Posts Tagged ‘CSX service issues’

STB Ending CSX Weekly Service Reports

March 22, 2018

The U.S. Surface Transportation Board has decided to stop requiring CSX to provide weekly service updates.

The Board, citing service improvements at CSX, said the reports will end effective April 1.

“We recognize that CSX Transportation has shown a marked improvement in its service metrics since the serious service disruptions that occurred throughout last summer and into the fall,” Chairman Ann Begeman and Vice Chairman Deb Miller said in a letter to CSX CEO James M. Foote.

After service issues arose last summer, the STB began requiring the reports last August. However, CSX will, along with other Class 1 railroads be required to provide the STB with a service outlook for the rest of the year.

That request was made this week following the receipt of letters from grain shippers and automakers that complained about slow and erratic service.

The STB said performance metrics at BNSF, CSX, and Kansas City Southern have held steady or improved but the performances of Canadian National, Canadian Pacific, Norfolk Southern and Union Pacific have deteriorated.


Shippers Perspective on CSX Service Woes

March 13, 2018

We often refer to a railroad’s customers as shippers as though they are a monolithic group.

They are in the sense that all of them pay a railroad to transport something, whether it be coal, trailers, containers, automobiles, scrap metal, chemicals or grain, to name a few.

But the interests of shippers of new automobile are not necessarily the same as those who ship coal.

Nor are all shippers equally suited to get CSX or any other railroad to pay attention to their gripes and complaints.

Some shippers are big enough to get a CSX executive to return their phone calls, but others might wait days, weeks or months to hear from the railroad if they hear anything at all.

The most vulnerable shippers are those who consider themselves captive to a railroad.

What constitutes a captive shipper is a subject of debate. A railroad might argue that all shippers have alternatives and it is a matter of their willingness to use them.

Shippers would say that some of those alternatives are impractical and/or too expensive.

CSX’s top management recently made the case at a meeting of investors that it has made great strides toward providing not just better, but excellent service for its shippers.

The late E. Hunter Harrison used every opportunity he could to say that precision scheduled railroading would result in better service for shippers.

I recently ran across an op ed column on the website of Railway Age written by Ann Warner, a spokesperson for the Freight Rail Customer Alliance, which represents more than 3,500 manufacturing, chemical and agriculture companies, electric utilities and alternative fuel companies.

As Warner sees it, CSX is more interested in pleasing shareholders than its shippers.

As evidence she cited the company’s $5 billion stock buyback program, noting that this is more than double what CSX spends on capital investments every year.

While agreeing that CSX needs to make a decent return on the investment made by its shareholders, Warner said that shippers and rail labor interests find themselves having something in common.

“CSX’s problems have become so big that what is bad for CSX’s customers and the country generally has also become bad for CSX’s employees. And CSX is just a more extreme version of what is happening at other railroads as they, too, pursue the holy grail of operating ratio reductions,” Warner wrote.

In reading Warner’s column I was reminded of how Harrison used to dismiss complaints from shipper organizations as little more than a front for long-standing arguments to re-regulate the railroad industry. There appears to be some truth in that.

Warner made it clear that many shippers believe the current regulatory scheme isn’t working for them.

In particular, she noted that federal law requires that rates for rail-dependent shippers must be reasonable.

When a shipper believes its rates are not reasonable it can complain to the Surface Transportation Board. Yet Warner finds the STB’s stand-alone cost test to be impractical.

“SAC cases are long and expensive, and their record of success is spotty at best. Large chemical companies like DuPont have devoted years and millions of dollars to bring SAC cases, only to have little or nothing to show for their efforts. Electric utilities have achieved a more mixed record. However, most shippers cannot even think of bringing a SAC case because of the expense.”

Other rate abuse remedies exist, but Warner said they are not viable.

Warner also was critical of the STB’s response to the CSX service problems of last year.

“In response to shipper complaints about CSX, the Board required some reporting, convened a public listening session, scheduled weekly status calls (which are not made public), and relied on its Office of Public Assistance, which under the circumstances has done a good job where it can,” she wrote.

“More telling is what the Board has not done: There have been no penalties or other sanctions, no order to show cause, and no directive to avoid personnel cuts or other operational changes.”

It is worth reading Warner’s column if for no other reason than because it provides a shipper’s perspective on the railroad industry. You can find it at:

Warner didn’t say much about what her employer wants done. She said rail-dependent shippers welcome the opportunity to work with rail labor “to help get the nation’s railroads, particularly CSX, back on the right track.”

