Posts Tagged ‘James Foote’

NS, CSX CEOs Tout Service Improvements

September 16, 2022

CEOs of Norfolk Southern and CSX said in remarks during investor conferences recently that their respective companies are slowly improving their freight service as newly hired conductors qualify for active duty.

The two Class 1 railroads have cited crew shortages as a major contributor to service issues that have drawn the ire of shippers and regulators.

Both spoke at the Cowen Annual Global Transportation & Sustainable Mobility Conference.

As reported by Trains magazine, CSX head James Foote said his railroad is lagging its goal of full train and engine personnel.

CSX now has 6,800 active T&E workers and expects to reach 7,000 active crew members by year’s end.

“We’re gradually, gradually improving,” Foote said. “Service metrics show it. Velocity shows it. Dwell shows it. On-time performance shows it. It’s a grind. It’s been really tough. But we’re continuing to show progress.”

At Norfolk Southern, CEO Alan Shaw said the conductor workforce have increased by 275 since the end of the first quarter with 923 conductors in training.

The level of active T&E crews is up 4 percent and close to matching the level of last year.

Shaw said merchandise on-time performance had improved to 67 percent in early September. Last May it had sagged to 48 percent.

“Demand for our product is exceptional right now, and it exceeds our capacity,” Shaw said. “As we speed up our network, which we have started to do, we have more capacity in our network and can take advantage of the volume opportunities.”

However, NS continues to see higher than desired crew attrition rates at terminals in Fort Wayne and Elkhart, Indiana; Louisville, Kentucky; and Cincinnati.

CSX to Get New CEO on September 26

September 15, 2022

CSX CEO James Foote will retire later this month and be replaced by a former Ford Motor Company executive.

Taking the helm of CSX on Sept. 26 will be Joseph R. Hinrichs, 55, who has worked in the automotive, manufacturing, and energy industries for more than 30 years.

Joseph Hinrichs

At Ford he was president of the company’s automotive business until 2020. He also served as President of Global Operations, President of the Americas, and President of Asia Pacific and Africa.

In a statement, Hinrichs pledged to continue CSX’s focus on growth, technology, and improving the company’s culture.

Hinrichs also serves in advisory and board positions of various companies including Exide Technologies, Luminar Technologies, microDrive, and First Move Capital.

He previously served as a Senior Advisor at Boyden California, an operating advisor at Assembly Ventures, as well as a Director at Ascend Wellness Holdings; GPR, Inc.; Rivian Automotive, Inc.; and Ford Motor Credit Company.

He was chairman of the National Minority Supplier Development Council from 2016-19 and also served on the boards of CEO Climate Dialogue, Climate Leadership Council, and the US-China Business Council.

Hinrichs earned a bachelor’s degree in electrical engineering, graduating magna cum laude from the University of Dayton, and an MBA from the Harvard Business School.

He was awarded an Honorary Doctor of Humane Letters degree from Tiffin University and an Honorary Doctor of Science and Business Administration degree from Cleary University.

A CSX news release said Foote will serve as an advisor to Hinrichs for six months. The CSX statement said the appointment of Hinrichs was a “planned secession.”

Foote also will step down from his post on the CSX board of directors

A story posted on the website of Railway Age included a note from editor William C. Vantuono saying that during a short interview following the announcement, Hinrichs said having experience as a major railroad customer will be beneficial in his new job at CSX, and that addressing the service delivery challenges of the past two to three years will be his prime focus.

Vantuono noted that Hinrich’s experience as a railroad shipper is similar to the background of former Canadian National CEO J.J. Ruest, who had a long tenure in the chemical industry, another major user of railroads for transportation

CSX Earnings, Income up in 2nd Quarter

July 22, 2022

CSX on Thursday reported higher operating revenue and net income in the second quarter of 2022. This came despite lingering operating personnel shortages that had led the railroad to turn away business.

In a news release, CSX said net income rose to $1.178 billion, or 54 cents per share, compared to $1.173 billion, or 52 cents per share in the second quarter of 2021.

Operating income was up 1 percent to $1.7 billion while revenue rose 28 percent to $3.82 billion.

CSX attributed the increases in nearly all markets to pricing gains, fuel surcharges and the addition of Quality Carriers, a North American provider of bulk liquid chemicals truck transportation.

The operating ratio – the percentage of revenue devoted to expenses – was up to 55.4 percent. In the second quarter of 2021 the operating ratio had been 43.4 percent.

The carrier said the increase reflected the effects of lower real estate gains, the acquisition of Quality Carriers and higher fuel prices.

The carrier said its second quarter 2022 financial results included $18 million of expense related to the acquisition of Pan Am Railways and a $122 million gain (4 cents per share after taxes) from property sales recognized from the 2021 agreement with Virginia.

