CSX Part Two

[JerryC]

In other news, they're running 220 car trains with DPU's from the eastern Appalachains down to the export docks.

[JohnS]

In other news, they're running 220 car trains with DPU's from the eastern Appalachains down to the export docks.

Sounds like a disaster waiting to happen.

[TheOldDessauer]

From: Trains Newswire

CSX rolls out distributed power on unit coal trains in Appalachia

By Chase Gunnoe | January 29, 2018


HUNTINGTON, W.Va. — Unit coal trains in Appalachia are now running with distributed power less than two weeks after CSX Transportation officials indicated the increased use of the mid-train technology.

Ed Harris, CSX’s newly appointed executive vice president of operations, told investors during the railroad’s fourth quarter earnings report that CSX was now running its coal service more effectively with the use of distributed power.

On at least three separate occasions in the past week, CSX has run 200-plus-car coal trains east on former Chesapeake & Ohio trackage through eastern Kentucky and West Virginia. The coal trains, including a mix of company-owned and leased hoppers, are running between Appalachian coalfields and export facilities near Newport News, Va.

As part of its operational pledge to run fewer trains with fewer locomotives, the use of distributed power allows the railroad to double the size of unit coal trains originating from rural terminals in south-central West Virginia. Coal trains that used to be 110-cars long are becoming 220-car trains with the use of mid-train locomotives. The longer trains, sometimes exceeding 30,000 tons, also eliminate the need for a second train crew.

While distributed power seems to align with the railroad’s operational motto of fewer trains with fewer locomotives, this isn’t the first time CSX has experimented with distributed power in the coalfields of West Virginia.

In January 2016, the railroad, along with the assistance of General Electric representatives, successfully led an experimental 220-car distributed power train across the former C&O mainline into Richmond, Va., and south into the Carolinas.

A few experimental trains would follow, but the concept did not become part of normal operations, and thus, 110-car and 150-car coal trains returned with the assistance of Ronceverte, W.Va.,-based helper locomotives on CSX’s Alleghany grade.

It’s unclear if distributed power is here to stay, but sources familiar with the matter say CSX is in the process of training area crews on the use of distributed power just a week after Trains News Wire reported that much of the railroad’s Appalachian coal network is part of the 8,000-miles currently under review for potential sale.

[gtrtroger]

Wonder how long it will be before cities and towns along the route begin to complain about crossing wait times, disruption of emergency services, traffic patterns during rush hours...one train a night isn’t going to get the tonnage to the port.....

[buzz456]

I'd really like to see the economics of this taking the time to marshal the train set up the dpu and then get the thing to work without making every single civilian along the route unhappy. UP has been running 110 car coal trains for years with a rear dpu and not unduly disrupting auto traffic.

[JOHNtheREDNECK]

With trains approaching that kind of size I can only imagine what the crews must be thinking every time they need to apply the brakes. It doesn't matter how many locomotives you have, physics and gravity can be very cruel to the railroads.

[JohnS]

The FEDs are looking into the length of trains https://www.reuters.com/article/us-usa-train-safety/growing-length-of-u-s-freight-trains-in-federal-crosshairs-after-crashes-gao-idUSKBN1E01B9

[buzz456]

"Train length is currently unregulated. Any push to add rules would likely face stiff industry opposition because railroads use longer trains to boost margins through the better use of fuel, locomotive power, and rail cars without having to add extra crew."
I may be wrong but it seems to me like it only cuts down on crew. After all it takes the same amount of energy to move the same amount of weight no matter what. I have a suggestion after watching UP around Chicago and that's figure out how to keep the trains moving. The congestion is almost unbelievable.

[TheOldDessauer]

From: Railway Age

CSX: A mighty fine line, but …

Written by Frank N. Wilner, Contributing Editor


CSX is a mighty fine line, with an equally illustrious railroad ancestry. That CSX has fallen on difficult times, service-wise, is regrettable.

Whether the stumbles are self-inflicted is secondary to the CSX commitment to recover, as the speed and quality of that recovery will spell the measure of current management to meet Job No. 1 of every transportation firm: Deliver a customer’s product where it is wanted, when it is wanted, without damage and at a reasonable price.

World-class customer service, not an emphasis on short-term earnings as if CSX were Bitcoin, is the time-honored method to raise and stabilize stock price and stock dividend.

As widely reported, CSX underwent a hedge-fund-influenced management transfer in early 2017 with the arrival of President and CEO E. Hunter Harrison, legendary for reducing operating costs and boosting profits on three mostly linear railroads—Illinois Central, CN and Canadian Pacific (CP).

