Posts Tagged ‘Cindy Sanborn’

Harrison Gives Preview of What’s in Store at CSX

April 21, 2017

CSX CEO E. Hunter Harrison gave a preview on Thursday about what is in store at the railroad in the coming months and years.

Speaking during a conference call with Wall Street investors, Harrison called the CSX network a bowl of spaghetti when compared to the linear-oriented systems he oversaw at Canadian Pacific, Canadian National and Illinois Central.

E. Hunter Harrison

Although he thinks that CSX does well in moving intermodal trains, Harrison believes merchandise freight needs to move faster.

The average speed of CSX merchandise freight is now 18 mph between terminals, but Harrison believes it could be boosted to 27 to 28 mph.

One way to boost transit times is by skipping terminals. Ultimately, Harrison wants to see CSX provide merchandise service that is on a par with trucks.

CSX Chief Operating Officer Cindy Sanborn said CSX has made two significant operating changes since Harrison arrived.

Some traffic that had been moving in unit trains has been merged into merchandise trains and four of the railroad’s 12 hump yards have been converted to flat switching.

Sanborn said the changes will allow CSX to provide seven-day-a-week service, bring balance to the system, increase train length, cut terminal dwell time and reduce the time that freight spends in transit.

CSX is expected to continue closing humps although Sanborn said she doesn’t know by how many because management is studying each yard individually.

Harrison described hump yards as a relic of an era when a much higher percentage of rail freight traffic was merchandise service.

In a related matter, Harrison said CSX will consolidate yards in areas where multiple yards now exist and sell the land used by yards that are closed.

There was speculation earlier that CSX would sell some secondary lines, but Harrison said he doesn’t expect any major line sales in 2017 because management is focusing on improving operations of the current network.

Other steps CSX plans to make, Harrison said, include having fewer train sets devoted to unit coal train service, but having faster cyling of cars between mines and customers.

CSX is not looking to drop some of its less-profitable merchandise traffic as Canadian Pacific did while Harrison was that railroad’s CEO.

“No, we’re not looking at demarketing,” he said. “We’re looking at marketing.”

As predicted, Harrison will trim the CSX work force. The railroad now has a hiring freeze in place and expects to lose 9 percent of its work force through attrition.

He added, though, that management does not have a target for work force cuts.

Another labor-related change may see CSX pull out of national negotiations with labor unions and instead bargain directly with the unions.

Harrison would like to see train and engine crews paid by the hour in return for the company offering job guarantees. Ultimately, Harrison said he wants to lower T&E costs by 30 to 35 percent.

One area in which Harrison does not expect change is the number of crew members on each train. “I’m not a one-man crew advocate,” he said. “ . . . to take a 20,000 ton train on line of road, with one person, I don’t think it’s good business,”

Sounding like a union officer, Harrison said there are safety issues with one-person crews and he sees the value of having extra set of eyes and ears in the cab.

If one crew member had to deal with such things as a broken air hose or a knuckle failure, that could result in delays.

Harrison said one-person crews might make sense in some situation, citing switching at mines.

CSX Expects to See Earnings of 8 Cents Per Share in 4th Quarter 2016, Sanborn Tells Conference

November 11, 2016

CSX expects its earnings per share in the fourth quarter of 2016 to be eight cents.

CSX logo 1“While we now expect fourth-quarter earnings per share to be down, absent the eight-cent impact, the company’s earnings remain consistent with its prior guidance of flat to slightly down from the prior year,” said Executive Vice President and Chief Operating Officer Cindy Sanborn.

She gave that assessment to analysts attending the Baird’s 2016 Industrial Conference in Chicago on Nov. 9.

Sanborn said volume will be roughly flat on a reported basis, which includes an extra accounting week in the fourth quarter this year.

However, management expects strong cost performance to help offset that and result in a solid financial performance throughout the year.

Sanborn said that through the third quarter CSX has posted about $550 million in cost savings through efficiency initiatives and volume-variable savings.

Cost cutting has been undertaken in labor, fuel and assets expenses through gains achieved with train length and crew savings, record fuel efficiency, and improved locomotive productivity and asset reliability.

In the long term, CSX expects to transition away from coal traffic and toward more service-sensitive merchandise and intermodal markets.

CSX expects to have an operating ratio in the mid-60s.

CSX Says 2nd Quarter Profits Fell 20%

July 16, 2016

A 34 percent decline in coal traffic played a major role in CSX seeing its second quarter profit drop by 20 percent.

Earnings per share for the quarter declined 16 percent to 47 cents on revenue of $2.7 billion. The net earnings of $445 million is a 20 percent decline from the second quarter of 2015.

CSX logo 3“This continues to be a challenging environment,” CEO Michael Ward said during the company’s earnings call.

CSX saw a 9 percent decline in overall traffic volume with every traffic category posting losses except for minerals and automotive, which were up 13 percent and 1 percent respectively.

CSX did manage to reduce expenses by 9 percent during the second quarter, but its revenue fell by 12 percent.

The railroad said it had efficiency gains of $96 million for the period, lower volume-related costs of $86 million, and $56 million from reduced fuel prices.

The operating ratio was 68.9 percent compared with 66.8 percent for the second quarter of 2015.

Chief Financial Officer Frank Lonegro said during the call that CSX expects to produce nearly $350 million of efficiency savings this year, which is an improvement of the original target of more $250 million.

Lonegro said CSX will continue to “turn over every rock” in an effort to bring expenses in line with revenue.

Among the measures CSX has taken to cut costs are mothballing 350 locomotives.

It still plans to take delivery of 65 new locomotives this year, which means additional active engines are likely to be placed in storage. The new locomotives were ordered in 2014.

CSX Chief Operating Officer Cindy Sanborn said the CSX active locomotive fleet has been reduced by 10 percent, which she said is in line with the decline in gross ton miles.

“I doubt you would see us in the market for new locomotives” in 2017 and 2018, Lonegro said.

Lonegro said CSX will probably rebuild some of its four-axle units used for switching and local service.

The employee head count for the quarter was on average 4,489 less than it was in 2015 for the same period.

Railroad executives said operational performance improved with on-time originations hitting 88 percent during the second quarter, which they said is a 33 percent improvement. On-time arrivals were 69 percent, a 44 percent improvement.

Ward said that “service continued to meet and exceed customer expectations.”

Fredrik Eliasson, chief sales and marketing officer, said that in a lower volume business climate improving service is critical to maintaining strong pricing.

Sanborn said CSX is trying to strike a balance between maintaining service levels and cutting costs by implementing such measures as running longer trains and using variable scheduling, Sanborn said.

“We are making the right tradeoffs between productivity and service,” Eliasson said.

CSX expects to see full-year volume and earnings declines with the third quarter presenting major challenges.

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

April 21, 2016

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.

CSX logo 3CEO 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.