Posts Tagged ‘CSX’

Hunter Says Adapt or Be Gone

July 21, 2017

During his appearance earlier this week on an investor’s conference call, CSX CEO E. Hunter Harrison spoke about the challenges of changing the railroad’s corporate culture.

And he also had a message for the rank and file who were or were not listening in.

“We can’t carry dead weight. Everybody’s got to do their job, everybody’s got to do their part,” Harrison said.

And for those who are unable to adapt to the change in direction that Harrison has brought to CSX, he had simple message.

Adapt or else the company will get rid of you. As it is, CSX has already been reducing its workforce although not always to get rid of a few bad apples.

The railroad had 25,495 employees at the end of June, a decline of 2,200 when compared to June 2016.

Harrison expects 800 more positions to be trimmed before the end of 2017.
Harrison said changing the CSX culture has been more of a challenge than changing the operational plan.

He said that employees need to adapt to a new way of doing things. However, he acknowledged that some workers may be confused after being subjected to the several different strategies and operating philosophies that CSX has used over the years.

There have also been changes in management, too. Harrison said during that call that CSX has hired two “rock stars” in operations and 15 “top-notch” people from railroads he would not name.

However, media reports have indicated that the newly-hired managers worked with Harrison at Canadian National and will replace mid-level operating CSX officials who have been fired.

He indicated that the new hires understand his philosophy of precision scheduled railroading.

Harrison will conduct what are termed “Hunter Camps” during which he will explain the principles of precision scheduled railroading.

The first of these will be held in late July for a group of operating officials.

“A railroad this size has got a lot of smart people who want to be successful, who want to do well,” Harrison said. “It’s our job to find them.”

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 Employees Will Have to Buy Own Safety Gear

July 20, 2017

Beginning Aug. 1, CSX will no longer supply to its operating employees safety boots and high visibility safety gear.

Instead, employees will be responsible for purchasing that equipment from their own pocket.

The company will continue to supply safety gear to a small number of employees under the terms of a collective bargaining agreement.

Trains magazine reported that CSX issued a notice on Tuesday in which it stated that although management considers safety to be important it also views it as a shared responsibility between the company and its employees.

“CSX is committed to providing a safe work environment that supports and promotes the health and well-being of every employees through a wide range of safety trainings and programs,” the bulletin said. “At the same time, employees are expected to contribute to their personal safety by following work rules and by ensuring they arrive on the job prepared to work safely.”

CSX Reports 2nd Quarter Net Income Up

July 19, 2017

CSX reported this week that its net profit rose nearly 33 percent in the second quarter.

However, when controlling for the effects of $122 million in restructuring charges, the net profit was up just 15 percent.

Most of those charges involved reimbursing CEO E. Hunter Harrison and hedge fund Mantle Ridge for salary and benefits that Harrison gave up because his left his job as head of Canadian Pacific five months early.

Discounting the restructuring charges, CSX posted an operating ratio of 63.2 percent for the second quarter of 2017. Taking the restructuring charges into account, the operating ratio was 67.4 percent compared to 68.9 percent compared with the second quarter of 2016.

An operating ratio is a measure of company efficiency that compares operating expenses to net sales. The smaller the ratio, the greater a company’s ability to generate profit if its revenues fall.

Adjusting for restructuring charges, CSX expects a full-year operating ratio in the mid-60s,  with earnings per share growth of around 25 percent off the 2016 reported base of $1.81, and free cash flow before dividends of around $1.5 billion.

CSX reported revenue of $2.9 billion, an increase of 8 percent from $2.7 billion in the 2016 second quarter. Expenses fell 6 percent, led by a 15-percent drop in fuel costs.

The restructuring charges also included $22 million for management layoffs. The CSX management ranks have fallen by 951 employees this year.

CSX said that during the quarter its train velocity was up 3 percent compared with the same period in 2016.

Terminal dwell time was down 2 percent. On-time originations were 88 percent and on-time arrivals were 79 percent, a 14-percent gain over 2016.

During the second quarter of this year, CSX said it had an 8 percent increase in revenue following a 2 percent traffic increase. Freight rates were up nearly 4 percent.

