Posts Tagged ‘Union Pacific’

CSX Revamping Intermodal Service

August 16, 2018

The plans of CSX to revamp its intermodal business will focus on more profitable longer-haul service linking major markets.

Trains magazine reported on Wednesday that CSX has notified its customers that numerous changes are being made to traffic that is interchanged with BNSF as well as the pending end of 75 low-volume service lanes.

A similar change in interline service with Union Pacific had been announced about a week ago.

CSX said that the changes are designed to reduce transit time through Chicago.

The new operating plan will funnel interchange traffic coming through Chicago to five eastern destinations including Chambersburg, Pennsylvania; North Kearny, New Jersey; the Northwest Ohio Intermodal Terminal in North Baltimore, Ohio; Springfield, Massachusetts; and Syracuse, New York.

Intermodal traffic will be sent to those terminals by truck from markets now served by rail. For example, traffic going to and from Cincinnati, Cleveland, Columbus and Detroit will travel by highway to and from North Baltimore.

Baltimore will be served via Chambersburg; Philadelphia via North Kearny; Worcester, Massachusetts, via Springfield; and Buffalo, New York via Syracuse.
CSX said the changes will cut travel time, including by as much as a day between West Coast terminals and New England.

The changes will occur in mid-September with UP interchange and in mid to late September for BNSF interchange.

BNSF and CSX also will shift interchange traffic bound for the Southeast from Chicago to Memphis. This includes traffic headed for Atlanta, Florida, and Charlotte, North Carolina.

“We have been working closely with our interline partners, Union Pacific and BNSF, to streamline interchanges, especially for traffic routed through Chicago and the Southeast,” CSX Chief Marketing Officer Mark Wallace wrote in a letter to intermodal customers. “These changes, to take effect prior to peak season, will enable us to execute our service plan with greater reliability and speed during this important shipping period.”

Union Pacific had told its shippers in early August of the plans of CSX to end steel-wheel Chicago interchange between a number of UP origins and CSX destinations as well as to shift interchange away from Chicago and New Orleans in favor of Memphis.

Most of the 197 UMAX service lanes being discontinued are low volume, including 67 that have not had any container movements in the past 12 months. Other lanes being dropped averaged just one container per week.

“Maintaining these status-quo service offerings would be detrimental to the majority of our customers and the East-West transcontinental network, particularly during fall peak,” Wallace said in his letter tocustomers.

CSX contends that most of the UMAX volume in cancelled steel-wheel interchange lanes can continue via crosstown trucks linking UP and CSX terminals.

However, Trains quoted an intermodal analyst as saying that might not happen because drayage capacity is tight in Chicago and it will increase the cost of the move. The analyst said drayage by highway will increase the travel time.

Movements from the West Coast to the Ohio Valley are likely to stay on the road once they are unloaded in Chicago.

In some instances, the traffic might be diverted to Norfolk Southern in Chicago. Of the UMAX lanes being dropped, 49 could potentially shift to NS.

CSX CEO James Foote had indicated during an earnings call conversation last month that the carrier was studying revamping its intermodal network. He said at the time that during his days at Canadian National that that carrier had undertaken a similar intermodal restructuring.

During his comments last month Foote said CSX would seek to become more efficient.

In his letter to shippers, Wallace said CSX will not be making any other changes to its intermodal network until the peak season is over.

The intermodal restructuring will not result in any closing of terminals.

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Todd Dillon’s Chase of UP 1943 and Train

June 9, 2018

Last Monday the Union Pacific OCS train came back from its trip east. Its schedule put it on the east side of Cleveland in daylight but things happen on the railroad so I headed eastward to make sure I would get daylight photos.

My first stop was Cassandra, Pennsylvania, where about 20 railfans had gathered, including some from Scranton, Pennsylvania, and one from Marion, Ohio.

Next we drove to Leetsdale, Pennsylvania, and despite being delayed in rush-hour traffic beat the special there. About 40 railfan were here. I saw many familiar faces including but not limited to Dave Ori and Roger Durfee.

The train made a quick crew change at Conway which let us get ahead again this time and get it from the I-376 overpass as it climbed to Summit Cut.

The last stop was at Rootstown in the last good light of the day. Over 50 railfans were camped out here including many ARRC members. This ended a great chase of what is probably the train of the year for Northeast Ohio.

Article and Photographs by Todd Dillon

 

Chasing UP 1943 in Pennsylvania, Ohio

June 7, 2018

Here are a few images of Union Pacific No. 1943 leading the passenger special that recently ran on Norfolk Southern to and from New Jersey/New York.

