Posts Tagged ‘E Hunter Harrison’

CSX Acknowledges Taking New Approach to Intermodal

November 9, 2017

Intermodal business is not the only thing that CSX is looking to downsize. Appearing at two investor conferences this week, CSX Chief Financial Officer Frank Lonegro said the railroad is also looking at shedding some lines and curtailing capital expenditures and expansion projects.

“We are in the evaluation phase,” Lonegro said, noting that CEO E. Hunter Harrison has said everything is for sale at the right price.

“Things that are non-core to the long-term business that we have and the long-term success of CSX, those things will ultimately be for sale,” Lonegro told the Stephens Fall Investor Conference.

Lonegro stopped short of acknowledging that CSX is ending the hub and spoke model on which intermodal operations at its Northwest Ohio Intermodal Terminal near North Baltimore are based.

Lonegro said Harrison wants to emphasize intermodal service to higher-volume, point-to-point markets.

As for reports that CSX has canceled plans to build a similar intermodal terminal in North Carolina, he would only say that plans for that terminal are under review.

However, speaking to the Baird Global Industrial Conference this week, Lonegro did say that CSX plans to reduce its capital spending next year and beyond.

This includes storing locomotives and freight cars and putting on hold expansion projects as the railroad transitions into a precision scheduled railroading operating model.

Lonegro said CSX  is likely to hold off on intermodal terminal investments in favor of leveraging the investments the railroad has made over the past decade.

Lonegro’s comments were the first made by a high-ranking CSX executive since a management shakeup in late October that will send three top executives out the door on Nov. 15.

The management changes also led to the cancellation of an investor’s conference that was to have been hosted by CSX in Florida on Oct. 30.

Instead, Lonegro said, Harrison gathered about 30 high-level managers in the Sunshine State and spoke for about six hours during what was billed as a “restart meeting.”

Some railroad industry analysts believe the investor conference that was canceled will be held during the first quarter of 2018.

During his remarks this past week, Lonegro said the North Baltimore terminal was being used by CSX to funnel traffic to and from smaller intermodal markets.

However, CSX has now decided to shut it down because its handling cost reduce profit in a line of business with razor-thin profit margins.

Lonegro said intermodal is all about creating traffic density. “If it costs you more to create the density, then you shouldn’t artificially create the density,” he said.

CSX plans to adopt a different approach to what Lonegro described as “ultra-low density lanes” but did not elaborate on what that will be.

“Hunter’s driving force around the intermodal strategy is to improve the profitability of that segment of the business,” Lonegro said.

Thus far CSX had ended intermodal service in scores of low-volume origins-destination pairs and moved light intermodal traffic in other lanes into its merchandise network.

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CSX Management Shakeup Spooks Some Investors

October 27, 2017

The fallout over a CSX executive leadership shakeup has spooked some investors and sent the railroad’s stock price tumbling.

At close of business on Thursday, the CSX price per share had dropped 2.60 percent to $52.92. In after-hours trading, the decline increased to 3.82 percent, to $50.92.

Cowen and Company Managing Director Jason Seidl told Railway Age magazine that his firm has received numerous calls from investors about the changes, which have Chief Marketing Officer Frederick Eliasson, Chief Operating Office Cindy Sanborn, and General Counsel Ellen Fitzsimmons leaving CSX in mid November.

CSX also canceled an Oct. 30 investors meeting that was to have been held in Florida and used as a forum to discuss the railroad’s future operating plans.

“There was no specific reason given for the Investor Day cancellation, but one would have to imagine the sudden departure of CSX’s CMO, COO and general counsel are primary factors,” Seidl said.

At the same time that CSX announced the departures of three top executives, it said it was bringing on board a former Canadian National manager who worked there with CSX CEO E. Hunter Harrison.

James Foote will assume the post of CSX chief operating officer and replace both Sanborn and Eliasson.

Akron Railroad Club member H. Roger Grant told Trains magazine that a management shakeup of the scale of that which occurred at CSX this week is unprecedented in the industry.

“I can’t think of another example of such a sweep of top executives,” said Grant, a professor of history at Clemson University and author of several books about railroads.

The changes will leave only Chief Financial Officer Frank Lonegro from the management team of former CSX CEO Michael Ward.

Siedl said some investors believe there is more going on at CSX than has been disclosed thus far.

“We do not think the departure of these three people, long-tenured executives at the firm, came on completely amicable terms,” he said. “We think their departure could further disenfranchise additional employees, many of which may blame current management for their departures. This would be something the railroad does not need as it attempts to improve its well-publicized service issues. We expect CSX shares to underperform those of its peers in the near-term or until an explanation is given that can assuage investors’ anxieties.”