Spaghetti-like CSX is neither a linear railroad nor one whose unit-train business substantially exceeds single cars as is the case on CN and CP. Thus, the challenge of implementing the Harrison-branded “Precision Scheduled Railroading” was presumed as somewhere between the agony of Sisyphus and safely navigating the strait separating Scylla and Charybdis.

In optimistic anticipation of a prefigured larger-than-life Harrison transforming CSX into the envy of modern railroading, no matter the warnings, investors propelled upward the CSX stock price—albeit in roller-coaster fashion and with more than a dollop of speculative fervor. CSX customers and rail labor leaders have not been so smitten.

Following Harrison’s arrival, CSX shippers complained of closed classification yards; longer transit times; unreliable car service; circuitous routings with “ping-ponging” of their loaded freight cars across the railroad’s extensive East Coast network; and dreadful communications. Those lacking effective transportation alternatives complained of rate increases in the midst of service degradation. Harrison said it was all part of his quest to implement Precision Scheduled Railroading.

Labor leaders said CSX had lowered the bar for worker safety, citing excessive train length (now under investigation by the Government Accountability Office, Federal Railroad Administration and Surface Transportation Board); mandated shortcuts in methods of securing trains in yards and terminals; increased yard speed limits; a requirement that crews board and exit moving trains to save time; and the shedding of 12% of the workforce in 2017, with another 2,000 said to be on the chopping block in 2018. One union president accused CSX of launching “a personal attack” on workers. At CN, union workers referred to Harrison as “the ugly American” for his alleged cavalier attitude toward work rules.

A variety of other interests, including safety regulators and officers of other railroads, speak of “a gutting [at CSX] of corporate culture with unknown future impact,” and “the hollowing out of institutional knowledge” that includes the departure of 20 senior officers, including Vice President Operations Cindy Sanborn (quickly recruited by Union Pacific as a regional vice president and said to be on a fast track to higher office there).

When the STB—in receipt of complaints from members of Congress, rail labor organizations and aggrieved shippers—convened an oversight hearing Oct.11 (politely called a “listening session”), Harrison testified that CSX service problems could be a result of too-rapid implementation of Precision Scheduled Railroading, and that “you wouldn’t want to start at any company with a proxy battle.”

Saying that Precision Scheduled Railroading means “having to do more with less,” Harrison placed additional blame on the CSX workforce, complaining of their “resistance to change.”

Harrison’s strongest words were directed at CSX customers, especially the Rail Customer Coalition, an umbrella organization for dozens of associations representing hundreds of diverse shippers (including agriculture, automotive, chemicals, coal, manufacturing and electric utilities)—many large and politically powerful.

In an Aug. 16 letter he signed, Harrison termed shipper complaints of “chronic service failures” as “unfounded and grossly overstated.” He continued, “Since coalitions do not have service issues, we do not intend to continue a discussion with you about the service we provide to our customers.” Harrison sent copies to the chairmen of the House and Senate committees with railroad oversight.

The tone of that letter has created concern within the railroad industry. In fact, the members of that shipper coalition disparaged by Harrison include those who formerly comprised Consumers United for Rail Equity (CURE), which aggressively promoted a roll-back of the partial economic deregulation afforded railroads by Congress in 1980 (via the Staggers Rail Act). The defense against reregulation legislation—at times a near-run thing—cost the railroad industry millions of dollars in lobbying and other expenses. And the threat of reregulation remains.

Following Harrison’s death in December, the CSX board named as Harrison’s successor his disciple and confidant, James M. Foote, whose well-respected, four-decade rail background is primarily in marketing, sales, investor relations, labor relations, communications and law.

Foote, recognizing his limitations, brought aboard Edmund L. Harris as operations chief, another former Harrison confidant and assiduous student of Harrison’s Precision Scheduled Railroading. Harris was a consultant to The Children’s Investment Fund during the late 1990s when that hedge fund unsuccessfully attempted a hostile takeover of CSX. AT CN and CP, Harris had benefit of a highly trained middle-management with substantial institutional knowledge. Harrison is said to have hollowed that out at CSX during 2017.

While Foote now speaks of “a remarkable rate of positive change” at CSX, shippers continue to cite service failures in communication with lawmakers and regulators. During a meeting last week with STB officials, Railway Age was told that Foote, as with Harrison, “also had trouble accepting responsibility [for service failures] on behalf of CSX. He acknowledged CSX moved too fast, but definitely doesn’t acknowledge that CSX continues to do a poor job communicating.”

