Posts Tagged ‘CSX operations’

CSX Extolls Benefits of Precision Scheduled Railroading Even as the Benefits of it Have Not Helped All Shippers

July 20, 2017

Even as CSX CEO E. Hunter Harrison was extolling the virtues of his precision scheduled railroading model in an earnings call with investors and analysts, the railroad’s management was acknowledging that it was having some service issues.

Harrison said there would be some inevitable pain and suffering before operations are running smoothly.

“I thought we had a hell of a quarter,” Harrison said in the wake of the railroad’s announcement earlier this week that during the second quarter of this year profits rose, the operating ratio improved, and traffic and revenue were on the rise.

CSX Chief Marketing Officer Fredrik Eliasson said that such important service metrics as terminal dwell time, average train speed, and on-time performance were better during the second quarter.

Eliasson conceded that service improvements have not been felt everywhere on the railroad. “There are certain places where we are not there yet,” he said while declining to provide customer satisfaction metrics.

A report published on the Trains magazine website said that not all shippers have felt those benefits.

“A large number of our members have said they are experiencing serious problems with their service from CSX,” Scott Jensen, a spokesman for the American Chemistry Council, told the magazine. “Some have even reported that it has caused their customers to temporarily shut down operations.”

Trains reported that the scope of the service problems appear to be growing and quoted an unnamed chemical shipper as saying that transit times have increased by 48 hours in several key lanes.

Jay Roman, president of Escalation Consultants, a Maryland-based firm that helps merchandise and bulk shippers negotiate contracts with railroads, told Trains that what the CSX metrics show is not what he has been hearing from shippers.

“There seems to be a disconnect between the data and what shippers are running into,” he said, noting that some shippers have experienced a reduction in local service and report having problems with car supply.

A survey of rail shippers conducted by Cowen & Company this month found that 24 percent of them ranked CSX service as “poor.”

Nonetheless, another unidentified shipper told Trains that there has been significant transit time improvement  and that his company’s car cycle times dropped by eight days over the span of a month.

“We are asking our customers to hang with us,” Ellison said. He said that he talks with shippers every day to assure them that conditions will improve.

CSX managers contend that no shippers have taken their business to Norfolk Southern or put it on the highway due to service issues.

“This service disruption has been way overplayed,” Harrison said. He said approximately 500 customers account for 90 percent of CSX’s traffic and two could make a case that they have experienced a “major disruption.”

In one of those cases, Harrison said service slid back to previous levels, which he attributed to a labor slowdown that he described as “pushback by some of the troops.”

CSX has stored nearly 900 locomotives and expects to put another 100 units in mothballs. The active car fleet has been reduced by 60,000 as CSX seeks to move the same level of tonnage on fewer trains.

Train length has averaged 6,500 feet and most trains now operate daily rather than five or six days a week as had been the case before Harrison arrived.

Chief Financial Officer Frank Lonegro said train length will continue to grow as CSX continues to move unit train traffic into its merchandise train network.

During the second quarter, terminal dwell time improved 2 percent to 24.4 hours, although dwell time is up significantly at some terminals since CSX ceased humping operations at seven yards.

CSX management is studying why dwell time has increased to 40 or 50 hours at some yards.

Train velocity improved 3 percent, to 21.7 mph and and fuel efficiency improved 5 percent as the railroad stored older, less-efficient locomotives.

In response to a question, Harrison said CSX will shift from a cost-cutting mode to a growth strategy if it continues to control its costs.

“A lot of this will happen in the post-Harrison era. If we do our job today in laying the foundation, there will be a lot of opportunity for growth,” he said.

Harrison described what CSX is doing as balancing cost and service. The railroad will need to bring in more revenue and not just cut costs.

The CSX head also said that just because the railroad is closing hump operations doesn’t mean it plans to sell the land they use.

“We’re not having a garage sale here,” Harrison said. If traffic continue to grow, that yard capacity may be needed again.