Second-quarter 2021 results included a $349 million gain (12 cents per share after tax) from the same agreement.

Freight volumes reached 1,594,000, which was nearly the same as the second quarter 2021 volume of 1,59,000.

The carrier said it is still targeting full-year double-digit revenue and operating income growth for the year.

Coal traffic grew 58.2 percent in the second quarter, but CSX management expects that commodity may decline due to market conditions.

Automotive carload growth was 10.4 percent with CSX management anticipating further growth this year due to the alleviation of a semiconductor shortage that has hindered auto manufacturing in recent months.

CSX managers also expect velocity improvements will result in volume growth in intermodal, boxcar and coal traffic over the second half of the year.

Velocity improved in the second quarter with 83 percent of planned work completed on schedule. Intermodal trip plan compliance was 90 percent while carload on-time performance fell 10 points to 59 percent.

Industry analysts said that the key to second half growth lies in how well CSX is able to resolve its worker shortage issues.

Those issues received considerable attention during the second quarter earnings call with CSX executives saying they are looking to increase the number of train and engine workers to 7,000 by the end of September.

But to reach that goal CSX will need to overcome high attribution in the T&E ranks.

“Our ability to hire and retain new workers, which is vital to improving our service and growing the business, remains challenged,” CSX CEO James Foote said during the earnings call.

He said CSX is not alone in having this issue because the labor market is tight and the COVID-19 pandemic “has had a profound effect on employees’ work and lifestyle preferences. Our hiring process has been steady, but slow.”

CSX has 6,667 active T&E workers but Foote indicated that new hires and veteran locomotive engineers and conductors are leaving CSX at significantly higher rates than usual.

The company added 311 conductors during the second quarter but crew availability of late has been lower than usual due to rising COVID-19 infections and workers taking vacations.

The railroad said it has had to respond by making “tough decisions” about what traffic moves and what gets held.

Priority is given to service-sensitive intermodal traffic and in instances where crew availability is tight preference is being given to bulk traffic over merchandise trains because the bulk commodities involve grain or coal being added to large stockpiles.

That was particularly the case in the Southeast where CSX gave priority to grain used as chicken feed. The result was that merchandise freight sustained delays of 24 hours or more.

Foote said CSX is hiring at a faster pace than attrition and he expects to turn the corner on crew availability.

Foote Defends PSR in Spirited Speech

July 20, 2022

CSX CEO James Foote gave a spirited defense of the precision scheduled railroading operating model during a speech to a shipper’s association, but acknowledged his company needs to do a lot of things differently.

As reported by Trains magazine on its website, Foote told attendees of the Midwest Association of Rail Shippers that blaming the railroad industry’s recent service issues on PSR is nonsense.

In hindsight, Foote said CSX made mistakes during the COVID-19 pandemic, including laying off workers when business plummeted.

“If I had the decision to make over again . . . we would have never laid off an employee,” Foote said. “Never. But there was no vision of the future, there was no idea what we expected to encounter.”

Foote said at the time he and other railroad executives expected the business downturn to play out as had other business downturns with the same cycle of layoffs and recalls.

CSX laid off about 1,000 operating workers but when it attempted to recall them, many didn’t return.

The CSX train and engine workforce was about 7,000 at the end of 2019, dipped to about 6,000 during the pandemic and rose to 6,800 after recalls went out.

Although CSX hired another 2,000 T&E workers, its workforce has fallen to 6,600 T&E employees because about half of the new hires have quit within the first six months of employment.

Foote said that happened because they began realizing they would have to work on weekends and holidays or miss the birthdays of their children.

He said the industry needs to find ways to make railroad work more attractive.

“We need to provide employees with greater flexibility,” he said. “Is it a different kind of bid arrangement, where they can go work on this kind of job one day, and this kind of job another day — yard jobs, where they can have a regular assignment and work regular days off, and then the people that want to make more money can bid the road jobs.”

Foote also took issue with the criticism that Class 1 railroads are acting at the behest of powerful investors.

“Everybody says, ‘oh, my God, he’s beholden to Wall Street,’ ” Foote said. “Do you have any idea how much money CSX has lost because of our failure to move freight? Enormous amounts of money. This doesn’t benefit me. This doesn’t benefit the shareholder. This doesn’t benefit anybody.”

He described the criticism of PSR as an excuse to “blame the railroad management for something they intentionally did. It’s insanity.”

More of Foote’s comments can be read at https://www.trains.com/trn/news-reviews/news-wire/csxs-foote-blaming-psr-for-rail-problems-is-nonsense/

CSX CEO Acknowledges Having Lost Traffic

June 7, 2022

CSX CEO James Foote acknowledged in an interview during an investors conference that the Class 1 carrier has lost traffic and missed new business opportunities due to ongoing service problems.

