Posts Tagged ‘CSX line sales’

CSX to Curtail Sale of Margin Routes

December 5, 2019

CSX CEO James Foote signaled this week that the carrier does not plan to sell any more routes other than those already on the market.

Speaking to the Credit Suisse seventh annual Industrials Conference, Foote said selling marginal routes was no longer an effective way for a Class 1 carrier to continue service on a route while reducing labor costs by having a short-line railroad operate it.

He said that is because Class 1 carriers have found other ways to cut costs and become more efficient.

“We’re going to be very, very, very careful before we would ever sell anything,” Foote said.

He added that CSX is seeking to get into new markets and grow its traffic.

CSX had studied listing for sale routes totaling about 4,500 miles of its 8,000-mile network.

That had stemmed from a route review ordered by the late E. Hunter Harrison when he was CSX CEO. Foote took over CSX after Harrison died in December 2017.

The track being offered for sale wasn’t considered part of the railroad’s network.

But in retrospect, Foote said CSX found that short line traffic growth on routes it sold has been nil.

Rather than rely on short-line partners to grow business Foote said CSX wants to do that itself.

None of the major track sales that CSX has closed on to date have involve routes in Ohio.

However, one of the routes that CSX still has on the block is the Marietta Subdivision, which extends from Parkersburg, West Virginia, to near Beverly, Ohio, on former Baltimore & Ohio trackage.

Also for sale are the Cumberland Valley feeder lines east of Corbin, Kentucky.

A portion of a 126-mile line located primarily in Illinois that CSX sold to Watco also included some track in Indiana.

Watco Hopes to take Over CSX Routes in Early September

August 14, 2018

Two CSX routes in Indiana and Illinois are expected to begin operation in early September by subsidies of short-line operator Watco.

The Decatur & Eastern Illinois Railroad will take over the Decatur Subdivision in Illinois and the neighboring Danville Secondary in Indiana on or around Sept. 6, pending regulatory approval, Watco said in a filing with the Surface Transportation Board.

Watco recently landed the support of agricultural products company Archer Daniels Midland, which is one of the largest shippers in the territory.

ADM recently told the U.S. Suraface Transportation Board that it supports Watco’s big to buy 126.7 miles of track from CSX.

The sale also includes 3.6 miles of trackage rights on Canadian National (former Illinois Central) in Decatur, Illinois.

The Decatur Sub (nee Baltimore & Ohio) extends between Montezuma, Indiana, and Decatur. The Danville Secondary (nee New York Central) extends between Terre Haute, Indiana, and Olivet, Illinois, and includes the Paris Industrial Track in Paris, Illinois.

Watco projects revenue to top $5 million from the 14 customers currently served by CSX routes.

The STB filings do not disclose the sale price of the routes.

A Watco spokeswoman said the carrier plans to assign six GP38-2s to the routes. The company plans to hire four conductors, five engineers, a locomotive laborer, a track inspector, two track laborers, and two track foremen.

CSX put the routes up for sale last January.

CSX Offering 6 More Lines for Sale

June 7, 2018

CSX has put up for sale six more rail lines, including one located in Ohio.

The rail lines total 650 miles and may be purchased by one buyer, multiple buyers or may not be sold at all, depending on the bids received. The lines are:

  • Massena Line: Line extending north from Syracuse, N.Y. to Canada.
  • Baldwinsville Subdivision: Branch line west of Syracuse, New York.
  • West Albany and Rensselaer, New York: A Collection of properties near Albany.
  • Cumberland Valley: Feeder lines extending east of Corbin, Kentucky.
  • Eastern North Carolina: Branch lines terminating in Grangers and Plymouth, North Carolina.
  • Marietta Subdivision: Branch line extending north out of Parkersburg, West Viginia, into Ohio via Marietta, Ohio.

CSX said in a new release that no short-term effects on customers are expected as a result of the sales process.

CSX to Keep 4 Humps, Unload Some Trackage

May 24, 2018

CSX plans to keep four hump yards but is reviewing other “underused” facilities, including 8,000 miles of trackage that may be abandoned or sold.

CEO James Foote disclosed the plans during a speech to the Wolfe Research Global Transportation Conference.

“We’re doing a good job of analyzing about 8,000 miles of railroad and trying to determine what segments fit into  . . . three baskets,” Foote said.

He identified those are core and non-core routes, and lines that are somewhere in the middle and need further analysis to determine whether they should be retained or spun off.

The hump yards that CSX plans to keep open for now are located in Waycross, Georgia.; Selkirk, New York; Indianapolis (Avon); and Cincinnati (Queensgate).

Foote said Waycross and Selkirk are anchors in their regions of the CSX network.

Avon and Queesgate have been processing cars at record levels. CSX briefly closed Avon Yard as a hump and talked about moving its yarding duties to smaller yards in Indianapolis but backed away from those plans after its network became congested.

CSX will continue to seek to consolidate underused local switching and support yards in an effort to find more efficiency gains.

Foote contended that railroad’s financial goals for the next three years are not necessarily contingent on selling off routes.

One of those objectives is to have a 60 percent operating ratio which is the percent of revenue that is being devoted to operating expenses.

“This is not something that was in the plan that says if we don’t do this we can’t hit a 60 operating ratio,” Foote said. “This is totally separate and independent. And again to a large degree, it goes back to learning, understanding the complete footprint of the CSX network and how it should be most efficiently and effectively run.”

The financial plan, which governs operations through 2020, calls for cost-cutting, efficiency gains and revenue increases.

This include selling real estate, which is expected to net $300 million. The plan also identified $500 million in potential line sales.

CSX said it is talking with numerous would-be buyers who have expressed interest in routes the Class 1 carrier might be willing to sell.

