How Does CSX Corporation’s Business Compare With Union Pacific’s?

CSX Corporation (NASDAQ: CSX) is engaged primarily in freight transportation in the Southeast, East, and Midwest regions of the U.S. CSX’s rail network is over 21,000 route miles, and it serves many large population centers. Union Pacific (NYSE: UNP) is engaged primarily in freight transportation in the western two-thirds of the United States, and its rail network is over 32,236 route miles, serving large population centers in 23 states. Union Pacific has higher revenues, led by higher volume shipped, as well as higher average revenue per carload. In terms of profitability, Union Pacific has historically posted better net income margin when compared to CSX, though in 2018, CSX’s margin was slightly higher. Overall, it appears that Union Pacific’s operations are more efficient than CSX’s. Look at our interactive dashboard analysis on CSX vs UNP: How Have Revenues & Other Key Metrics Changed Over Recent Years? for more details.

Comparing CSX’s 2019 Revenues With That of Union Pacific

• CSX’s Total Revenue Contribution For 2019:
  • Merchandise: 64%
  • Coal: 17%
  • Intermodal: 15%
  • Others: 4%
• Union Pacific’s Total Revenue Contribution For 2019:
  • Premium: 29%
  • Industrial: 27%
  • Energy: 20%
  • Agriculture: 17%
  • Others: 7%

Union Pacific’s Revenue of $23 Billion Are Around 2x of CSX’s

• CSX’s revenues have declined from $12.7 billion in 2014 to $11.9 billion in 2019, primarily led by coal freight business, which has seen low volume due to favorable trends in natural gas prices, thereby creating lower demand for coal as an energy source. Look at our interactive dashboard analysis for more details on CSX’s revenues.
• Union Pacific revenues declined from $24.0 billion in 2014 to $21.7 billion in 2019 for the same reason as discussed above for CSX. Note that Union Pacific’s coal freight revenues are part of its Energy segment. Look at our analysis on Union Pacific’s revenues for more details.

Both CSX And Union Pacific Saw Similar Revenue Trend Over The Recent Years

• CSX’s revenues likely declined at an average annual rate of around 1% between 2014 and 2019, while that of Union Pacific declined 2%.
• The jump in 2018 revenues for both the companies can be attributed to higher Intermodal revenues, which benefited from capacity constraints in the trucking industry, amid full implementation of ELD Mandate (Electronic Logging Device). In fact, higher trucking capacity in 2019 resulted in high single-digit decline in Union Pacific’s Intermodal revenues in Q4 2019.

CSX’s Total Carloads Shipped (Including Intermodal Units) Has Been Lower Than That of Union Pacific’s

• CSX’s total carloads have declined from 6.8 million in 2014 to 6.2 million in 2019.
• This compares with 8.3 million carloads for Union Pacific in 2019, compared to 9.6 million in 2014.

CSX’s Average Revenue Per Carload Has Been Lower Than That of Union Pacific’s

• CSX’s Average Revenue Per Carload declined from $1,873 in 2014 to $1,716 in 2016, before increasing to $1,940 in 2019.
• Union Pacific’s Average Revenue Per Carload likely grew from $2,344  to 2,601 between 2014 and 2019.
• This can be attributed to product mix in transportation. For instance, agricultural products garner high average revenue per carload, and Union Pacific’s agricultural products shipped volume is over 2x than that of CSX’s.

Average Revenue Per Employee Has Been A Little Higher For Union Pacific

• Average Revenue Per Employee (ARPE) has fluctuated in the past for both companies.
• CSX ‘s ARPE declined from $405K in 2014 to $354K in 2016, but grew to $486K in 2018, led by a reduction in the workforce, amid its focus on improving efficiency and reducing operating ratio.
• Similarly, Union Pacific’s ARPE declined from $508K in 2014 to $465K in 2016, but grew thereafter to $544 in 2018, for similar reasons as stated above for CSX.

Union Pacific’s Net Income Margin Has Historically Been Better Than CSX’s

• CSX’s net income margin grew from 15.2% in 2014 to 27.9% in 2019.
• Union Pacific’s net income margin grew from 21.6% to 27.3% over the same period.
• The growth in margins over the recent years can be attributed to the focus of both the companies to reduce their expenses.

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