“How much business are we missing? Lots. This is not minimal. This is not on the fringes. We’re not doing the job we should be doing,” Foote told interviewer David Vernon during Bernstein’s 38th Annual Strategic Decisions Conference.

Foote attributed the service problems largely to shortages of operating crews. He said the Class 1 rail system needs to hire and train 300 more conductors to reach full staffing of 7,000 active train and engineer employees.

In the meantime, CSX has seen its carload traffic fall by 2.1 percent and its intermodal traffic decline by 0.6 percent based on figures reported by the Association of American Railroad through the end of May.

Foote rejected during the interview that the adoption of the precision scheduled railroading operating model has hamstrung CSX service.

“I’ve never seen anyone who I know who knows anything about railroads tell me that this is not the right business model,” Foote said.

“If the railroads had not done what they had done over the last couple years, the railroad industry right now would be a basket case.”

Foote said CSX furloughed workers when traffic fell during the COVID-19 pandemic and, “all of the sudden the business came flying back at us.”

Many of those furloughed workers declined to return to work at CSX and the railroad’s crew attrition rate has been 10 percent. The normal attribution rate before the pandemic was 7 percent.

Although CSX has hired 1,000 new conductors over the past year those gains were offset by the higher than expected attrition rate.

“Hopefully it’s a matter of months now that we start to see some improvement,” Foote said.

More from the interview can be found at https://www.trains.com/trn/news-reviews/news-wire/service-problems-related-to-crew-shortage-have-cost-csx-traffic/

Union Leaders Skeptical of Foote’s Comments

May 19, 2022

Although labor unions representing CSX appreciate some of the moves the carrier has made in recent months to improve management-employer relations, they are taking with a grain of salt recent comments made by CEO James Foote about his desire to improve the working relationship.

Trains magazine said the labor leaders it interviewed described the relationship with management as the worst it has been in decades. They were speaking about railroads generally and not CSX in particular.

Foote has spoken about the need to improve relations with workers in recent weeks and last week during a speech to the North American Rail Shippers conference he said creating better rapport with workers would be the biggest transformative change the industry could make.

Dennis Pierce, president of the Brotherhood of Locomotive Engineers and Trainmen, said he was “flabbergasted” by Foote’s comments because CSX has not met with the union since January and no contract negotiations are currently scheduled.

“He’s got the tools to fix it and he’s never used them. So we’re not sure what he’s talking about,” Pierce said.

In the eyes of union leaders Foote has been sending mixed messages. During a late April hearing by the U.S. Surface Transportation Board into freight service issues, Foote said the railroad’s crew shortage problems would disappear overnight if it could use one-person crews.

According to the Trains report, labor leaders see massive layoffs and operational changes prompted by the move to the precision scheduled railroading model as a major source of tension.

Other sources of conflict include what labor sees as punitive attendance policies, stalled contract negotiations, and no pay increases since 2019.

Unions see the desire of railroads to have one-person crews as a major reason why contract talks have stalemated.

Railroad industry management has not hidden its desire to reassign most conducts to ground-based roving positions in set territories. Conductors would be responsible for multiple trains within their territories and follow them in trucks or SUVs.

Union leaders acknowledge that CSX has taken some steps toward improving its relations with labor.

It has begun offering attendance bonuses to workers to stay marked up, has softened some discipline policies and boosted pay for new conductors.

Trains quoted industry observer Todd Tranausky as saying labor relations in the railroad industry are strained.

“But there is always tension between labor and management in any industry when large changes driven by automation are on the horizon, so it should not come as a surprise,” said Tranausky, vice president of rail and intermodal at freight forecasting firm FTR Transportation Intelligence.

The article can be read at https://www.trains.com/trn/news-reviews/news-wire/labor-leaders-skeptical-of-ceo-talk-of-improving-railroads-relationship-with-rank-and-file/

Foote Calls for New View of Workplace Culture

May 16, 2022

CSX CEO James Foote wants the railroad industry to rethink its relationship with its workers.

Speaking to the National Rail Shippers Conference last week, Foote said railroads need to discard the adversarial stance they often take with their workers and instead negotiate with them

“Lesson learned,” he said in reference to the difficulties CSX has been having hiring new workers. “People don’t want to work in the railroad business any more. People don’t like to work weekends. People don’t like to work nights. People like to go to their kids’ birthdays. People like to be home for Christmas.”

As Foote spoke about 40 union railroad workers picketed outside.

“We need to fundamentally review and understand the jobs that we offer to our employees,” Foote said.

“And I’ll tell you, it isn’t just about money. There’s been a mindset and a change in the world about what people want from the people they work for, and we need to change. And I’m talking about, primarily, that we need to change for the 85 percent of people who work for me that are in the union.”