What that would entail she didn’t say. It is one thing to identify a problem, but quite another to implement the solution.

Comments from shippers must be read with the same degree of skepticism that comments made by railroad executives also must be read. Both are trying to get the world to accept how they project themselves and neither is necessarily what they say that they are.

Shippers and railroads are alike in those both seek to maximize their own financial gain, sometimes at the expense of someone with whom they do business.

The interests of shippers and railroads will inevitably conflict and each will do whatever it can to influence those who have the authority to address those conflicts.

Truth be told, some members of Warner’s organization probably have their own customers who complain about the service they receive.

Caught in the middle are regulators and policy makers who would rather not get caught in the back and forth that exists in commerce.

And yet that is what they are appointed to do. Perhaps if no one is satisfied with the regulatory framework and how it operates then maybe they are doing something right by not favoring one party too much.

CSX Shipper Complaints to STB Dropping

February 16, 2018

Even as some CSX shippers continue to be disgruntled with the service they are receiving, other railroad customers are either finding their service satisfactory or have given up complaining about it.

The U.S. Surface Transportation Board said that shipper complaints about CSX service have dropped and an STB member attributes that to improved service.

Acting STB Chairman Ann Begeman made that observation in a letter sent to the American Chemistry Council, saying the Board has received “very few calls” regarding CSX service in the past few weeks

The Chemistry Council had earlier this week released findings of a survey of its members that many of them still are receiving inconsistent service, forcing some to curtail production and/or rely more on truck transportation.

CSX CEO James M. Foote met with Begeman on Feb. 1 to discuss CSX service matters and the Board has indicated it will continue to review weekly reports the carriers has been filing since last August.

However, the STB may modify its oversight as soon as April. The STB ramped up its oversight of CSX after service issues became rampant last summer after the railroad moved to the precision scheduled railroading operating model.

The STB might be willing to roll back some of the reporting on performance metrics that it has required of CSX since last summer.

In her letter to the Chemical trade group, Begeman urged shippers who have experienced problems to contact the STB so the problems can be addressed.

Chemical Industry Critical of CSX Service

February 13, 2018

A chemical industry trade group told the U.S. Surface Transportation Board last week that its members continue to experience significant service disruptions on CSX.

In a letter to the STB, Cal Dooley, CEO of the American Chemistry Council, said that companies have in the past two months been forced to curtail production or divert shipments to truck in order to prevent shutdowns.

“While many companies report that service had improved since the summer/fall of last year, it is clear that service is still not where it needs to be,” Dooley wrote.

The letter to the STB was based on a survey the trade group conducted of its members in December and January.

Dooley said that some members have seen improvements since last summer but overall service has not returned to normal.

“While CSX’s January 13 letter to the Board notes ‘a remarkable rate of positive change’ and cites selected service metrics that exceed 2016 levels, few benefits of CSX’s operational changes have actually been realized by its customers,” Dooley wrote. “In fact, the vast majority of ACC member responses indicate that current CSX service is worse than it was prior to the implementation of precision railroading.”

Dooley said that many of his group’s members fear that paying more for less reflects a “new normal” for CSX service.

Examples of shoddy service cited in the letter included a Midwest plant reducing production  by 90 percent due to erratic deliveries of raw material.

Another company said it shifted to trucks to prevent plant shutdowns in the Northeast due to a bad weather and CSX delays.

A Southeastern company said local switching delays and route changes have increased transit times by four or five days.

In a related vein, a Northeast shipper said a shipment that normally takes 10 days took 55 days due to multiple delays on CSX.

Another shipper said loaded cars have sat in yards for a week or more while some said they have seen reduced local service and higher car demurrage and switching fees.

CSX has been arguing for the past year that once it works out its operating changes that shippers will benefit from faster and more reliable service.

In response to the chemical association letter, CSX said in a statement that it “consistently strives to meet customer expectations and we believe that concerns about our service can best be resolved on a customer-by-customer basis and by focusing on a customer’s individual needs.”

The statement also restated a report that railroad made to the STB recently that cited five consecutive months of improvement in train velocity and dwell time.

Foote Touts Operating Improvements in STB Letter

January 5, 2018

CSX CEO James Foot told the U.S. Surface Transportation Board this week that terminals and line hauling of the carrier are now fluid with velocity and dwell time substantially improved.

Now the railroad is turning its attention to improving local service and yards.