The carrier has said it doesn’t have a target number for how many miles it wants to sell or abandon.

Chief Financial Officer Frank Lonegro said that management recently held an “intense dialogue” about core and non-core routes with the company’s board or directors.

Lonegro said management outlined what routes were considered part of the core and which lines no longer fit into CSX’s plans.

“Precision scheduled railroading has clearly given us the opportunity to look more at redundant routes and branch lines that don’t carry very much traffic,” he said.

CSX Will Keep New Castle Sub

January 24, 2018

The review of the future of the CSX New Castle Subdivision turned out to be brief.

Trains magazine, which reported earlier this week that the former Baltimore & Ohio route between Baltimore and Greenwich, Ohio, was among 8,000 miles of routes that CSX was looking to potentially sell or lease, reported a day later that CSX plans to continue operating the route.

Trains said that new Executive Vice President of Operations Edmond Harris pushed for keeping the line, which passes through Akron, Kent and Youngstown.

In both reports, the magazine did not name its sources, saying only that the information came from “people familiar with the matter.”

The New Castle Sub begins at Greenwich and extends eastward to West Pittsburgh. If CSX were to sell or lease the line that hosts about 24 trains a day it would in effect be pulling out of Pittsburgh.

The Baltimore-Greenwich route was once the B&O’s primary route between Chicago and Baltimore/Washington and hosted such passenger trains as the Capitol Limited, Diplomat, Shenandoah and Ambassador.

Trains said that a CSX spokesman would not confirm the decision to exclude the Baltimore-Greenwich line from consideration for sale or lease, nor would the carrier affirm the accuracy of the list that the magazine published on its website.

The ex-B&O route west of Greenwich is CSX’s primary freight route between Chicago and the middle Atlantic and New England regions of the East Coast.

Anthony Hatch of ABH Consulting told Trains that he expects CSX to reveal more information about its potential line sales or leases during an investor’s conference to be held on March 1 in New York.

Hatch said he was surprised that CSX would consider selling or leasing as much as 8,000 miles of track, calling it “serious stuff.” The 8,000 route miles would represent a third of the railroad’s 21,000-mile network.

In its initial report, Trains said that not all 8,000 of those miles were expected to actually be sold or leased to a short line, regional or startup operator.

A few routes in Illinois and Florida have already been offered by CSX for sale or lease.

CSX Will, First and Foremost, Protect Its Own Financial Interests in Line Sales or Leases

January 23, 2018

Many years ago when I was a college student intern at the Illinois Department of Transportation, one of my co-workers in the Bureau of Planning schooled me on what CSX is seeking to do today.

The Illinois Central Gulf Railroad was slimming down its route network much as CSX is doing today.

ICG was seeking to abandon a web of former Illinois Central Railroad branch lines in Illinois whose primary commodity handled was grain.

My fellow planner quoted officials of the ICG as saying “we’re going to get that grain one way or another.”

Even if the grain was taken away from those scores of small town grain elevators that dotted the Illinois prairie like rural skyscrapers by truck rather than in covered hopper rail cars, it had a long way to go to reach its final destination.

Those trucks leaving the elevators were not bound for a port on the Gulf of Mexico or the Mississippi or Ohio rivers.

The grain traveled by truck a relatively short distance to a regional grain facility such as the one operated by Cargil in Tuscola, Illinois, where unit trains were made up to move the grain onward toward its final destination, whether for export or domestic use.

ICG would continue to make good money hauling grain while getting rid of the expense of maintaining hundreds of miles of branch lines and paying union scales wages and benefits to the railroaders whose trains ran once a day or less on those branches.

The routes that CSX is seeking to lease or sell are not necessarily 25-mph or 10-mph branch lines in need of millions of dollars of rebuilding as was the case with many of the lines the ICG abandoned in the 1970s. Some of them, like the New Castle Sub, are significant mainlines handling much overhead traffic.

But they do cost a sizable amount of money to maintain and the CSX employees who operate the trains on those routes make Class 1 union scale wages and benefits. CSX would rather see that money wind up in the pockets of its shareholders or used for other purposes, such as buying back its stock.

Like the ICG in the 1970s, CSX will do all that it can to keep most of the business generated by its “surplus” routes while not having to pay to maintain or operate them.

CSX doesn’t do much business in Akron. What business there is could be handled by the Wheeling & Lake Erie, which already has a considerable presence in town.

But the Wheeling won’t be hauling most of that freight to its final destination. How that freight reaches its destination will come down to how those sale or lease contracts are written.

The ICG also spun off most of the former Gulf, Mobile & Ohio mainline between Chicago and St. Louis to an upstart known as the Chicago, Missouri & Western.

ICG was careful to keep for itself the more financially attractive elements of the route, including ownership and operation of the track between Chicago and Joliet, Illinois.

CM&W quickly found the traffic it received from the ICG was not what it thought it had been promised.

CM&W had overpaid for the ex-GM&O and couldn’t earn enough to pay its debts and get back its investment.

There are, of course, numerous success stories in which a short line or regional leased or purchased a route from a Class 1 and was able to make a go of it due to lower labor costs and more attentive customer relations policies.

Such was the case when the late Jerry Jacobson leased some track from CSX for his Ohio Central System.

It remains to be seen how much, if any, of the New Castle Sub that CSX will be willing to part with.

Aside from whatever business there is to be had in Akron, there is considerable auto rack business at Lordstown and some business in the Youngstown area.

CSX is not going to put itself in a position where it is likely to lose most of that business to Norfolk Southern for the long haul.

We’ve seen this game played before. Route rationalization has been the modus operandi of Class 1 railroads for years. That is how the modern W&LE got started. We’re about to see it play out again.