Posts Tagged ‘CSX service issues’

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.

Shippers Demand Congress Address CSX Service

November 16, 2017

Some CSX shippers are seeking more hearing about the railroad’s service issues.

The Rail Customer Coalition argues that CSX service has not improved and it wants federal officials to take action on complaints they expressed during an Oct. 11 hearing held by the U.S. Surface Transportation Board.

The coalition made its demand in letters dated Nov. 14 and addressed to the U.S. Senate’s Commerce Committee and the House of Representative’s Transportation Committee,

The letters assert that CSX customers continue to experience “service changes with little notice, missed switches, and poor communication on delivery status.”

The shippers group also wants Congress to “examine the CSX service breakdown, and potential means available to the STB to mitigate the adverse impacts to the rail network.”

Members of the coalition include the American Chemistry Council, National Farmers Union, the Sulphur Institute and 30 other organizations.

Although CSX has presented figures showing that car dwell time in yards and average train speeds have improved since last summer, the coalition is questioning whether those service metrics matter because they continue to perceive freight delays.

Some CSX Customers Still Unhappy With Service

November 9, 2017

The degree to which CSX has overcome its service problems of recent months depends on who is doing the talking.

In an analysis published on its website, Trains magazine noted that although CSX contends that although it is moving past its service problems, many shippers counter that the railroad’s service is still plagued by erratic transit times, lost carloads, and misrouted shipments.

The National Grain and Feed Association said its members cannot get accurate information from the CSX customer service department.

“In some cases, our members have said they simply have given up, alleging that answers provided by CSXT personnel — if and when they can access them — often are opaque and vague,” said Randall Gordon, president of the association, in a letter to the U.S. Surface Transportation Board last week.

Trains said it heard similar complaints from large merchandise shippers, chemical shippers, and short-line and regional railroads.

“It is still a big mess for us,” an unnamed merchandise shipper told Trains. “I am talking with the STB almost daily.”

Another merchandise shipper studied round-trip transit times on eight of the origin-destination pairs that it uses on CSX, comparing September and October of this year to the eight-month period before CEO E. Hunter Harrison took over the railroad .

It found slower service on five of the eight lanes and improved transit times on two lanes, including one in which the transit time was six days faster.

“It does not look like the CSX troubles are behind us,” said Scott Jensen, a spokesman for the American Chemistry Council. “Things have not returned to normal.”

The agricultural shipper group said some of its members reported improving service in early October while others are reporting that cars are arriving four to seven days behind schedule after bouncing around the CSX system.

Some of these misroutings have been due to billing instruction errors that have sent cars to the wrong destination. But at other times yard congestion is to blame. Loaded cars have waited five to seven days to be picked up.

However, CSX did seek to expedite delivery of an overdue train from Georgia to Okeechobee County, Florida, after several mills in the area had run out of corn and other ingredients to manufacture feed for dairy cattle.

CSX executives have been pointing to improvements in terminal dwell and average train speed in recent weeks.

A CSX spokesperson said the railroad has worked to meet the demands of the harvest season to be at the same or better levels than they were in 2016.

The spokesman said CSX has expanded its Grain Express program, which aims to ensure that unit trains are loaded and unloaded within 15 hours of arrival.

Speaking this week to an investor’s conference in New York, CSX Chief Financial Officer Frank Lonegro said average transit times have improved.

He presented figures showing the average transit time was around 6.5 days in early March and declined to around 5.9 days in May before nearing 8 days amid the height of the service problems in August.

The average transit time since then has been on a steady decline and is now back to six days.

Lonegro boasted that CSX is the only Class I railroad that can claim year-over-year improvements in train speeds, terminal dwell, and the number of cars on line.

He also emphasized that during the third quarter of 2017 CSX set a new operating ratio record, while operating income was up 20 percent.

CSX expects to reach an operating ratio of around 66 or 67 percent this year, along with earnings per share growth of between 20 and 25 percent.

In his telling, Lonegro attributed the service problems to the rapid pace of changes that CSX made to implement the precision scheduled railroading model.