CSX said its pricing and volume gains were led by export coal. Merchandise and intermodal pricing gains were 2.2 percent, which CSX said reflected the continued “challenging freight marketplace.”

Coal traffic was up 7 percent while intermodal rose 3 percent. Merchandise traffic fell 2 percent, which the railroad attributed to across-the-board declines in virtually every category.

For the quarter, CSX reported net earnings of $510 million, or 55 cents per share, up from $445 million, or 47 cents per share, a year ago. Excluding the restructuring charges, CSX reported earnings of 64 cents per share.

CSX Modifies 2 Operating Rules

July 16, 2017

CSX is overhauling its operating rules to abolish the use of brake sticks and three-point protection, Trains magazine has reported.

The magazine reported Friday on its website that it had obtained a copy of a bulletin telling crews that it was revising Safe Way Rule 2104.1 and will now ban the use of brake sticks.

The report quoted sources within the railroad as saying that brake sticks can be difficult to locate in sidings or at rail yards and taking time to find them might be seen by the current management as inefficient.

The notice abandoning three-step projection was sent out last month. Conductors or other operators will only have to receive a verbal radio transmission from the engineer that the train will not be moved until an inspection or work task is complete.

Three-step protection is used by many railroads to determine when it is safe for a crew member to go between, behind, or under railroad equipment.

During three-step protection procedure, the locomotive engineer applies the train’s automatic and independent brakes, places the reverser into the neutral position, and opens the generator field switch.

“As part of an ongoing comprehensive review of company operations, CSX continues to make rule changes across its network, including changes to operating rules, to improve safety, efficiency and service to customers,” said CSX spokesman Rob Doolittle in response to the Trains report. “As these operational changes are made, CSX managers are communicating with employees and conducting additional training in the field as necessary.”

CSX Contends it has Cut Freight Transit Times

July 14, 2017

Despite some performance metrics showing mixed results, CSX management contends that it is making substantial progress in implementing its precision scheduled railroading operating plan.

CSX Chief Operating Officer Cindy Sanborn told Trains magazine that CSX has cut transit times by reducing the number of times that cars are handled en route.

She was responding to a report by the magazine that found that during June terminal dwell has increased 8 percent and average train speed fell by 4 percent.

Those figures were taken from reports that Class I railroads must provide to federal regulators.

“What you don’t see are the cars that used to go into that terminal . . . but don’t go into the terminal anymore,” Sanborn said.

She said that means that when a car is handled just once instead of twice, it arrives a day earlier, which reduces shipper costs.

The latter is primarily the case with shippers who own their own fleet of cars and reduce the size of their fleet because cycle times have improved.

CSX also contends that it is providing more consistent service. Sanborn said that through June 10, CSX was operating trains on-time 79 percent of the time.
Sanborn said reducing transit times has been the primary motivation for closing hump operations and shifting to flat-switching at major classification yards.

Before the implantation of its current operating plan, CSX road freights would pick up blocks of traffic bound for the nearest hump yard.

But now Sanborn said the only traffic going to a hump or classification yard is that which needs to go there.

She said that although locals are still pre-blocking traffic for the nearest hump yard, they also build blocks for additional destinations.

Those blocks are picked up by road trains and block-swapped or switched closer to their final destination.

Sanborn acknowledged that there will continue to be teething pains and issues that must be addressed as the railroad implements its operating plans.

The railroad’s operating team is constantly monitoring performance and is seeking to balance daily traffic flows by shifting some unit train traffic onto manifest freights.

This has been particularly the case with auto rack traffic and aggregate shipments that once traveled in dedicated trains.

Consolidating traffic has meant that CSX will be operating the same number of trains in each direction on every corridor, which Sanborn said will improve locomotive and crew utilization by reducing deadheading moves.

The railroad’s goal is to move the same tonnage on fewer trains.

Second Track Opens in Amtrak Empire Corridor

July 14, 2017

Work to install a second track on a CSX route in New York State heavily used by Amtrak has been completed.

The $91.2 million project involved building the second track between Schenectady and Albany in order to eliminate a bottleneck that often delayed Amtrak trains on a 17-mile stretch of single track.

The track went into service on June 26 to conclude the end of the three-year project.

