CSX declines to comment on reports of a proposed offer from Canadian Pacific. Associated Press

CSX Corp. CSX -2.25% Chief Executive Michael Ward said Wednesday that railroad industry mergers could exacerbate congestion and traffic problems, not alleviate them.

Mr. Ward wouldnt directly address Canadian Pacific Railway Ltd. CP.T -3.77% s proposed merger with CSX during his companys third-quarter earnings conference call with analysts. The company had said it wouldnt comment on recent reports.

But in response to an analyst question if consolidation was needed to alleviate tightness in the rail industry, Mr. Ward argued it could make matters worse.

I think what we see is that all the railroads are increasing their capacity similar to what were doingand will be able to move Americas freight, he said. In a rail merger, you might actually see a step back. In the past youve seen severe disruptions in the wake of rail mergers, he added.

In response to another question, Mr. Ward said he believed rail regulators would be very concerned about the impact of a rail merger on rail service levels because the network has been slowed by the recent increases in rail volumes.

As you know the STB [Surface Transportation Board] is very concerned about the service levels.I would speculate [the regulators] would be very cautious, he said, citing the disruption that past mergers have caused.

Mr. Ward also articulated the consensus view among rail operators that the industrys problems this year are temporary and that railroadsincluding CSXare on the right path to fix them by investing capital to add more track and terminals, hiring more crews, and growing to meet the demand.

Jacksonville, Fla.-based CSX announced Tuesday record third-quarter earnings of $509 million, up from $455 million a year earlier. Revenue rose 8% to $3.22 billion, and total shipment volume grew 7%.

CSX didnt accept a merger approach last week from Canadian Pacific Chief Executive Hunter Harrison, The Wall Street Journal reported Sunday, citing people familiar with the talks. Discussions are still possible between the two companies, these people added.

A Canadian Pacific-CSX deal would give rise to an industry giant with a combined market value of about $62 billion and, potentially, an increased ability to exploit the North American energy boom.

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CSX-controlled rails run from the Midwest to refineries on the U.S. East Coast, but the railroad lacks direct access to North Dakota oil fields. Canadian Pacific has access to North Dakota oil-loading terminals. A deal would potentially create a single railroad operator that could haul crude from oil fields all the way to fuel-making plants in the Northeast.

On Wednesday, CSX executives told analysts that it plans to add 300 new locomotives to its fleet over the next few years. That is on top of 400 more locomotives added in 2014 compared with 2013.

One hundred of the new locomotives are due to arrive early next year. The company is hoping for the second hundred later in the year, according to Oscar Munoz, executive vice president and chief operating officer. Another 100 to 150 locomotives should be put into service by midyear as a result of an internal heavy repair effort, Mr. Munoz said.

Locomotive power is key to improving CSXs service levels. Executives said theyve hired an additional 1,250 train crews, 900 of which are currently in training. But locomotive power is a major cause of the railroads service challenges, which will continue until the end of the year.

I think we have got a lot of crews, but we need 100 or 200 more locomotives here over the next few months, to return to the companys prior on-time departure and arrival records, Mr. Munoz said. But getting locomotives is difficult. Everybody is sold out. There is not a single piece of power you can acquire.

Locomotive power was a big factor in the decrease in the railroads costs related to weather and network inefficiencies; those fell to $16 million in the latest quarter from $32 million in the second quarter, executive vice president and Chief Financial Officer Fredrik Eliasson said on the earnings call. The difference, he said, was the railroads ability to secure additional leases and ramp up repairs.

Executives told analysts that they had been working with other major freight railroads to ensure that rail operations through Chicago go more smoothly this winter than last, when winter storms created rail delays that lasted well into this year.

Were going to 24/7 operations, Mr. Munoz said. And the railroads are putting in a system, a scorecard, if you will, to improve communication and better tools to get facts and data, he said.

Chicago is important because Canadian Pacifics Mr. Harrison has said it is one of the major rail bottlenecks that could be alleviated by a merger with CSX.