These changes included converting eight of the railroad’s dozen humps to flat-switching terminals, placing what had been metals and rock unit trains into manifest freight trains, restructuring local service plans, introducing seven-day-a-week intermodal service, consolidating Florida intermodal trains, and implementing a “full balanced network plan” over the Fourth of July holiday.

CSX also consolidated its operating regions to five and replaced field leadership with new managers who had worked with the precision scheduled railroading model at Canadian National or were existing CSX managers who had completed a “Hunter Camps,” which was intensive training in the operating model.

Lonegro said about 85 percent of the merchandise network changes have been implemented and CSX is now working to execute its operating plan and make refinements.

This includes continuing to evaluate hump yard operations. He said CSX convert another hump to flat switching or reopen another hump as traffic volume dictates.

Earlier this summer, CSX converted Avon Yard near Indianapolis to flat switching, but reversed course as the western end of its network became congested.

It also scrapped plans for now to convert Selkirk Yard near Albany, New York, to flat switching only.

Some Shippers Question Value of Railroad Metrics

October 30, 2017

When it comes to the service metrics that CSX has been providing the U.S. Surface Transportation Board, the value of that data depends on who is reading it.

During a U.S. Surface Transportation Board hearing earlier this month, CSX said that it is now operating as well as or better than it did in 2016 and it has the numbers to prove.

The carrier cited statistics on declining terminal dwell time and an increase in average train speed.

CSX is not the only railroad that tracks those things. Many railroads use terminal dwell time and average train speed as a way of measuring how well they are doing.

Such numbers are given prominence in quarterly and annual reports because they are said to indicate how efficient and fluid that a railroad is.

That is a railroad perspective. Some shippers, though, say that what matters to CSX doesn’t matter as much to them.

Bruce Ridley, a vice president with Packaging Corporation of America, wrote to the STB last week to say that on-time arrivals, re-crew rates, terminal dwell times, and car-order fulfillment figures are “misleading metrics in CSX’s weekly reports to the Surface Transportation Board.”

PCA, one of the nation’s largest producers of container board and corrugated packaging, argues that on-time figures measure yard-to-yard performance of road trains and do not include local service.

“Even at 64 percent, which is dismal for any supply chain, it can be expected to be much worse if the first and last miles are considered,” Ridley wrote to the STB.

As for re-crew statistics, Ridley said they can be misleading because they do not appear to count a train that died and did not get a new crew right away because no crew was available.

An analysis published last week on the Trains magazine website said that Ridley’s point is similar to one that other shippers have made about service metrics publicized by CSX and the Association of American Railroads. Shippers say those metrics do not necessarily reflect the service that rail customers actually experience.

Some railroad executives recognize this. NS CEO James Squires noted last May that there is a difference between network performance and customer service.

Squires said that network performance measures — like average train speeds and terminal dwell time — may be important to railroad management, but customers have their own set of metrics that they value.

“What we’re trying to do with our customers is measure performance in the entire supply chain,” Squires said. “That’s different than merely measuring terminal-to-terminal train performance.”

Trains reported that Canadian National has taken this approach since 2010, after it noticed that its operating metrics, which were among the best in the railroad industry, didn’t necessarily match the service that shippers were receiving.

Some have said that trip-plan compliance should be the key measuring stick when it comes to service.

“Customers really only care about the first and last mile, pick up and drop-off on time; [it] doesn’t matter so much [what happens] in between,” said Linda Bauer Darr, who heads the American Short Line and Regional Railroad Association.

Bauer Darr said short lines and regional railroads need to work with their Class I railroad connections to do a better job of using data and presenting meaningful, accurate information to shippers in real time.

AAR head Ed Hamberger said during the STB’s CSX hearing that performance metrics need to be retooled, but he has yet to say how.

In his letter to the STB, Ridley raised doubts about whether terminal dwell figures for Avon Yard near Indianapolis actually have improved. He said some of his company’s cars have sat in Avon for seven to 14 days.