The letter dated Jan. 3 was in response to a request made by the STB last month for CSX to respond to what the Board termed persistent complaints about service from shippers, particularly delays occurring during the last mile of delivery.

In response, Foote said CSX has created a virtuous cycle of faster trains, more efficient yard operations and more on-time originations.

This has meant fewer locomotives and cars needed to handle the same amount of freight. “In short, what you have is a better-run railroad,” Foote wrote.

Foote said CSX managers do not expect to make significant operational changes in 2018.

However, management will continue to fine tune its operations. He cited as an example testing end-to-end trip plans for every carload by the end of March.

The new railroad chief executive said he is committed to listening to customers and communicating with them regularly.

As for that last mile issue, Foot said local service metrics, including car-order fulfillment, currently exceed those metrics posted in 2016.

“ . . . we are targeting enhancements in yards, local service, and efficient switching,” Foote wrote. “Accordingly, we expect ongoing improvement in our local service measurements concurrent with other performance measures.”

Yet Trains magazine on its website quoted an unnamed merchandise shipper who said his company in the eastern United States has been playing whack-a-mole with CSX.

As soon as a service problem is resolved in one area another crops up elsewhere. “We are better in Florida and New York now but issues are [now occurring] in the Carolinas as we speak,” the shipper said. “So I like the new metrics, especially around door-to-door and car fulfillment.”

The magazine quoted another unnamed merchandise shipper who said that it is not seeing the faster, more reliable service that CSX says it’s providing.

“Our cycle times are still longer today than they were a year ago,” the shipper says. “I suspect this may simply be their new normal and longer transit times are something we have to get used to. We’re actually planning to add some cars back into our fleet in the first quarter of 2018 to address this.”

Some shippers said CSX has slashed the frequency of local switching, something that began when Michael Ward was CEO and kicking off a cost-cutting campaign.

“CSX is being run for the benefit of Wall Street now and not Main Street,” one shipper said.

However, some shippers told Trains they are starting to see faster, more efficient service. On the western reaches of the network operations have remained smooth despite changes implemented last month that, among other things, significantly reduced yard operations in Evansville, Indiana, on the route between Chicago and the Southeast.

STB Wants More CSX Service Information

December 16, 2017

The U.S. Surface Transportation Board is taking a renewed interest in CSX operations.

The STB wrote to the railroad on Thursday to ask its managers for a meeting with board members and requested that they provide a detailed update on the ongoing implementation of its precision scheduled railroading model.

In the letter, the STB asked for information concerning the current state of the CSX network and key performance measures in light of continued reports regarding service issues.

In its reports to the STB, CSX has contended that operational improvements have been accelerating, with average train speed up 19 percent and terminal dwell time down 13 percent when compared with the average for 2016.

In the past two weeks, on-time performance has improved and now stands above last year’s levels, but has not yet topped the 81-percent level recorded in the second quarter.

But that hasn’t been enough to satisfy some shippers.

“The board continues to hear concerns related to CSX service challenges or inadequate service, particularly about unsatisfactory ‘last mile’ performance and lack of communication regarding changes to service before they occur,” commissioners Ann Begeman and Deb Miller wrote to CEO E. Hunter Harrison.

The STB sought to encourage CSX to continue to participate in the Chicago Transportation Coordination Office, which helps smooth railroad traffic through the nation’s busiest rail gateway.

That was apparently in response to Harrison saying in October that he was considering pulling out of the CTCO, which the Class I railroads and terminal lines use to monitor such things as yard car inventories, maintenance-of-way planning, weather alerts and service priorities.

“While we recognize that several key performance measures have shown noticeable improvement in recent weeks, other metrics, such as car order fulfillment and local service performance, have lagged when compared to 2016 and first quarter 2017,” they wrote.

The STB also wants CSX to explain its lack of progress in improving car-order fulfillment, including why it can’t match or exceed local service performance from 2016.

Also on the STB’s list is a request for information on the progress the railroad has made on developing trip plans for individual carloads, as well as efforts to improve communication with shippers.

CSX Executive in Presentation Lauds Precision Scheduled Railroading, Explains How it is Benefiting Shippers

December 5, 2017

A CSX executive gave a rosy assessment of the benefits of the precision scheduled railroading model during a speech at the RailTrends 2017 conference last week.

Michael Rutherford, CSX vice president of industrial products, said carload customers are benefiting from faster and more dependable service.

Although the closing of hump operations at eight CSX yards has received much publicity, Rutherford said a less visible change has been the practice of blocking cars closer to their origination and pushing them further across the network before they are flat-switched or classified in a hump yard.

