Higher rates helped freight railroad CSX Corp boost profits by 14% despite a drop in coal shipments. CSX said that it earned USD 449 million in the first quarter, up from USD 395 million a year ago.

CSX said freight volumes rose just 1% in the first quarter compared with a year ago, but overall rates rose 5%

Coal accounts for more than one fourth of CSX revenue, and shipment volumes of that were down by 14%. But the company said it was able to boost coal rates by 10% to offset the decline.

Demand for coal used in generating power was hurt by a big drop in natural gas prices, which made that fuel more attractive to utilities. Mild winter weather didn’t increase demand, either.

CSX said the market for utility coal is likely to be even weaker in the second quarter, but the Jacksonville, Fla., company said it’s on track to top 2011 earnings this year.

Auto shipments, while a small portion of CSX revenue, jumped 18%. The railroad saw smaller increases for metals, forest products and food and consumer products. CSX charged higher rates in all those categories.

Mr Michael J Ward Chairman and CEO said the company was off to a fast start in a year that will be dynamic and challenging. He said most transportation markets were performing very well.

Source - Associated Press

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