What PCA wants the STB to do is help resolve ongoing car-supply issues by measuring how many cars were ordered, how many were delivered, and how many were loaded.

Ridley said this would be more accurate and allow CSX to identify shippers who are ordering more cars than they need.

STB Gets Earful in CSX Hearing

October 13, 2017

The CEO apologized and the shippers hurled charges about poor service. After a month-long delay triggered by a hurricane, the U.S. Surface Transportation Board held a “listening” session on Wednesday pertaining to service issues that CSX has been having this year.

There wasn’t much new presented. Many shippers have written to the STB about their problems with CSX over the past several weeks and those letters have been posted on the STB website.

CSX has been providing weekly reports to the Board that describe how it is doing in recovering from those service problems. Those, too, have been posted on the STB website.

In addressing the STB this week, CSX CEO E. Hunter Harrison said the precision scheduled railroading operating model that he brought to the railroad when he joined it last March still needs some fine tuning.

But as far as Harrison is concerned, it is how CSX operates now.

“I want to apologize to our valued shippers. Whatever problems we’ve had, we’ve had internally,” he said during the hearing. “We’ve made mistakes, but this is not a failure of precision scheduled railroading. We’re moving in the right direction.

Harrison, who also brought the operating model to the Illinois Central, Canadian National and Canadian Pacific when he headed those railroad, was the opening speaker at the hearing.

Then representatives from various shippers and organizations representing shippers took their turn at the microphone.

Some of them are satisfied with CSX services, other said it appears to be slowly improving while yet others said they had they had seen no changes, or that service has gotten worse.

Count William Scott, vice president of Cullum’s Lumber Products of Allendale, South Carolina, as among the latter.

“CSX seems to have a total disregard for customer service and business relations,” he said. “They seem to do what they want, when they want, regardless of the impact on your business.”

Among the problems that Scott identified are keeping enough rolling stock on hand to manage customer orders.

Scott said that on some days Cullum has no cars. Then on Friday, CSX will deliver a dozen cars so that it collect the demurrage over the weekend, which is a fee a shipper pays for holding onto equipment beyond an allotted amount of time.

A typical amount of “free” time for freight cars is 24 or 48 hours after delivery, including weekends and holidays.

Some witnesses at this week’s hearing said CSX has been moving cars in and out of yards unnecessarily.

Still others said the poor to lackluster service has forced them to increase inventories of raw materials and pay higher rates for trucking products to customers.

One potato chip plant had to resort to shipping cooking oil by truck while a fast-food company had to ship french fries by truck to get them to its restaurants in a timely manner.

Some power generation plants have seen coal show up days after it was expected and grain elevators have had to hold onto inventory because they lacked cars in which to load it.

Brad Hildebrand, a vice president at Cargill, told the STB that the number of CSX switching crews has been cut and those that remain on the job are required to do more than they can handle.

“Mr. Harrison has publicly stated that we the shippers must bear some pain and suffering for the changes that are being rolled out,” Hildebrand said.

“Where in business today would a company put their customers through this pain to implement a supposedly new and improved operating model?”

Hilldebrand said that in his eyes precision scheduled railroading has meant shippers having to accept less service and adjust their operations to accommodate how CSX has structured its railroad.  “In a nutshell, [it] means having to do less with less,” he said.

So What is Precision Scheduled Railroading and Why Does E. Hunter Harrison Believe it Will Work at CSX?

October 13, 2017

Since March, the term “precision scheduled railroading” has shown up in a lot of news stories about CSX.

But the model is anything but new. The term has received added attention this year because its chief promoter, E. Hunter Harrison, began imposing it shortly after he became the CEO of CSX last spring.

Harrison developed the model while serving as head of the Illinois Central Railroad. He later took it to Canadian National and then Canadian Pacific after he became the CEO of those roads.

Last year he proposed taking it to Norfolk Southern, but a rebellion by that railroads shippers, its board of directors and various government officials thwarted those plans and Harrison and his associates called off a proposed merger between CP and NS.

