CSX began construction of its Quebec Intermodal terminal in March. This new terminal will connect the Montreal region and Quebec with CSX's 21,000 mile rail network in the U.S. The terminal is expected to be operational by 2015. CSX will spend $107 million on this project in order to tap business opportunities from shippers in Montreal and Quebec City. The shippers, through this terminal, will have quick and efficient access to markets across the U.S. The terminal will be able to handle up to 100,000 containers per year. With this expansion, CSX has huge potential to acquire a good market share in intermodal business.
Furthermore, the prospects for coal seem to be on the upswing. Demand of utility coal is increasing in the U.S. domestic market. The Illinois Basin reported an increased demand of coal for domestic use. The utility coal from Illinois Basin is priced around $3.5 per million British thermal units, or MMBtu. The increased demand of utility coal is a result of higher natural-gas prices, in the range of $4 to $5 per MMBtu. This trend will be beneficial for CSX (NYSE: CSX), which is one of the major railroad carriers in this region.
It reported an increase in its Illinois Basin coal carloads, for domestic use, from 12% in 2010 to 28% in the first quarter of 2013. CSX has seen a significant shift in demand for its utilities to Illinois Basin coal from Central Appalachian coal, as Illinois Basin acts as a source of low-cost utility coal.
Demand for domestic coal will further increase due to high natural-gas prices and weather conditions. The total coal consumption in the U.S. is forecast to increase from 890 million short tons, or MMst, in 2012, to 954 MMst in 2013. The company anticipates an increase in its domestic coal shipments, as Illinois Basin miners are willing to ship more of their low-cost coal.
Good luck/fortune to all CSX longs, but patience is required.