As for the short-term future, CSX management expressed a favorable third-quarter outlook for two-thirds of its traffic, including export coal, intermodal, agriculture and food, metals and equipment, and minerals.

CSX managers have a neutral outlook for fertilizers and forest products, which account for 8 percent of the railroad’s traffic.

The outlook is seen as unfavorable for 26 percent of traffic, including automotive, chemicals, and domestic coal.

CSX plans to discuss its long-term strategy and outlook during an investor conference scheduled for Oct. 29 and 30 in Palm Beach, Florida.

CSX Converts Cumberland Hump to Flat Switching

May 22, 2017

As expected, CSX last week converted its hump yard in Cumberland, Maryland, to flat switching.

It is the fifth such yard to have its hump closed since E. Hunter Harrison became CEO in March and implemented his precision scheduled railroading operating philosophy.

Among other things, that approach looks with disfavor upon hump yards in the belief that they add cost and transit time to freight movements.

Other hump yards that have been converted to flat switching are located in Toledo, Ohio; Louisville, Kentucky.; Hamlet, North Carolina; and Atlanta.

A memo sent to CSX employees last week indicated that the hump at Selkirk, New York, will also be closed in favor of flat switching.

The remaining CSX hump yards are in Waycross, Georgia; Birmingham, Alabama; Nashville, Tennessee; Cincinnati; Avon, Indiana (Indianapolis); and Willard, Ohio.

CSX managers have indicated that those yards are being evaluated and that the railroad expects it could have between two to four hump yards left in its system once that review is completed later this year.

Trains magazine reported that when CSX closes a hump, it does the flat switching on the receiving and departure tracks. The classification bowl tracks stand empty.

The railroad said track and switches from the classification bowls will in time be used elsewhere.

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 Closing Stanley Yard Hump in Toledo

March 29, 2017

CSX plans to close the hump at Stanley Yard in Toledo, rearrange the schedules of trains originating there and convert the facility to flat switching.

The changes were to begin this week and be phased in over a period o f weeks.

A CSX spokeswoman told Trains magazine that the move will result in the elimination of 34 jobs. The yard will still have 40 workers once the restructuring is completed.

The laid off employees will be train service and maintenance employees, the Toledo Blade reported. CSX employs 360 workers in the Toledo area.

It will be the second time that CSX has reduced operations at Stanley.

It closed in spring 2004 but within days the railroad had resumed flat switching there and it reopened the hump that July due to freight congestion in neighboring rail yards.

Stanley Yard is a former Toledo & Ohio Central (later part of the New York Central) yard and one of two hump yards on CSX in Toledo.

Walbridge Yard, a former Chesapeake & Ohio facility, but its hump is no longer used.

Instead, Walbridge is used to sort auto rack cars and store unit trains of coal, grain and other bulk commodities that do not require en route sorting.

Stanley is the second CSX hump yard to be closed since E. Hunter Harrison became CEO on March 6.

The railroad also plans to cease hump operations at Tilford Yard in Atlanta.

CSX will have two hump yards left in Ohio at Willard and Queensgate Yard in Cincinnati.

CSX is framing the closing of the Tilford and Stanley hump yards as a cost cutting move that will make the railroad more efficient.

Among the trains that originate at Stanley are Q319 to Indianapolis; Q322 to Flint, Michigan; Q392 to Detroit; Q394 to Cumberland, Maryland (via Willard);  Q507 to Cincinnati; Q509 to Chicago; and Q511 to Louisville, Kentucky

It is not yet clear if these trains will now be handled at Willard or continue to be classified in Stanley by flat switching.

The Blade reported that another recent CSX practice, operating symbol trains every 28 hours, ended shortly after Harrison became head of CSX. The every 28 hours starts resulted in trains operating six days a week rather than seven.

The practice had been implemented more than a year ago. At the time, CSX had also combined the operation of some symbol freights.

Harrison is known for his operating philosophy of precision scheduled railroading, which seeks to reduce if not eliminate the number of times that a train is reclassified en route.