But less than a year later Harrison and the Mantle Ridge Hedge Fund successfully engineered a plan whereby Harrison became CEO of CSX.

The name of the model itself provides only a few clues to how it works. Like any philosophy, how it works in theory and how it works in practice are now always in synch and that appears to have been the case at CSX where service problems began within two months and accelerated during the summer.

Depending on who you believe, CSX is either ironing out the kinks or forcing its shippers to change how they do business.

PSR differs from the prototypical railroad practice of holding trains in a yard or on a siding until they’re full.

With PSR, deliveries are given priority from origin to destination as quickly as possible, and each asset is used and monitored constantly so customers can better plan their shipments.

As CSX Executive Vice President and Chief Operating Officer Cindy Sanborn explained it to Progressive Railroading magazine, PSR is designed to improve customer service, control costs, optimize asset utilization, enhance safety and aid workforce development.

Of course it is. What railroads doesn’t say it is doing those things.

Sanborn continued by explaining that PSR seeks to provide customers a more reliable, predictable and cost-effective shipping experience by creating train operating plans that seek to speed cars through the network.

Sanborn acknowledged that a charge made this week at a Surface Transportation Board hearing into CSX service issues that the railroad is forcing customers to change how they operate may be accurate.

“Our service may be configured differently, and the transition to the new system may mean that we’re asking some customers to make some changes, but ultimately we believe that the customer will be happier with that product,” she said.

The latter part of Sanborn’s comment mirrors what Harrison has been saying for weeks that, ultimately, customers will benefit from precision scheduled railroading.

It’s just that many CSX shippers aren’t seeing that yet and Harrison’s pronouncements are coming across as just so much public relations talk.

Trains magazine Fred Frailey columnist wrote last year when CP was trying to take over NS that Harrison has a core belief that freight cars should be moving, not sitting still.

He said Harrison learned this as a young railroad manager and if he saw cars that had been sitting around for awhile he would demand that they get out town on the next train.

When CSX began having its service issues this year, Frailey wrote another column about Harrison and what he is seeking to do at CSX.

Frailey thinks Harrison might have come to CSX with clear ideas about what needed to be done, how it needed to be and who should do it.

Among other things, he apparently believed that CSX had too many hump yards, too many trains and too many employees and contractors.

In short order, CSX made 1,300 train plan changes, cut 2,700 jobs and sent 1,000 contractor and consultant positions packing.

It has retired or stored 850 locomotives and eliminated more than 300 train crew starts per week. Twelve hump yards were converted to flat switching yards because a tenet of precision scheduled railroading is that that humping cars takes more time.

PSR holds that some car blocks can be switched more efficiently at intermediate stops between an origin and destination and in less time than it would take to classify each in a hump yard.

Frailey quoted an industry source who suggested that Harrison didn’t care if CSX loses customers. In the end, he is only interested in keeping those customers whose needs dovetail with the service that he wants to provide.

Most of those would be shippers needing transportation that provids CSX with high margins.

Shippers whose business is more competitive tends to be lower margin business and costs money to keep.

Harrison, like so many other corporate titans these days, is an adherent of the religion of cost cutting.

In that sense, he is not alone. All North American Class 1 railroads are talking about reducing expenses and driving down their operating margins.

The problem that CSX encountered after implementing Harrison’s vision was a clogged network.

Sanborn admitted to Progressive Railroading that the rapid changeover to precision scheduled railroading caused some shippers to experience “unintended effects.”

CSX owned up to it, Sanborn said, noting that in early August, Harrison emailed shippers a letter apologizing for the service disruptions.

“We have redoubled our efforts to resolve customer issues as quickly as we can and to improve communication with customers as we move forward,” she said.

Sanborn said that based on customer comments, CSX management is studying traffic flows across the network by closely analyzing connections between merchandise trains, yard jobs and locals.

Management is seeking to nudge local operating managers to be more proactive in communicating with shippers and solving their problems.