In a news release announcing the management changes, CSX said that Sanborn and Eliasson were leaving to pursue other opportunities.

That wording is often used by companies to mask a firing or an employee otherwise leaving involuntarily. Fitzsimmons was said to be retiring.

Trains reported that some industry observers were surprised that the management changes were disclosed less than a week before the investor day event and while the railroad remains under scrutiny of the U.S. Surface Transportation Board in the wake of a summer of service disruptions.

Yet others said they were surprised that Harrison, who became CEO in March, waited this long to make major management changes.

The management shakeup mirrors what Harrison did when he became CEO at Canadian Pacific in bringing in executives from Canadian National, where Harrison had also served as the top executive, to oversee the transition to the precision scheduled railroading operating model.

However, Trains reported that at CP changes in top executives occurred over a five-month period and not in a single day.

The magazine said that concerns about Harrison’s health — he has an undisclosed medical condition that limits his travel and forces him to rely on supplemental oxygen — may have had something to do with the timing of the changes.

Harrison had said during a conference call to discuss CSX’s third quarter earnings that the issue of who would succeed him might be addressed during the investor conference in late October.

At CN, Foote was the carrier’s chief sales and marketing officer between 2000 and 2009. He left CN after Claude Mongeau was named to succeed Harrison as CEO.

Foote, who is now president and CEO of Bright Rail Energy, which oversees converting locomotives to be powered by natural gas, does not have railroad operating experience even though Harrison wrote in a memo to CSX employees that Foot “has a proven track record with implementing precision scheduled railroading and  . . . more than 40 years of railroad industry experience.”

One Wall Street analyst told Trains that Foote knows Harrison’s operating philosophy and what’s expected at a Harrison-led railroad.

“Foote could be the trusted, proven railroader that could be a solid backup for Hunter,” said John Larkin, an analyst with Stifel Equity Research. “Just being part of the senior team at CN was kin to accumulating operating experience.”

Yet Trains quoted another source as saying lack of direct operating experience could be a liability.

“Credibility with ops people comes from working day and night in the field,” said the source, who was not named. “If, for example, you haven’t changed a knuckle 50 cars from the head-end in blinding rain at 2 a.m., you won’t have much credibility among the ranks of T&E personnel, superintendents, and trainmasters. These are the people who get trains over the road and want to be led by people who know their daily grind.”

Larkin said Foote might be a short-term successor while CSX grooms Lonegro to be its next CEO if Harrison has to step down or he does not continue after his four-year contract ends.

Foote is not the first former CN manager hired by Harrison at CSX. Approximately 15 people who worked at CN have been hired in operations at CSX.

In return for being released early from his contract at CP, Harrison had to agree not to poach any of that carrier’s top managers.

However, he was able to bring from CP Mark Wallace, who is now CSX’s executive vice president and chief of staff.

3 High-Level CSX Executives Leaving Company

October 26, 2017

Three high-ranking CSX executives will leave the company on Nov. 15. Departing are Executive Vice President and Chief Operating Officer Cindy M. Sanborn; Executive Vice President and Chief Sales and Marketing Officer Fredrik J. Eliasson; and Executive Vice President Law and Public Affairs, General Counsel and Corporate Secretary Ellen M. Fitzsimmons.

A CSX news release used the proverbial “to pursue other interests” boilerplate to describe the reason why Sanborn and Eliasson are leaving while Fitzsimmons was described as retiring.

The release also said all three executive  “will remain engaged in supporting the transition until early 2018.”

Replacing Sanborn will be James M. Foote, a former executive at Chicago & North Western, and Canadian National.

Foote most recently was the president and CEO of Bright Rail Energy. During his time at CN, he worked under current CSX CEO E. Hunter Harrison as CN’s executive vice president sales and marketing.

In a statement, Harrison cited Foote’s experience with precision scheduled railroading.

CSX Vice President Risk Compliance and General Counsel Nathan D. Goldman will be promoted to executive vice president, chief legal officer and corporate secretary, replacing Fitzsimmons.

The management shakeup follows a period of several months in which CSX experienced severe service issues that raised the ire of shippers and led the U.S. Surface Transportation Board to hold a public hearing on the railroad’s service.

The STB began monitoring CSX’s performance in July, requiring the company to submit weekly progress reports.

Harrison said at the STB hearing that CSX will continue to implement the precision scheduled railroading model and has been making progress in overcoming its service issues.

CSX Delays Investors Conference

October 26, 2017

In the wake of high-level management changes, CSX is delaying an investors conference to an unspecified later date.

