capacity to a volatile and highly competitive market. Weak pricing in J.B. Hunt's intermodal, freight brokerage and trucking units held down earnings in those areas even as business jumped at the dedicated contract services operation that manages fleets for customers. The company says basic truckload prices fell 1.4% in the quarter from a year ago and revenue, operating income and revenue per load in the logistics operation all fell at a double-digit pace. The strength in dedicated services proves the value the diversified strategy has for the company, but the results in other lines suggest that J.B. Hunt and other U.S. freight operators are still looking for prices to push higher.

TRANSPORTATION

With larger vessels, shifting trade patterns and population growth all changing the landscape for shipping, industry expert Olaf Merk says it's time for public policies involving ports to catch up. The administrator for ports and shipping at the International Transport Forum writes in a Guest Voices commentary for WSJ Logistics Report that a new wave of port reform is needed to meet new demands in modern trade. Mr. Merk writes that many ports operating strictly as landlords for global cargo terminal operators are ill-equipped to meet the needs of both ship operators and the big cities that are growing around seaports. The ports, he writes, must be "able to bridge the demands of a range of parties beyond the port while providing innovative transport solutions to local firms." Questions over port management are becoming more important as bigger ships strain dockside operations and terminal operators gaining their own scale through acquisition and expansion.

QUOTABLE

IN OTHER NEWS

U.S. housing starts rose 11.3% in December and reached their highest level in nine years in 2016. (WSJ)

The number of Americans newly applying for unemployment benefits fell sharply and remained near a four-decade low. (WSJ)

The decline in sales at physical stores is hitting small-town malls in the U.S. especially hard as big chains close anchor sites. (WSJ)

Big leaps in artificial intelligence are raising tensions among businesses and policy makers over the impact of the technology on middle-income jobs. (WSJ)

Beer maker Asahi Group Holdings Ltd. is reviewing its investments in China, including its minority stake in Tsingtao Brewery Co. (WSJ)

Shares in DryShips Inc. fell more than 28% after the bulk carrier announced a one-for-eight reverse stock split. (MarketWatch)

Alphabet Inc. unit Google is facing inventory shortages of its Pixel and Pixel XL smartphones. (The Verge)

A measure of U.S. domestic road and rail shipments rose 3.5% in December, the fastest growth pace in two years. (Logistics Management)

Malaysia's Port Klang says its container throughput expanded 10.8% last year. (Port Technology)

Freight exports from Hong Kong International Airport jumped 12.8% year-over-year in December. (Air Cargo World)

One of two Hanjin Shipping Co. vessels stranded with crew off Canada's Pacific Coast for six months is sailing back to Asia after the ship was sold. (Victoria Times Colonist)

Hapag-Lloyd AG increased the size of its new bond offering to $266 million, citing strong demand. (American Shipper)

Scorpio Tankers Inc. won a $172 million loan commitment to finance its purchase of eight tankers under construction. (Shipping Watch)

The price of U.S. First-Class postage stamps will rise by two cents on Sunday. (Detroit Free-Press)

ABOUT US

Paul Page is deputy editor of WSJ Logistics Report. Follow him at @PaulPage, and follow the entire WSJ Logistics Report team: @brianjbaskin, @jensmithWSJ and @EEPhillips_WSJ and follow the WSJ Logistics Report on Twitter at @WSJLogistics.

Subscribe to this email newsletter by clicking here: http://on.wsj.com/Logisticsnewsletter .

Write to Paul Page at paul.page@wsj.com

(END) Dow Jones Newswires

January 20, 2017 07:23 ET (12:23 GMT)

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