I started off in Altoona. It was cloudy but that kind of helped since it would have been a harsh “noon in June” high sun when it first came through.

The first two images are from Altoona and include a train and roster grab. The third photo is from the Route 22 bridge in Cresson.

The fourth is from Leetsdale. The last one is a “in your face” type of shot. I went with that to highlight the nose as from what I can tell this is the only non Armour Yellow unit to wear the wings.  It was made at Smith Goshen Road just east of Sebring, Ohio.

Article and Photographs by Roger Durfee

UP Special Saunters Through Northeast Ohio

June 5, 2018

The Union Pacific passenger train that ran to New Jersey and New York to help a bank celebrate its bicentennial, came back through Northeast Ohio Monday night.

By the time it reached Cleveland, it was dusk or getting to be dusk.

Operating as Norfolk Southern symbol 066, the train was led by UP 1943, the Spirit of Union Pacific.

It made good time on the Cleveland line after a crew change at Conway Yard near Pittsburgh.

The train was reported at Leetonia at 7:22 p.m., Sebring at 7:43 p.m., Alliance at 7:48 p.m., Rootstown at 8:05 p.m., Hudson at 8:18 p.m., Garfield Heights at 8:40 p.m. and Berea at 9:33 p.m. It had reached Chesterton, Indiana, at 6:19 a.m.

Photographers who ventured out to see the special got a bonus. Train 65E ran nearly a half-hour ahead of the passenger train with the Virginian heritage locomotive in the lead.

The 65E was through Hudson at 7:20 p.m., Macedonia at 7:35 p.m. and Bedford at 8:05 p.m.

On its way east, the UP special slipped through Cleveland in darkness on May 31. In both directions, the best place to catch the special was in central Pennsylvania.

UP OCS to Pass Through NE Ohio Today

June 4, 2018

After much anticipation the Union Pacific office car special on the former Erie Railroad to Harriman, New York, and back on Sunday.

Akron Railroad Club member Jack Norris said the weather was crazy with rain and clouds, sun and rain. “None of the photo locations I wanted to do were really great for this due to the time of day and weather, so I ended up in WC Tower in Waldwick, New Jersey, for an operators view. Heck, anyone can shoot from a bridge.”

There was a big car show in Waldwick as the train came through. My girlfriend caught the train up near Tuxedo, New York, about a half hour later. Our wet winter and spring has made for some lush greenery.

The train is slated to leave New Jersey today. ARRC Vice President Todd Dillon said the tentative schedule is to leave New Jersey at 5 a.m. from Croxton Yard.

There is a crew called at Conway Yard near Pittsburgh for 4 p.m. and the estimated time at Berea is 8:45 p.m.

But this is the railroad so times are subject to change. If anyone wants to catch this in daylight for certain, you probably should head east to at least Pittsburgh and possibly even further east depending on the train’s progress.

As for why the train went east in the first place, there is speculation that it had to do with the bicentennial celebration of Brown Brothers Harriman Company Bank, which was established in 1818.

Henry Harriman was a UP President and his son, E. Roland Harriman, was a UP chairman years later, thus giving the family a connection to UP history.

The celebration may have been held at the Harriman Mansion in Arden, New York.

Photographs by Jack Norris

UP OCS Came Through at 0 Dark 30

June 1, 2018

That Union Pacific business train that we talked about at the May Akron Railroad Club meeting did, indeed, pass through Northeast Ohio on Norfolk Southern rails, but under the cover of darkness.

It was reported in Berea at 3:45 a.m. and in Macedonia at 4:30 a.m. on Thursday en route to New Jersey operating as NS symbol 066-30.

The train had originated in Council Bluffs, Iowa, on Wednesday and arrived at UP’s Proviso Yard in Chicago about noon.

A report on the Trains magazine website indicated that the OCS had locomotives ES44AH No. 2752 and SD70AH’s Nos. 1943 and 9082 from Council Bluffs to Chicago. No. 2752 was removed at Chicago.

UP had equipped Nos. 1943 and 9082 in Council Bluffs with NS cab signal equipment so that No. 1943, which has a livery honoring the U.S. Armed Forces, could lead on NS rails.

No. 2752 led from Council Bluffs to Chicago because it had UP cab signals.

The OCS is expected to depart Croxton, New Jersey on June 4 to return to Council Bluffs.

