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Despite the soft economy and weak demand for building materials, appliances and automobiles, Kansas City Southern increased traffic volume in the second quarter. The Class I also boosted productivity, posting gains in velocity and locomotive availability, and a drop in terminal dwell times.

As a result, the Class I generated record revenue of $486.2 million, up 13.8 percent, and earned operating income of $104.6 million, up 29.9 percent compared with second-quarter 2007 totals. In addition, net income nearly doubled to $50.5 million and KCS' operating ratio dropped 2 points to 78.5.

Revenue growth was driven by pricing gains, significant business growth in certain units and increased fuel surcharges. Chemical and petroleum products revenue jumped 19.9 percent to $93.9 million; agricultural and minerals revenue rose 18.4 percent to $117.7 million; intermodal and automotive revenue increased 15.7 percent to $72.4 million; industrial and consumer products revenue rose 12.4 percent to $140 million; and coal revenue went up 5.7 percent to $48.1 million.

Carloadings increased 1.1 percent to 465,351 units compared with second-quarter 2007's total primarily because chemical/petroleum products traffic jumped 13.2 percent to 64,563 units and intermodal carloads rose 5.2 percent to 127,512 units. Coal traffic declined 11.5 percent to 68,702 units.

"Volume pressure in [some] areas was more than compensated for by double-digit volume gains in chemicals, metals and scrap, and a 44 percent increase in container volumes out of [Mexico's] Lázaro Cárdenas," said KCS Chairman and Chief Executive Officer Mike Haverty in a prepared statement. "KCS' diversified revenue portfolio and unique cross-border network characterized by a well-balanced mix of established customers and new business opportunities are central to the company's belief that we will be the fastest growing railroad in North America over the foreseeable future."

Operating expenses — driven up by a 38.8 percent jump in fuel costs — proved to be the lone negative on KCS' ledger. Expenses totaling $381.6 million rose 10.9 percent compared with second-quarter 2007's total. Excluding the impact of fuel, operating expenses rose 4.3 percent.