The company had been set to announce during the Oct. 30 event its vision for the future and some details about its operating plans.

In a statement, CSX CEO E. Hunter Harrison said, “I am more confident than ever in CSX’s ability to achieve industry leading operating and financial performance and look forward to showcasing our leadership team at a future date.”

CSX also announced that its board of directors has authorized $1.5 billion in share repurchases, which builds on the $1.5 billion program recently completed.

“The board’s action to expand the repurchase program demonstrates our confidence in CSX’s long term future and ability to generate substantial free cash flow,” Harrison said.

CSX Gained 1% Increase in 3rd Quarter Revenue

October 18, 2017

CSX said on Tuesday that it had third quarter net earnings of $459 million, or 51 cents per share, up from $455 million, or 48 cents per share, in the same period last year.

Excluding a $1 million restructuring charge, CSX said its adjusted earnings per share remain at 51 cents.

The results marked a 1 percent increase in revenue over the third quarter of 2016 and came after several months of discontent by the railroad’s shippers and scrutiny by the U.S. Surface Transportation Board stemming from numerous service issues.

CSX said that its revenue increase was due to core pricing gains and offset by the impact of an unfavorable mix of freight.

Overall, traffic was up 1 percent for the quarter. Merchandise traffic declined 5 percent, but coal and intermodal rose by 5 percent.

The company cut its expenses by $2 million with efficiency gains of $95 million, which more than offset a 19 percent rise in inflation and fuel costs.

Total volume was stable, while operating income improved 4 percent  to $876 million and the operating ratio improved 90 basis points to 68.1. In the third quarter of 2016 the operating ratio was 69 percent.

CSX said it has completed a $1.5 billion share repurchase program that it began in April 2017 and increased in July 2017.

“The company’s results for the third quarter reflect the resiliency of precision scheduled railroading, even during times of transition,” said CSX CEO E. Hunter Harrison in a statement. “With that transition largely behind us, we are now intensely focused on driving superior service for our customers and lasting value for our shareholders.”

Adjusting for restructuring charges, CSX said it expects to post a 2017 operating ratio in the high end of the mid-60s.

It also expects earnings per share growth of 20 to 25 percent from a base $1.81 in 2016, and free cash flow before dividends of around $1.5 billion.

In the fourth quarter of 2017 CSX said that its outlook for volume is neutral.

On the plus side, demand for U.S. export coal should remain strong while consumer demand through the holidays will boost intermodal traffic.

On the downside, CSX is forecasting a less favorable outlook for automotive, crude oil and domestic coal traffic.

During a conference call with investors and analysts, CSX management said the 12 percent intermodal growth during the third quarter this year shows that service is improving.

“The customers are coming back to us very rapidly,” said Fredrik Eliasson, chief sales and marketing officer.

Harrison proclaimed that the service problems that hindered the railroad last summer are generally fixed and that CSX will move forward at “breakneck speed” to further improve and streamline its operations.

He also expected to gain back traffic lost to truckers and rival Norfolk Southern. “I think it shifts back immediately,” Harrison said. “Shippers out there, they’re trying to get the best bargain they can get.”

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.”

CSX Managers Tout Service Improvements

September 7, 2017

CSX executives told a railway conference this week that the carrier is emerging from its operations meltdown and making progress in implementing its precision scheduled railroading operating model.

CEO E. Hunter Harrison acknowledged in a statement issued ahead of the 10th Annual Global Transportation conference sponsored by Cowen and Company in Boston that the railroad’s service problems were in part due to a “too much, too soon” rush to implement the operating model.

But Harrison said CSX management now sees progress in overcoming those problems.

“The railroad is now returning to a normal operating rhythm, and our performance metrics are improving,” Harrison said. “Fluidity in our terminals largely has been restored and we are appropriately resourced to continue making progress. Car dwell has improved from week to week for the past five weeks, and system-wide velocity is increasing.

“I’m confident that many of the challenges we and our customers have recently faced are behind us.”

Chief Financial Officer Frank Lonegro said CSX “continues to expect free cash flow before dividends (excluding restructuring charges) of around $1.5 billion and record efficiency gains for 2017.”

However, the service issues that occurred in July and August have prompted CSX to change its 2017 full-year guidance from an operating ratio in the mid-60s to an operating ratio around the high end of the mid-60s and earnings per share growth from around 25 percent to a range of 20-25 percent.

Despite the improvements, CSX’s on-time performance was 50 percent last week, well behind last year’s 66 percent mark and the record 88 percent recorded in May this year.

