Posts Tagged ‘CSX freight customers’

Most CSX Shippers Reporting Service Issues

August 3, 2017

A survey of CSX shippers has found more than 80 percent of those responding saying they have experienced service issues since the company initiated the precision scheduled railroading operating philosophy of its CEO, E. Hunter Harrison.

The results were reported in Railway Age, which quoted Cowen & Company Managing Director Jason Seidl as saying that “nearly 40 percent [of respondents] have switched some freight to Norfolk Southern, and 67 percent have transferred freight to a trucker.”

Sidel said this could lead to NS gaining additional market share gains in the third quarter of 2017, prompting a 5 percent increase in NS earnings per share if it grabs as much as 5 percent of CSX traffic.

“Shippers are moving or have already moved freight off CSX where they can,” Seidl said.

Although 37 percent of survey respondents said they are switching at least some freight to NS, nearly 50 percent of those not captive to CSX are moving a piece of their business to NS and two-thirds of [responding] shippers are moving some freight from CSX to trucking company.

The survey found that 20 percent of shippers are shifting less than 25 percent of eligible freight to NS, while 14 percent are transferring between 25 percent and 50 percent of freight.

Just 5 percent of survey respondents said they were moving more than half of their traffic to NS and about 40 percent are moving less than 25 percent of their freight to trucks.

“Our view is that NS could meaningfully benefit from the service-related issues at CSX over the next couple of quarters,” Seidl said. “We continue to like the stock and see NS achieving its sub-65 OR (operating ratio) goal before 2020. NS should also have an easier time raising prices over the near-term as we think shippers would be willing to accept them for reliable service.”

Despite the problems that CSX had had, Seidl said he sees them as transitory. “While it is painful for many shippers today, we expect that over the next 12-18 months CSX customers will be more pleased with the railroad’s service quality. We do not think volumes that are lost to NS or a trucker during this transition period will be permanently lost.”

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Harrison Acknowledges to Shippers CSX Service Issues

August 1, 2017

CSX head E. Hunter Harrison acknowledged to the railroad’s shippers on Monday that service problems exist and tried to assure then that the carrier is committed to “working with you individually to ensure you receive the support you require to meet your business needs.”

Harrison reached out to shippers in an email message that seemed to blame the service issues on a few people at CSX who have pushed back against the changes he brought and continue to do.

The email said most CSX employees and managers have embraced changes in the operating philosophy which have, among other things, resulted in longer trains and a phasing out of hump operations in classification yards in favor of flat switching.

“To those customers that have experienced such issues, we sincerely apologize,” Harrison wrote. “As we move forward, we will continue to address these internal personnel matters and our teams have recommitted themselves to reaching out to those affected to work through any service issues and resolve them as quickly as possible.”

The email comes in the wake of the Surface Transportation Board saying that it was more closely monitoring CSX service because of numerous informal complaints that it has received.

Trains magazine reported that one chemical shipper said that it had not seen service so poor since the carve-up of Conrail in 1999 by Norfolk Southern and CSX.

Arch Coal also complained about shoddy service. “We started seeing problems toward the tail end of Q2 and, frankly, the problems have gotten worse in the last 10 days,” Arch Coal President Paul Lang during his company’s second-quarter earnings call last week.

Lang said domestic and export shipments of coal have been adversely affected.

STB to Monitor CSX in Wake of Shipper Complaints

July 28, 2017

The U.S. Surface Transportation Board has notified CSX that it will closely monitor the railroad’s performance.

In a letter to CSX head E. Hunter Harrison, the STB said it would conduct weekly service calls with senior railroad executives.

The STB said some shippers have lodged informal complaints with the agency about the deterioration of service between April and June.

It was during that period that CSX began implementing the precision scheduled railroading operating philosophy that Harrison has long espoused.

“In particular, shippers have complained that transit times have increased significantly and/or become unpredictable; loaded and empty rail cars sit for days at yards; switching operations have become inconsistent and unreliable; car routings have become circuitous and inefficient; and CSX customer service personnel have been unable to provide meaningful assistance,” the STB wrote.

