U.S. railroad company CSX Corp. raised its estimate Wednesday for export coal shipments to a new all-time high, which it expects will help drive record 2011 results.
The company also plans to increase average headcount by about 4 percent this year to support growing demand as well as maintenance needs.
"We continue to see the economy expanding and we are making investments in capital and in people, which is how strongly we believe" in the growth picture, Chief Executive Michael Ward said in an interview.
The company reported record second-quarter results on Tuesday and maintains its early-year forecast for record full-year results.
CSX plans a record $2.2 billion in capital spending this year to back the projected growth.
"We will exceed both gross domestic product and industrial production," Ward said. CSX's volume rose about 3 percent in the quarter compared with about 1.9 percent U.S. GDP growth.
CSX, the second-largest publicly held U.S. railroad operator, boosted its forecast for coal to be moved for export to between a record 42 million and 45 million tons, from a prior estimate of a record 40 million.
That will be driven mainly by demand from China and India, and will sharply surpass the prior high of 30 million tons last year.
The company told analysts on a conference call that it appears demand will be as robust in 2012.
Despite a tepid U.S. economic recovery, CSX increased its "same-store sales" pricing by 7.2 percent in the quarter. These sales, which are shipments to the same customer as the prior period, account for about three-quarters of CSX's traffic.
"The pricing strength in the quarter was impressive, certainly aided by export coal and the volume and pricing momentum they have on that," said Benjamin Hartford, senior research associate at Robert W. Baird.
Even if that rate of increase were unsustainable, rails would continue to have pricing power, analysts agree.
Relatively fuel-efficient rails have been drawing freight shipments off the highways, particularly to their intermodal businesses.
Intermodal — which refers to the shipments of goods in containers that can be moved from one form of transportation to another, such as from rail to ship — now represents more than one-third of CSX's total volume.
"They are capitalizing on an economy that may not feel good to the consumer level, but looks pretty good at the transportation level," said Phil Adams, senior bond analyst with Gimme Credit.
Export coal, for instance, is a big profit driver for the company though it has little impact on the U.S. consumer.
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