UP Business Train Coming

May 26, 2018

A nine-car Union Pacific business train will reportedly be traveling through Northeast Ohio next week en route to New Jersey and New York next week.

It will be in Harriman, New York, on June 3 and will be led by UP 1943.

Information presented at the Akron Railroad Club on Friday night indicated that the train is scheduled to leave Chicago on Wednesday morning (May 30) and should pass through Cleveland on the Chicago Line and Cleveland Line of Norfolk Southern in the afternoon.

CSX Had Lowest 1st Quarter Operating Ratio

May 10, 2018

CSX has the lowest operating ratio among Class 1 railroads in the first quarter of 2018.

The operating ratio of 63.7 percent compared to 69.4 percent during the first quarter of 2017 and was 0.9 points ahead of second-place Union Pacific.

A year ago, CSX was second-to-last among railroad operating ratios.

Chief Financial Officer Frank Lonegro said earlier this year that CSX is seeking to hit a 60 percent operating ratio by 2020.

To be sure, there are underlying factors that enabled CSX to post the performance that it did.

Indeed, CSX’s operating-ratio ranking led by the pack due to a number of factors, including an accounting rules change that disproportionately affected longtime industry leaders Canadian National and Canadian Pacific.

Both Canadian carriers also had to contend with higher operating costs due to harsh winter weather and congestion.

Likewise, first quarter operating ratios tend to fluctuate due to the effect of winter weather.

CSX also benefited from a 96 percent increase in “other revenues,” which included such things as demurrage, a $30 million-increase in real estate sales, and a doubling of equity earnings of affiliates such as the Indiana Rail Road, Conrail, and TTX.

Even CSX CEO James M. Foote cautioned not to read too much into the first quarter operating ratio.

“The plan recently laid out at our investor conference is a three-year plan,” Foote said. “We’re only one quarter in, one out of 12, and we still have a lot of work to do to achieve our goals.

“As we demonstrated in the first quarter, we expect a solid step-down each year in the operating ratio. There remains significant work ahead in order to deliver on our 2020 target.”

Foote told investors earlier this year that the railroads is handling about the same amount of volume that it hauled a year ago with eight fewer hump yards, 1,000 fewer locomotives, 4,000 fewer employees and 20,000 fewer railcars.

Another Shipper Group Unhappy With Railroads

March 27, 2018

A shipper group representing fertilizer producers has joined a growing chorus of customers that is giving the U.S. Surface Transportation Board an earful about service issues.

“Rail service challenges have been ongoing and increasingly pervasive,” wrote Chris Jahn, president of The Fertilizer Institute, in a letter posted on the STB website.

Although Jahn mentioned CSX, he went on to say the carrier, which underwent major operational changes in 2017, is not the only problem spot for his members.

If anything, Jahn said, CSX service has improved recently. But fertilizer produces continue to experience “serious service disruptions” when shipping on Canadian National, Canadian Pacific, Norfolk Southern and Union Pacific.

“Unfortunately, these service challenges are becoming increasingly pervasive,” Jahn wrote.

Some railroad industry analysts say service problems are a missed opportunity for railroad companies during a time when truck capacity is limited. Instead, carload freight volumes have been falling this year.

“This isn’t a crisis — but could lead to a gigantic missed market share opportunity,” Anthony B. Hatch of ABH Consulting said in an interview with Trains magazine.

Reading Between the Lines of How CSX Management Projects Itself to the World

March 7, 2018

CSX executives revealed last week at long last their vision for their company. They were supposed to have done it last fall, but three top-ranking vice presidents left during a management shakeup. Then CEO E. Hunter Harrison died.

But things have now stabilized. CEO James M. Foote and his management team put forth the most optimistic and rosy scenarios that they dared to spin.

Hovering over those presentations in New York City, though was Harrison.

A year ago Harrison and the hedge fund Mantle Ridge were closing in on their takeover of CSX, a feat they pulled off with a relatively small amount of money and in a short amount of time.

Harrison had great plans for the hidebound CSX. He brought the precision scheduled railroading model that he had implemented on the Illinois Central and then at Canadian National and Canadian Pacific.

Foote and his team went to great lengths to show that Harrison’s vision is their vision, too. Harrison received the reverence normally reserved for a company founder or elder statesman of much longer tenure.

Harrison had a lot of work to do. Independent railroad industry analyst Tony Hatch and Trains magazine columnist Fred Frailey have described CSX as long hindered by adherence to the practices of its  predecessor railroads, meaning it was  averse to change and rather bureaucratic.