Foote attributed the adversarial relationship railroads have with their employees in part to such federal laws as the Railway Labor Act and Federal Employers Liability Act.

Calling changing workplace relationships the biggest transformative change that CSX can make, Foote said his company needs to build better rapport with its workers.

“You sit down with your employees, you negotiate, and you come up with an agreement that’s beneficial to your company, and beneficial to your employees. It’s as simple as that,” Foote said. “That’s what every other business in the world does, and we need to put our big-boy pants on and get back into the negotiating arena.”

One complication to this is the fact that railroads negotiate with unions on an industry-wide basis. Foote suggested CSX might withdraw from those talks and work out contracts with unions on its own.

The nation’s railroads and it unions are in the third year of talks for a new contract.

However, he also suggested that the entire negotiating process needs to be examined as well.

In the meantime, Foote said CSX is unlikely to reach pre-COVID-19 pandemic levels of staffing until the third quarter of this year.

Before the pandemic, CSX had 7,100 train and engine employees. Like other Class 1 railroads, CSX has blamed freight service issues that were the subject of a recent U.S. Surface Transportation Board hearing on crew shortages.

Vaccine Mandate Has Foote Worried

November 12, 2021

In a speech on Thursday to the Bernstein 2021 Global Industrial Conference, CSX CEO James Foote expressed concern about how a federal mandate requiring workers to be vaccinated against COVID-19 will affect operations.

However, as reported by Trains magazine, Foote said the Class 1 carrier plans to comply with a Jan. 4 deadline to require vaccinations although a company spokeswoman said no decision has been made on whether to require unionized workers to receive the vaccine.

CSX is offering financial incentives for workers to receive vaccinations.

Foote said requiring workers to be vaccinated could adversely affect CSX’s efforts to hire and retain operating personnel.

Already, Foote said, crew shortages have restricted how much freight CSX can handle as well as hindered its efforts to provide reliable service.

Foote Responds to Service Complaints Assertion

November 11, 2021

In a letter to the U.S. Surface Transportation Board, CSX CEO James Foote sought to refute assertions that the Class 1 carrier is having service issues.

Foote said there has not been a surge in shipper complaints and that the carrier has increased the number of staff in customer service office by 40 percent.

He was responding in part to a letter written by STB Chairman Martin J. Oberman last month seeking information about such service issues as missed switches, delayed shipments and unfulfilled car orders.

Oberman said in the letter that regulators have been receiving a steady stream of complaints about CSX service.

Foote countered that if those informal complaints are coming into regulators that CSX wants to hear about them because the company cannot address issues it doesn’t know exist.

He also contended that although CSX service is not where it should be, that the carrier moving toward returning to 2019 performance levels as it continue to hire new operating personnel and such metrics as terminal dwell time, average train speed and the number or cars sitting for more than 48 hours without moving are among the best in the industry.

Foote’s letter has been posted at https://www.stb.gov/wp-content/uploads/JMF-CSX-service-update-to-STB-11-02-21.pdf

CSX Revenue up 24% in Third Quarter

October 21, 2021

CSX said Wednesday that during the third quarter of 2021 it had revenue of $3.29 billion, an increase of 24 percent compared with the same period in 2020.

The railroad said it posted a third quarter increase of 3 percent in volume. Coal traffic increased 16 percent while intermodal was up 4 percent.

Merchandise traffic fell 2 percent, which CSX officials attributed largely to a 26 percent plunge in automotive traffic.

Auto production in North America has slowed in recent months due to computer chip shortages.

CSX said net earnings for the quarter were $928 million (or $0.43 per share), a gain of 32 percent compared with the same quarter in 2020 ($736 million or $0.32 per share).

Operating income rose 26 percent to $1.44 billion. The operating ratio was 56.4 percent compared with 56.9 percent in 2020. 

“We are committed to helping our customers overcome current supply chain constraints and will continue to take action in order to keep our network fluid and design new solutions that enable the delivery of critical goods to millions of Americans,” CSX CEO James M. Foote said during an earnings announcement.

Officials said CSX is increasing overflow capacity at 13 container yards including in Cleveland, Cincinnati, Detroit, Indianapolis and Louisville. The program is designed to create additional storage and capacity.

They said this would free truck capacity and reduce port terminal congestion.

Since July, CSX said it has increasing hiring of train and engine operating personnel by 300 percent.

The carrier has created incentive programs to increase existing employee availability and hired additional workers at intermodal terminals to maintain fluidity.

During the earnings announcement, CSX said it expects double-digit revenue growth and plans to spend on capital programs between $1.7 billion to $1.8 billion.

More information is available at https://investors.csx.com/overview/default.aspx