“The CSX of the Hunter Harrison era is still under construction,” Frank Lonegro said at the conference. “While I say ‘please pardon our dust,’ I also tell you that the fundamental building blocks are in place to enable us to provide two very important things. The first is consistently high levels of service for our customers and the second is a radically improved financial trajectory for our owners.”

Lonegro said the railroad’s focus now is on reliably executing and refining the new operating plan.

He said CSX still expects to have between two and four hump yards and that by flat-switching two-thirds of its traffic, the railroad can cut the costs of processing cars, bolster yard productivity, trim hump-related capital expenses, and reduce transit time by a day.

Average train length has increased 7 percent since July 1 and fuel consumption has fallen by 6 percent. More than 300 crew starts per week have been cut and employment is down 2,700. CSX has also eliminated about 1,000 outside contractors.

The nine operating divisions of CSX have been reduced to five regions.

Although it has yet to undertake a line-by-line analysis, CSX is willing to consider bids to buy its lighter-density routes. “Everything’s for sale at the right price,” Lonegro said.

CSX Claims Shorter Dwell Times in STB Report

August 30, 2017

In its latest report to the Surface Transportation Board CSX said it has made progress in reducing dwell time in terminals even as on-time performance has continued to decline.

The letter from CEO E. Hunter Harrison noted that the resumption of hump operations at Avon Yard near Indianapolis has enabled the railroad’s western terminals to become more fluid.

Secondary congestion that had overflowed from Avon and other yards has been contained. CSX said that its terminal dwell time declined to an average of 11.8 hours in the week ending Aug. 25, down from a peak of 13.2 hours five weeks ago.

In its six western terminals, CSX said dwell time averaged 13.7 hours last week, down from a peak of 22.1 hours five weeks ago.

CSX said its on-time originations fell to 64 percent, down from 70 percent a week ago and 87 percent in the last week of June. On-time arrivals followed suit, declining to 51 percent from 55 percent last week.

Average train speed was 13.2 mph, measured using a new standard that CSX recently adopted. That’s 15 percent slower than the average speed in the last week of June and below historic averages for this time of year.

However, some shippers are saying that CSX service remains erratic.

“We have not seen evidence that overall service is improving,” said Scott Jensen, a spokesman for the American Chemistry Council.

In its latest report to the STB, CSX said it has undertaken a number of steps, including sending during the past three weeks commercial personnel to “challenged” field locations to improve communications with customers, particularly those who have complained about CSX’s service.

Harrison said the reactivation of the hump at Avon Yard leaves the railroad with five hump yards, adding that the goal is to find the right balance of hump and flat switching yards to optimize efficiency.

“We are intensely focused on maintaining a balanced train network, reducing freight transit time by minimizing crew handlings, and scheduling each car and train in a manner that delivers optimal results for our customers,” Harrison wrote in the CSX report.

Earlier this year, CSX ended hump operations at yards in Atlanta; Hamlet, North Carolina; Stanley (Toledo), Ohio; Cumberland, Maryland; Birmingham, Alabama; Nashville, Tennessee; and Louisville, Kentucky.

CSX Union Hits Back at Harrison Obstruction Allegations

August 8, 2017

A CSX labor union has taken issue with assertions by the railroad’s CEO E. Hunter Harrison that some CSX workers are the reason for service issues.

In a letter to CSX shippers, Harrison contended that some CSX employees were resisting the changes that management has made in operations and that this was resulting in service disruptions.

Railway Age magazine reported Monday that it obtained a copy of a letter sent to Harrison last week by the Sheet Metal, Air, Rail and Transportation Workers, which represents some CSX operating employees.

The letter was signed by SMART’s five co-chairmen and said that the union “ . . . refuses to accept responsibility for disruptions that negatively affect the customers when we have no input on operational changes. We receive minimal, and in most cases, no communication from any department about the significant changes being implemented almost daily.”

The letter said that Harrison has ignored the union’s repeated requests to be involved in planning changes and that it viewed the CEO’s charges as “a personal attack,” “a kick to the gut,” and “a severe blow to [employees’] morale.”

SMART criticized CSX for what the union termed “harsh treatment, furloughs and repeated violations of their collective bargaining agreement.”

In denying Harrison’s allegations that union members had intentionally disrupted operations, the SMART letter said, “This organization will not allow our members to serve as an excuse for management’s inability to communicate and execute your ‘precision scheduled railroading.”

The magazine reported in late July that CSX had changed work hours from four 10-hour days to five eight-hour days in an effort to reduce train delays.

However, that has made it more difficult for employees working far from home to get to work and back in a reasonable length of time.