Foote, CSX Facing a Trust Deficit

During his remarks last week to investors to announce fourth quarter financial results, CSX CEO James Foote spoke at length about his belief that the carrier can win back market share from trucks.

As Foote sees it, doing that is pretty simple. CSX must get shippers to trust the railroad by offering reliable service.

That of course will be easier said than done, but Foote and his management team have a plan.

It begins with recognizing that rail service in recent years has been inconsistent.

That has led to a loss for CSX of nearly 25 percent of merchandise traffic over the past two decades.

However, the good news for CSX is that over the past three years merchandise traffic has held fairly steady.

Still, Foote recognizes that diverting business from trucks to rail won’t happen quickly.

Foote said CSX needs to provide truck-like reliability and show that over a period of time.

In late 2019 CSX implemented its ShipCSX portal in which it provides trip compliance information for every carload shipment and container.

The data shows the on-time performance for each car or container. Foote said when CSX began tracking that information two years ago the on-time performance was 35 percent.

Foote said that figure is now 85 percent for carload traffic.

“We need to show him through this transparent tool that he can trust us to get his product there when we said we’re going to get it there,” Foote said.

What shippers will gain, he said, is a 15 percent saving from shipping by rail versus by truck.

The reward for CSX, Foote noted, will be growth in merchandise and intermodal traffic that will be faster than the industry average.

The reward for that could be considerable. Foote said there are billions of dollars of opportunity out there for railroads to snatch back from trucking companies.

CSX already knows those shippers. Foote noted that shippers who are using boxcars to move freight via CSX trains are also shipping between half to 60 percent of their products by truck because it is more reliable.

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