This all leads us to Congress, where notwithstanding tempestuous polarization, there is always bipartisan interest in safety issues, which rail labor organizations, for one, are eager to advance.

The House Rail Subcommittee will hold an oversight hearing Feb. 15 on Positive Train Control, which Amtrak President Richard H. Anderson said Feb. 4 could have prevented the South Carolina collision on CSX track.

While there is absolutely no correlation between that CSX-Amtrak accident Feb. 4—the cause and responsibility for which can only be determined by a National Transportation Safety Board (NTSB) investigation—and the Feb. 15 hearing on PTC, lawmakers of all political stripes cherish opportunities in election years to be on camera in support of safety, a completed NTSB investigation or not.

The STB, meanwhile, may be independent, but its funding comes from Congress, and its members require Senate confirmation. And the FRA is an agency of the Executive Branch Department of Transportation, whose Cabinet Secretary, Elaine Chao, is the spouse of Senate Majority Leader Mitch McConnell.

It should be enough to say that sharp sticks needlessly poking at the eyes of politically powerful shippers and labor organizations is its own train wreck waiting to happen.

It would be wise for the expatriate top CSX management, now returned from a long tenure in Canada, to reread, mark and inwardly digest the American political and regulatory process and atmosphere.

Rail labor and captive rail shippers previously aligned against freight railroads darn-near ignited Congress to reregulate the industry—and it could happen again. As author and Nobel Prize laureate William Faulkner wrote, “The past is not dead. In fact, it’s not even past.”

[TheOldDessauer]

From: Trains Newswire

CSX Transportation safety record comes under scrutiny as accident, injury rates rise

By Bill Stephens | February 12, 2018


When a misaligned switch sent Amtrak’s Silver Star barreling into a parked CSX Transportation train in South Carolina last week, killing two Amtrak crewmen and injuring more than 100 passengers, it was a tragic example of rising accident rates at the freight railroad.

CSX’s train accident and personal injury rates both rose last year, by 12 percent and 13 percent, respectively, amid the broad operational and management changes made by then-CEO E. Hunter Harrison.

The Federal Railroad Administration is becoming increasingly concerned with safety trends at CSX, according to people familiar with the matter.

The FRA believes the rapid pace of change at CSX over the past year — in the executive suite, to front-line operating personnel, and to operating rules — has increased the risk of accidents and injuries at the railroad, the sources said.

The entire railroad is under tremendous pressure to deliver on promises made to shareholders and shippers regarding improved financial and operational performance under Precision Scheduled Railroading.

“And that pressure does not just exist at the board level,” according to a safety expert. “It goes all the way down to the guy that is responsible for operating the locomotive or doing the inspections.”

The FRA is concerned about operating rule changes designed to improve terminal productivity, such as raising restricted speed in yards to 20 mph from 15 mph and allowing crews to get on and off moving equipment.

The FRA has received complaints from employees who say they don’t have enough time to properly inspect trains. And agency officials are concerned about the quality of inspections, which take longer when FRA inspectors are on site than when they are not, according to people familiar with the matter.

The elimination of road foremen of engine positions, and assigning their duties to trainmasters, has reduced the effectiveness of the supervision of engineers and conductors, according to people familiar with the matter.

Also a concern for federal safety officials: The ability of engineers to properly handle long trains, which CSX operates with distributed power less frequently than other railroads, the sources say.

CSX management has been “resistant” to some of the concerns the FRA has raised, according to people with knowledge of the situation. They noted, however, that it is not unusual for railroads to push back against the FRA.

“As part of our regular, ongoing coordination with regulators, CSX maintains an open line of communication with the Federal Railroad Administration to discuss any concerns or questions they may have, and we work to provide the FRA with information they request in a timely manner,” the railroad said in a statement. “Safety remains CSX’s top priority as we focus our efforts on executing the scheduled railroading strategy, which we firmly believe will result in a safer and more efficient railroad. Our goal is to become the best railroad in North America. We cannot be the best unless we are the safest, and we are relentlessly working toward that objective.”

In its annual report, CSX says it strives for continuous improvement in safety through training, innovation, and investment in technology that can help prevent accidents caused by human error.

“CSX’s FRA reportable personal injury frequency index of 1.19 for the full year of 2017 was 13 percent unfavorable versus the prior year as man-hours fell by 9 percent while overall injuries were up slightly,” CSX says. “While the FRA train accident frequency rate increased year-over-year, overall FRA train accidents remained flat and train miles decreased 12 percent year-over-year. CSX remains committed to ongoing safety improvement, with a focus on reducing injury severity and avoiding catastrophic events.”