CSX is also considering providing customers more frequent service. Sanborn cited the example of possibly discontinuing unit-train service for a customer who in the past used one or two trains per week, or about 200 cars, and instead offering daily service that would provide about 30 cars  a day.

“For the customer, that [would] mean they need fewer cars and less track space for storing empty or full cars, and there’d be less inventory tied up in transit at any one time,” Sanborn said. “For CSX, it means we are able to handle fewer cars in our scheduled merchandise service, with better balance on the network. That’s a more efficient approach.”

There’s that “e” word again. Efficiency is something that Harrison has long valued.

At the time that Harrison arrived, CSX was in the midst of another operating plan change that the Michael Ward administration had begun executing in April 2016.

That plan was based on the premise that the railroad would emphasize a triangle of routes extending from Chicago to New York, New York to Florida, and Florida to Chicago.

All other routes were secondary and would not receive the same level of maintenance as the key routes.

Trains began getting longer and departed yards every 28 hours rather than every 24 hours. The effect was fewer and longer trains.

At the time, CSX said this realignment would bolster service, boost productivity and improve safety.

But Harrison and his management team tore up CSX of Tomorrow in favor of precision scheduled railroading.

CSX Executive Vice President and Chief Financial Officer Frank Lonegro said last month during an industry conference that the previous operating plan had resulted in inconsistent financial results.

“Measured by operating ratio, we hovered around 70 percent,” he said. “It wasn’t that long ago that we had an industry-leading OR. Since then, though, the industry has made great progress … but we did not make meaningful progress. On the service side, [we’ve had] a couple of good years followed by a couple of not-so-good years.”

Another flaw of the CSX of Tomorrow plan was that it would take too long to show results. When it was announced, management said it would take years to implement.

But Wall Street is seldom willing to wait that long. John Larkin, a Stifel Equity Research analyst who follows CSX, told Progressive Railroading that many on Wall Street expected an operating ratio in the 50s in a matter of months. “That is obviously not a realistic expectation,” Larkin said.

But it was out there and many on Wall Street tend to view Harrison as a financial savior.

Larkin is among them, saying that Harrison is “the most brilliant operator of our time.”

The news that Harrison wanted to take over CSX was enough to send the value of the company’s stock skyrocketing by double digits.

The service problems of this year may have soured some shippers but they have not dented Harrison’s reputation on the Street.

Larkin argues that many critics, observers and customers are selling Harrison short for the recent performance hiccups.

“He will get CSX service fixed and lower the operating ratio to the targeted levels, no matter what. He won’t accept anything else,” he said.

Independent rail industry analyst Tony Hatch, whose views are often cited by Trains and Progressive Railroading, concurs, citing improvements in CSX service metrics.

Harrison and other top CSX executives have maintained throughout the troubles that things will turn around, that the issues are temporary.

Sanborn said that once the transition period has ended and the operating plan is fully in place that shippers will enjoy a fast and more fluid network. CSX will reap lower costs and a reduced operating ratio.

“While we have made a lot of changes since we began our transition [to PSR], there is still work to be done to refine the operating plan and continue to improve company performance and service to customers,” Sanborn said.

CSX management plans to send stakeholders a long-range strategy overview that it plans to reveal at its investor conference Oct. 29-30 in West Palm Beach, Florida.

“In broad terms, we’ll talk about financial and operational objectives and the timeframes in which we hope to achieve them,” Sanborn said.

“We’re bullish on the future and sometimes you have to break some eggs to get there,” Lonegro said.

Much of the faith that CSX management and Wall Street have placed in precision scheduled railroading is rooted in the belief that it is a strategy proven to work.

By that they mean that it worked at IC, CN and CP, although some skeptics have noted that the networks of those railroads differed greatly from that of CSX.

In touting PSR, Sanborn said it has been proven over time to improve the performance of railroads. It will provide a more intuitive and flexible railroad, she said.

“Our decision-making is driven by [PSR] principles,” she said. “As our business evolves, we will use that framework to determine how to continue meeting our customers’ needs, and operating safely and efficiently, in response to whatever new conditions develop.”