Joseph R. Hinrichs
President and Chief Executive Officer at CSX
Thank you, Sean. Before we discuss our outlook, I want to briefly touch on a couple of key ideas that we think about the ONE CSX concept and how it fits together with the fundamentals of scale railroading [Phonetic] at the core of this company. This past year has seen a lot of commentary from many different parties about what scale railroading is and how it's supposed to work. For us, it really is quite simple operating philosophy based on the 5 principles that you see across the top of slide 20.
The key, just as it is with the railroad network, is to keep everything in balance, optimize your assets and ensure you show respect for your employees; be disciplined in cost control; and maintain your client to good service. If you can't service your customers well and reliably, all the cost control in the world won't deliver a healthy growing business.
CSX has been tremendously successful over the last several years as the Company has undergone its transformation. In my view, we've done particularly well across the first three of these scale railroading principles. The opportunity for us now is to focus on getting to even better balance with those last two. We will redouble our efforts in serving our customers and ensuring that our employees, the people who are delivering that service to our customers, feel valued, appreciated and included. To address this and bring out the best of this operating model can deliver, we are building a ONE CSX culture that prioritizes our relationships and leverages our common goals.
Whether you are an employee, a customer or a shareholder, you want a strong and thriving CSX. A healthy culture leverages that alignment to do better together. Under each heading, you will see a couple of the ways we have brought these principles to life over the last year. At the bottom, we give examples of what we aim to do. As an example, for customer service, we have added the T&E resources we have needed to increase capacity, and we have built resilient momentum as our service measures have improved.
Now looking forward, it is critical that we ensure that our service metrics reflect our customer experience and that we are measuring and evaluating ourselves in the right way. We also know that we have to improve the way that we interface with our customers and make it easier to do business with us if we are going to win market share from trucks. Every week, we get together as a leadership team. We are challenging ourselves to find new ways to address these issues and take advantage of the great energy that we are creating here at CSX. We have tremendous talent here. And with these principles at our road map, we have a clear, collective goal.
Now, let's conclude with a review of our outlook for '23 as shown on slide 21. First, as our service levels keep improving, we expect to achieve overall volume growth for the year, which will outpace real GDP growth, driven largely by strong contributions from merchandise and coal, as Kevin discussed. That said, we do believe that international intermodal volume is likely to be soft, particularly over the first half of the year, as imports have slowed and retailer inventory levels have recovered.
Next, the pricing environment remains favorable for us. Our customers have experienced substantial inflation and understand that we face our own cost pressures, including the effects of the recent labor agreements. This transparency has helped us as we renew our pricing agreements, which will support our top line performance. That said, there are a couple of important things to note for 2023. First, we do expect revenues from intermodal storage to decline through the year as supply chain conditions improve. We currently believe it is reasonable to expect we will see a reduction of approximately $300 million in intermodal storage revenue compared to last year, which would imply a quarterly average close to levels seen in early 2021. Second, international met coal benchmarks have recovered from their lows of last fall, but remained volatile. High quality Australia met coal averaged roughly $355 in 2022 and sits at $315 today. It is likely that the average this year will be lower year-over-year, which will impact our coal RPU and our total revenue.
Now regarding profitability, we will face cost pressures in 2023, but we know that we can get better operationally. Where it is possible and where it makes sense, we will make every effort to realize efficiency gains and reduce some of the extra costs that we have been carrying to manage through the congestion and resource constraints of that post-pandemic period.
In the end, our margin performance will largely depend on our success in driving more volume through our network and realizing potential operating leverage. Finally, we estimate that our capital expenditures will increase to approximately $2.3 billion, driven by a full year of spending for Pan Am, additional equipment for Quality Carriers truck to rail conversion opportunities, investing in strategic high-return growth projects and the effects of inflation.
Now, before we close, I want to emphasize what an exciting time it is for all of us to be a part of the ONE CSX team. We have a common goal to profitably grow this railroad, and you are seeing the real progress that we are making toward that goal as we put people and resources into place. I am personally very optimistic about the opportunities ahead, and I look forward to updating you on the achievements throughout the year.
Thank you. And with that, we will now take your questions.