“That’s how you get the speed and reliability,” he said. “Hump yards make sense where they make sense. They just don’t make sense everywhere.”

Rutherford said running cars through hump yards was adding two or more days to their transit time and cars were sometimes humped more that once.

Since implementing the precision scheduled railroading model, Rutherford said, CSX has reduced the average merchandise transit time from just under seven days to just under six days by early November.

Rutherford cited an example of faster transit times between Buffalo and Syracuse, two New York cities located 150 miles apart.

Previously, freight traveling from Buffalo to Syracuse went through Syracuse to Selkirk Yard near Albany to be classified. It was then sent back west to Syracuse.

“We used to have to boomerang the car over Selkirk,” Rutherford says. “As a result, the actual route miles were three times the actual distance from Buffalo to Syracuse.”

Today an eastbound train picks up a block of Syracuse cars in Buffalo and drops them off in Syracuse, which Rutherford said is a faster, more reliable service that costs less.

Although many CSX shippers prefer to see their cars move in unit trains because they view that as more reliable than regular merchandise service, Rutherford said that where possible CSX is shifting unit train business into the merchandise network as a way to streamline service.

Rutherford said the downside to unit trains is the extra time expended in building and unloading them, which adds expense by requiring the use of more freight cars.

Metal shipped for a customer in a unit train would require 10 days to load, move from origin to destination, and unload, Rutherford said. But smaller blocks of carloads moving in daily merchandise service has reduced the moves to two days and the shipper is able to use 10 to 15 percent fewer cars to handle the same traffic

Those now surplus cars are being re-assigned to other shippers to carry other freight.

Rutherford acknowledged that CSX is seeking to change the behavior of its shippers by encouraging them to order only the number of cars they need and to unload their shipments more quickly.

When shippers order extra cars, those cause congestion. Precision scheduled railroading seeks to keep rolling stock moving along.

“The change has been transformative,” he said, citing performance measures of reduced terminal dwell time and faster average train speed.

However, Trains magazine observed that Rutherford did not say that CSX’s on-time performance remains lodged at its 2016 level with about a third of its trains arriving late.

Now did he acknowledge that some shippers still believe service is subpar or deteriorating.

Harrison Says CSX is Doing Just Fine

November 30, 2017

CSX CEO E. Hunter Harrison told an investor’s conference on Wednesday that concerns about his railroad’s service are overblown and they are in part an attempt by shipping lobby groups to seek regulatory changes that would hurt the railroad industry.

E. Hunter Harrison

Harrison expressed pride in the job that CSX is doing. “The network is good,” Harrison said at the Credit Suisse Industrials Conference,

He cited improvements in terminal dwell time and average train speed figures that exceed what CSX posted last year.

Touching on a management shakeup that saw three high-level CSX executives leave earlier this month, Harrison said the CSX’s management team did not have the right chemistry.

Harrison has brought in James Foote, who worked with him at Canadian National about a decade ago, to oversee operations, and sales and marketing.

“Jim knows a helluva lot more about operating and precision scheduled railroading than some have given him credit for,” Harrison said. “At the same time, he’s got a unique talent on the marketing-sales side and happens to be a team builder. And that’s one of the things we really need.”

Foote is likely to become the CEO of CSX after Harrison retires. Harrison said he’s stepping back a bit to let Foote and his operating and marketing teams develop.

Speaking to the same conference, Foote said the challenge facing CSX is to get operations and sales to see the world in the same way.

He said both need to understand that precision scheduled railroading is about efficiency and improving customer service.

“This is not a plan to shrink the railroad into profitability, but to grow the business,” Foote said.

One area in which CSX has been making major changes is in its intermodal business.

It earlier closed its Northwest Ohio Intermodal Terminal and has eliminated numerous intermodal service lanes.

Noting that intermodal traffic has razor-thin profit margins, Harrison said he’s never been enthusiastic about the business and was critical of the hub-and-spoke intermodal strategy that sought to build density in low-volume lanes.

The railroad also has folded some intermodal traffic into manifest freights.

“We were doing some things that if you know anything about intermodal you don’t do,” Harrison said in reference to the Northwest Ohio terminal.

“You don’t switch intermodal stuff. That’s why intermodal stuff came about,” he said.

In some instances, Harrison said trains ran as much as 140 miles out of route to get to the Northwest Ohio terminal near North Baltimore. “That’s not smart to me,” Harrison said, adding that some traffic could be handled more directly on merchandise trains.