Frailey said ormer CEO John Snow as uninspiring and his successor, Michael Ward, sought to move CSX forward but was bewildered as to how to get it out of its rut.

No wonder the CSX board of directors gave Harrison a chance even if, to quote his successor Foote, Harrison engaged in “carpet bombing” the railroad with fast-paced changes that led to widespread service failures that drew the ire of shippers and the attention of the U.S. Surface Transportation Board.

But all of that is behind CSX now, or so management wanted those attending or watching the presentations in New York to believe.

Some have bought it. Writing in Progressive Railroading, Hatch quoted an  investor as saying this was the best CSX meeting he had seen in a decade of watching the railroad.

The current management team laid out  goal of a 60 percent operating ratio by 2020, described a new intermodal business strategy, and pointed to the huge buckets of money it will fill from sales of unneeded real estate and rail lines.

Having a plan and making it work are not always, though, the same thing. Truth is every railroad company talks about growing traffic and all of them are facing challenges finding it.

Hatch said that if CSX is to increase its carload and intermodal business it will have to provide consistent and improving service.

Frailey didn’t comment directly on the New York conference, instead referring readers to articles written by the magazine’s writer covering the story, Bill Stephens.

Those articles, Frailey correctly observed, did well in showing how CSX seeks to project itself to the world.

Yet Frailey said some industry observers with whom he regularly corresponds have been debating the endgame that CSX management is seeking and it isn’t necessarily to grow traffic and become North America’s best railroad.

Those observers think CSX plans to eventually liquidate the company.

Frailey said the case for liquidation goes as follows: “The railroad borrows money to buy back an astounding $5 billion of stock, making every dollar of profit worth more to shareholders who stick around because the same amount of earnings is spread among many fewer shares . . . Freight rates are being jacked up to cover fully allocated costs, a direction I’m told only Union Pacific has gone up to now—milk the cow until it collapses, the saying goes. Its carload business has been steadily eroding since the turn of the century.”

The veteran journalist who has written about railroads since the 1960s said  he understands that CSX has reduced its marketing staff to a hard core operation.

That hardly sounds like a railroad that will be able to aggressively go to find new business. Perhaps CSX expects that by offering a superior product that shippers will come to it begging to do business.

The word “liquidate” that some of Frailey’s contacts used to describe CSX’s endgame is unfortunate because it conjures up selling assets and going away.

Perhaps a better description might have been to break up the railroad much as Illinois Central Gulf slimmed down in the 1970s and 1980s until it emerged as largely a Chicago-New Orleans core with a few arteries connecting to it.

Yes, some rail lines were abandoned, but most wound up in the hands of short line and regional railroads.

It was that railroad on which Harrison first implemented his precision scheduled railroading model.

Frailey isn’t sure what to make of what CSX is doing, but doesn’t believe Foote isn’t prepared to do the job thrust upon him following Harrison’s death.

Foote was in the right place at the right time and for now CSX and its shareholders will let him sit at the throttle and take the EHH train a little further down the line. But it is Harrison’s train orders that Foote is following and not those Foote wrote himself.

Shareholders can be a fickle lot. Just this week Canadian National, a railroad described in most circles as highly successful, pushed out CEO Luc Jobin after the company hit a rough patch.

What I see happening at CSX is that management is trying to walk a fine line between pleasing investors and shippers and keeping at bay a few interested bystanders who have the ability to make life easy or miserable for a company.

Cost cutting and asset sales will only take a company so far in that endeavor. Of course growing traffic makes everyone happy, but is CSX prepared to spend the time and money needed to make that happen. It is so much easier to sell property and lightly used rail routes.

In theory, a company exists to serve its customers because without them you don’t have a company. But theory also says that a company exists to make money for its shareholders.

The two objectives are not necessarily in opposition. Arguably, you can’t make money for shareholders unless you provide a product or service that someone is willing to buy.

But you can’t improve your product or seek to sell more of it without spending money on that, too.

Management has always existed to reconcile those sometimes opposing forces.

The history of the railroad industry is filled with tales of financiers milking companies and leaving them behind. There is reason to believe that CSX is tilting toward enabling the financiers to make a financial killing before moving on to something else.

To quote a line from the John Mellencamp song Peaceful World, “These are just words and words are OK. It’s what you do and not what you say, if you’re not part of the future then get out of the way.”

We will know in time what the future of CSX is but take with some healthy skepticism how CSX projects that to the world.