Some trains waited as long as 20 minutes in Schenectady or Rensselaer for opposing traffic to clear.

The track had been removed when the rails were owned by Penn Central.

Overseeing the project were the New York State Department of Transportation, Amtrak and CSX.

In a related development, New York officials released design details for a new $23 million Amtrak station in Schenectady. The station is expected to be completed in late 2018.

The design will feature a wraparound awning outside the building, a weather vane in the shape of New York state on top of a gold dome on the roof, and over-sized arched windows similar in design to those of the 1910-era Union station that once sat at the site.

Earlier this year, Amtrak finished work to improve its station serving Albany-Rensselaer.

That $50.5 million project involved construction of a fourth passenger loading track, extending the loading platforms and upgrading block signals.

Much of that work will benefit the Chicago-New York/Boston Lake Shore Limited, which splits at the Albany-Rensselaer station.

Still to be completed is a $3.5 million state-funded project to rebuild platform elevators and replace the escalators.

Other work that remains in the Empire Corridor to be completed includes making grade crossing and signal improvements south of Rensselaer on the route to New York City.

Most of the funding for the work in the Capitol Region of New York came from the American Recovery and Reinvestment Act of 2009.

The Federal Railroad Administration in a separate allotment had granted New York $33 million to be used to install positive train control technology between Poughkeepsie and Schenectady.

Reflections of CSX

July 12, 2017

Sometimes an idea for a doing something different with your camera just comes to you.

That was how I came to make the image shown at the top of this posting.

I was standing next to the fence waiting for a CSX work train to arrive in Marion on the Columbus Subdivision.

It would be something different as I don’t recall ever photographing a weed sprayer train.

I just happened to turn around toward the station and saw a reflection of the approaching train in a window. Now that’s different.

I made three images of the train before turning back to face it for a more traditional head-on image. The one  you see is the middle one.

Because the train was reflected in the window, everything is backward. I could have easily fixed that in Photoshop, but the resulting image would not have reflected (pun not intended) what I actually saw.

Some Doings In North East

July 11, 2017

The Canadian Pacific run-through intermodal train still operates from Buffalo, New York, to Chicago on CSX.

I made two trips to North East, Pennsylvania, last month. Both found me spending some time at the Lake Shore Railway Museum.

It’s a good place to watch trains yet can be a challenging place to photograph them, depending on the hour of the day and the time of the year.

Shown here is selection of images from the two outings. They are not presented in any particular order.

A westbound work train is loaded with track equipment for the summer track work season.

The museum provided some lighting of the CSX tracks.

Another experiment in hand-holding a camera for night shots. This is an eastbound ethanol train.

A grandfather and his grandson watch a westbound stack train from the museum grounds.

Eastbound and westbound stack trains pass in front of the museum.

The rear of a local headed to drop off and pick up cars in Erie.

The local is finished working in Erie and returning to, I presume, Buffalo as it passes the two former Great Northern passenger cars in the museum’s collection.

Everyone is along the fence to see a westbound ethanol train pass by during the night at the museum event.

This westbound ethanol train was led by an older model Canadian National unit.

The lead unit of this eastbound auto rack train appears to to have been freshly painted. Or is is the mid-morning sunlight making it gleam?

L&I To Build Overpass in Downtown Columbus, Ind.

July 8, 2017

CSX and the Louisville & Indiana Railroad will join with the city of Columbus, Indiana, and Bartholomew County to pay for an overpass to carry Indiana Route 46 over the L&I tracks in downtown Columbus.

The bridge is part of a $100 million line rehabilitation project on the former Pennsylvania Railroad mainline between Indianapolis and Louisville, Kentucky.

Although the L&I owns the tracks, CSX has helped the short-line railroad pay for track upgrades.

CSX routes through trains over the line between Louisville and Indianapolis. Some CSX trains use part of the route to go from Louisville to Cincinnati, getting onto the St. Louis line of the former Baltimore & Ohio at Seymour, Indiana.

The upgrading of the L&I line is expected to be completed next year. CSX has indicated that it will increase its use of the line.

Officials said Indiana Route 46 is the primary entrance and exit for motorists and trucks heading into and out of downtown Columbus.