Harrison hinted that major changes are coming to the North Baltimore terminal, saying it might involve a western railroad looking to extend its reach into the East.

For now, CSX is using the Northwest Ohio terminal for block-swapping and is still handling some local intermodal containers there.

CSX also recently pulled out of a public-private partnership to increase clearances in the Howard Street Tunnel in Baltimore so that double-stacked container trains could use it to serve the Port of Baltimore.

In Harrison’s view, the East has too many ports seeking traffic. He also expressed a philosophical opposition to receiving government money.

Foote contended that CSX remains committed to intermodal traffic and will seek creative ways to profitably grow that business.

CSX has some underused routes that Harrison said will be sold or spun off. This includes all CSX trackage in Canada and related lines in the U.S.

Harrison said the CSX routes in Canada are not successful. In particular, a $100 million terminal near Montreal that CSX opened in December 2014 has underperformed, handling just a dozen containers per day.

“Everything we’ve got out there is going to go through some scrutiny,” Harrison said. “If it creates shareholder value to sell it, we’re going to sell it. If it creates shareholder value to keep it, we’re going to keep it.”

Harrison said he isn’t concerned if CSX competitors buy routes that it wants to sell.

“We’re not going to keep railroads for defensive purposes. I don’t believe in that,” Harrison said. “You’ve got a real weakness if you do that.”

Harrison, Foote to Appear at Florida Conference

November 28, 2017

The two highest ranking executives at CSX plan to conduct what is being termed a “fireside chat” on Wednesday at a conference in Florida.

CEO E. Hunter Harrison and Chief Operating Officer James Foote will appear in Palm Beach at the fifth annual Credit Suisse Industrials Conference.

Credit Suisse analyst Allison Landry is expected to ask questions of the two executives who worked together at Canadian National a decade ago.

In the meantime, the service issues that plagued CSX last summer are still occurring some shippers say.

Trucking company J.B. Hunt has warned of delays of up to 72 hours in Jacksonville, Florida.; Atlanta, Savannah, Georgia.; Charlotte, North Carolina; Memphis, Tennessee; and Louisville, Kentucky. Delays of up to 48 hours may occur in Chicago and central Florida.

“Regrettably, the numerous changes, combined with peak season volumes, have resulted in an extended degradation of service since the slight improvement observed post-Hurricane Irma,” J.B. Hunt said in a Nov. 21 service advisory. “Shipments continue to be delayed throughout the CSX network.”

Toyota Canada said the positive comments it made last month to the U.S. Surface Transportation about CSX service are no longer reflective of the quality of service the automaker has been receiving of late.

After New York lawmakers stepped in, CSX reversed a plan to curtail service to a General Mills facility in Buffalo, New York, that makes Cheerios.

CSX had planned to reduce switching at the plant from twice a day to once a day.

Railroad spokesman Rob Doolittle sought to give the reversal a positive spin by saying it shows that CSX continues to respond to individual customer issues when they emerge.

CSX Raising Some Rates on Jan. 1

November 27, 2017

CSX plans to raise rates for freight shipments to Mexico and increase charges for customers who fail to load or empty railcars by agreed deadlines or ship unsafely loaded or overweight railcars.

The changes will take effect Jan. 1. The Reuters news agency said it had seen a notice sent to shippers encouraging them to better conform to CSX schedules.

The railroad’s operating plans have changed over the past several months as it implements a model known as precision scheduled railroading.

CSX spokesman Rob Doolittle described the rate charges as “in line with efforts to optimize the use of assets.”

Doolittle said the changes are intended to improve the efficiency of CSX operations.

CSX has also told some customers that they would no longer be able to use other railroads to move freight in certain locations if CSX’s system cannot handle their cars, a practice known as reciprocal switching. That might lead some shippers to ship freight by truck.

The changes come at a time when CSX has been under fire from many shippers due to service breakdowns that occurred last summer.

Anthony Hatch, who operates a railroad consulting business, told Reuters that CSX is using the fees as a “behavior-changing strategy” to make shippers conform to the railroad’s timetables.

Hatch said the changes are not about boosting CSX’s profits although he said they could pose prove costly for shippers who lack the personnel and infrastructure to speed up or change their railcar processing capabilities.

“Shipper-caused delays are a part of the whole story along with CSX-caused delays,” Hatch said. “[CSX CEO] Hunter Harrison is trying to reset the whole relationship.”

Hatch said Harrison used a similar strategy when he took over at Canadian National.