CSX Idles Locomotives, Extends Sidings for Longer Trains, Seeks Cost Savings and Price Increases

CSX has taken 400 locomotives out of service and plans to lengthen some sidings to allow longer freight trains.

It is all part of the company’s efforts to save $250 million in the face of falling traffic, particularly coal traffic.

CSX expects its coal traffic will fall by 25 percent in 2016 for a revenue loss of $500 million.

CEO Michael Ward said during a first quarter earnings call that the railroad is seeking to offset the loss of coal revenue by focusing on pricing, efficiency gains, and closing lines and facilities.

For several months, CSX has sought to reduce operating costs by running longer trains.

Cindy Sanborn, executive vice president and chief operating officer, said that train lengths have increased by 16 percent to an average of 6,400 feet

“We’re bumping up against challenges in single-track territory where siding length is an issue for us,” Sanborn said.

She cited as an example the Nashville-Cincinnati route where CSX is extending sidings that limit train length to 6,500 feet.

Sidings are being lengthened in Kentucky at Cave Creek and Morgantown and in Tennessee at Mitchellville. The longer sidings are expected to go into service this summer.

“These extensions will support strong current and future volume on the corridor, especially for our automotive market,” said CSX spokeswoman Melanie Cost.

Sanborn said that although overall train speeds on CSX trail those of other Class 1 railroads, “we’re never satisfied with where we are.”

She noted that the service quality that CSX is providing over double-track routes has enabled it to increase prices.

CSX is seeking a balance between productivity and efficiency, Sanborn said. Adding density on its primary routes will enable the railroad to find opportunities for additional savings.

“These siding projects are being driven by business needs and future opportunities rather than any specific ‘target’ train length,” Cost said in an interview with Trains magazine. “CSX’s work to build longer sidings is part of the company’s overall strategic investment to match network resources to the changing business mix we see – as we manage through the decline in coal and make decisions now to maximize long-term opportunities in merchandise, including automotive and intermodal.”

Sanborn insisted that the changes that CSX is making are not short-term reactions to temporary economic conditions.

Asked if CSX plans to cut its coal branch network further, Sanford said the company will continue to look at demand and take steps to reduce costs as needed.

“We’re never done any of this,” Sanborn said in reference to the cutbacks the railroad has made in its Appalachian coal field territory.

CSX is now operating with 10 percent fewer locomotives than it had in the first quarter of 2015.

Sanborn said 275 locomotives are in storage and the railroad will return 96 leased units in the second and third quarters.

However, CSX still expects to take delivery of 100 new locomotives this year.

Tags: Cindy Sanborn, CSX, CSX CEO Michael Ward, CSX locomotives