US Economy Slowed in Third Quarter: CSX CEO
Lower natural gas prices, softer demand for thermal coal, and more stringent regulations led fewer coal shipments in the third quarter, but auto shipments remain strong, Michael Ward, CEO of railroad CSX, told "Squawk Box" on Wednesday.
"We had a very mild winter, natural gas prices were very low by historical measures and the (Environmental Protection Agency's) new regulations continue to put pressure on coal, " the CSX executive said following its earnings report.
This is significant for CSX, since coal makes up a quarter of the railroad's total shipments, the CEO said. Coal is also important for the other railroads, including Union Pacific and Norfolk Southern .
Ward noted that with low natural gas prices, older coal-fired power plants are being shuttered more quickly than anticipated. (Read More: Coal, Crude, Natural Gas: How Pros See Energy .)
The rest of the business is doing much better, however. "We're seeing good growth in the intermodal market and great growth in the automotive market, as well, " Ward said.
If you strip out coal, CSX's markets were up four percent in the quarter. That does represent a slowdown from the six percent increase seen in the second quarter, as "we are seeing the economy moderate somewhat, " the rail executive said.
The auto market could remain an area of strength. Ward noted that at 10.5 years, the U.S. auto fleet is the oldest it has ever been. With Americans not buying new cars during the recession , Ward said "we're catching up from some of that lack of demand."
For the third quarter, CSX posted earnings of 44 cents a share, a penny ahead of estimates, while revenue came in at $2.9 billion, down 2 percent.