The U.S. economy should grow in the third quarter, but at a more modest level, railroad CSXCEO Michael Ward, told CNBC’s “Squawk Box.”
“I think we're seeing in recent weeks a little more cautiousness in the economy, but I will say, we do expect to see growth, maybe at a more modest level, but we do expect to see growth in the third quarter," Ward said.
CSX’s second-quarter earnings were impacted by weakness in coal shipments, given the low price of natural gas, Ward said. “It was down about 37 percent on a year-over-year basis,” he noted.
While U.S. coal shipments weakened, there’s more U.S. coal headed overseas, Ward said.
“The one interesting development we've seen in the coal market is the growth of export coal, going overseas to Europe and Asia,” Ward stated. “That market was up about 40 percent for us in this current quarter, so we are seeing coal usage in the remainder of the world actually increase fairly significantly.”
Other parts of the business are also picking up the slack as U.S. coal shipments weaken. Automotive was up 27 percent and intermodal shipments were up 8 percent, Ward said. “While our carloads were flat, if you exclude the impact of utility coal, we were up 6 percent,” he said.
Lower gas prices haven't yet made trucking a more competitive means of shipping goods, Ward noted. “Our intermodal was up about 8 percent in the quarter because (truckers) still have highway congestion and driver shortages,” Ward noted. (Related: Jobs Employers Can't Fill).
For the second quarter, CSX posted earnings of $512 million, or 49 cents per share. That was 2 cents better than analyst expectations and up from $506 million, or 46 cents per share, a year earlier.
Revenue of $3.01 billion fell short of the $3.04 billion estimate among analysts surveyed by FactSet.