Congestion has hindered CSX operations at its St. Louis and New Orleans terminals and the railroad’s performance metrics indicate that trains are moving more slowly and cars are spending more time in yards, while the number of cars online has increased.

“We understand that these disruptions have forced a number of rail shippers and their customers to curtail production, temporarily halt operations, and/or utilize other transportation options,” the STB letter said.

The letter went onto cite CSX for not communicating well with it customers, saying that many shippers have been caught off guard by the service changes and didn’t have the lead time required to adjust their supply chains.

Earlier this week, STB officials and senior CSX officials had a meeting to discuss the railroad’s operations. CSX spokesman Rob Doolittle said the railroad will provide the information the STB has requested.

CSX Says On-Time Performance is Up 52%

May 19, 2017

A CSX executive this week touted improving performance metrics over the past two months, including a 52 percent improvement in on-time performance.

“We’re at the beginning of an amazing transformation,” CSX Chief Financial Officer Frank Lonegro said at the Bank of America Merrill Lynch 2017 Transportation Conference.

Lonegro said train velocity has risen by 14 percent and terminal dwell time has fallen by 11 percent.

On-time originations rose 16 percent to 91.6 percent while on-time arrivals jumped to 87.6 percent from just 57.8 percent.

Lonegro largely credited the improving metrics to new CEO E. Hunter Harrison’s precision scheduled railroad operating philosophy.

Harrison has been at CSX for 10 weeks. “He really has hit the ground running and has begun to implement precision scheduled railroading across our railroad,” Lonegro said.

During his presentation, Lonegro said CSX has become more efficient by hauling the same amount of tonnage on fewer trains.

Although its revenue-ton miles have held steady while the active train count has fallen by 15 percent, Lonegro said that will continue to improve.

He said CSX is creating a train plan that keeps terminals fluid and reduces the need for handling en route.

“Hunter’s philosophy is move the freight as far as you can as fast as you can and touch it as few times as you possibly can,” Lonegro said.

One highly visible change at CSX has been a reduction in hump yards. That is at odds with how CSX has operated.

“At CSX historically we have been a big believer that the most efficient way to class[ify] traffic is through a hump yard,” Lonegro said. “Hunter has totally debunked that.”

CSX has converted hump yards in Toledo, Ohio; Louisville, Kentucky; Hamlet, North Carolina; and Atlanta to flat-switching.

Reports have surfaced that yards in Cumberland, Maryland; and Selkirk, New York, will also lose their humps.

Lonegro said CSX is evaluating its eight remaining hump yards and expects to convert some to flat switching in the second quarter of this year.

In doing this, CSX has changed is operating plan so that traffic bypasses the yards except for cars destined for that location.

CSX will likely have between two and four active humps by the time the evaluation process is completed.

Lonegro also reported that CSX has stored 551 locomotives and parked, scrapped, or returned more than 22,000 freight cars.

He said the operating changes have thus far not prompted shippers to shift their business to Norfolk Southern.

“We’re really not seeing any market share shifts,” Lonegro says, although he acknowledged that there is a potential for service missteps that could anger some shippers.

Nonetheless, he said CSX expects to satisfy customers by providing faster transit times, improved on-time performance, and better cycle times of freight cars.

The better service and lower costs, he said, should enable CSX to grow its business, particularly at the expense of trucks.

CSX Aided 114 New Facilities in 2016

January 12, 2017

In an economic development report for 2016, CSX said that it worked with customers to help make possible 114 new or expanded facilities that are served by rail.

CSX logo 3CSX said that represented an investment of $9.5 billion that is expected to general 8,100 new jobs. In it for CSX is 136,000 new annual carloads.

This is in addition to more than 100 customers facilities that CSX began serving last year.

“The substantial capital investments announced by our customers last year included a new automotive plant and an ethane cracker facility to further leverage abundant domestic natural gas supplies,” said Derrick Smith, CSX vice president—strategic business development. “ We also saw strong activity that generated other energy projects, as well as facility construction or expansion to support agriculture and intermodal markets.”