But the spike in CSX’s accident and injury rates in 2017 was part of a longer trend.

CSX’s train accident rate increased 73 percent from 2013 through 2017, while the employee personal injury frequency rate rose 38 percent over the same five-year period, according to a review of the safety figures the railroad reports quarterly alongside its financial results.

CSX’s train accident rate — the lowest among the Class I railroads in 2013 — was the highest among the big six systems through the first 11 months of 2017, according to the latest FRA data available. It now stands at about the level it was a decade ago.

The vast majority of CSX’s train accidents, as holds true for the industry as a whole, occurred at low speed in yards and did not involve injuries or significant damage, the FRA data show.

But high-profile wrecks — such as the Silver Star collision and the derailment of a long train that forced the evacuation of 900 residents of Hyndman, Pa., in August — often indicate deeper safety problems, railroad safety experts say.

Veteran safety officials say the whirlwind of change at CSX would almost certainly affect the railroad’s safety culture.

Former CEO Michael Ward laid off nearly 1,000 management employees in February. Harrison became CEO in March and launched sweeping operational changes that in the summer led to service problems, shipper complaints, and increased scrutiny from federal regulators. In October, the departure of three top executives was announced amid the hiring of Jim Foote as chief operating officer. Harrison died in December and Foote was named to succeed him. In January, Ed Harris, who worked alongside Harrison at Illinois Central and Canadian National, was named chief operating officer.

“How do you maintain a safety culture when you are making some really radical changes to the operation in a short amount of time,” asks Allan Rutter, a former FRA administrator who now is division head of freight and investment analysis at the Texas A&M Transportation Institute in Dallas.

Another former FRA administrator, and former Amtrak CEO, Joseph Boardman, said it’s dangerous for any railroad to undergo as much change as CSX has in such a short period of time.

“Safety culture is a very difficult thing,” Boardman says. “You have to be consistent, you have to keep moving forward.”

Boardman wondered if cost-cutting at CSX has played a role in the uptick in the accident and injury rates.

Steven Ditmeyer, a former FRA official, says the increased rates are significant.

It appears likely that CSX workers didn’t follow rules and procedures to ensure that the switch was properly lined before the Silver Star wreck, Ditmeyer says.

“I view it as a legacy of Hunter Harrison,” he says.

Harrison made similar operational and management changes while leading Canadian Pacific from 2012 to 2016. Yet during that period, CP maintained an industry-best train accident rate, while personal injuries rose slightly, by 6 percent, but remained at the low end of the Class I systems.

The difference at CSX?

“Harrison was trying to do a much more rapid change on a much more complex network,” Ditmeyer says.

Meanwhile, the lack of a permanent FRA administrator hamstrings the agency because it creates a leadership vacuum, safety experts say.

The confirmation of Ron Batory, a respected rail industry veteran, as FRA administrator remains tied up in the U.S. Senate. After the Trump administration said it would abandon a deal for partial federal funding of new Northeast Corridor rail tunnels linking New Jersey communities and New York Penn Station, senators from New York and New Jersey have held up a vote on the matter.

[TheOldDessauer]

From: Railway Age

February 15, 2018
Class I, Freight, News, Regulatory, Safety

CSX: From first to worst

Written by John Previsich


Those who have spent many years in the rail industry know that rail workers are among the most loyal of employees, spending entire careers on the railroad and often following a parent into railroading. This loyalty is expressed in a myriad of ways, including today’s internet chat rooms devoted to railroad topics where railroaders discuss everything from operating plans to locomotive livery, and share photos and recollections.

Many of these employees remember too vividly the dark days of railroading during the 1970s, when rail resources were so thin that “service” and “reliability” had disappeared, standing derailments were common, employee injuries increased, and the future of the industry was in doubt.

Partial economic deregulation brought railroads roaring back, to where rail service quality became world-class as carriers were earning profits to reinvest. Along with that resurgence came a heightened emphasis on safety, with operating rules modified to eliminate unsafe practices, such as implementation of the nearly universal prohibition that restricted getting on or off moving equipment. Safety awareness became good business, with the accident rates on most railroads declining in parallel with the reduced operating ratios so coveted by stockholders and industry executives.

Safety awareness also became good government, with the Federal Railroad Administration taking an active role in not only enforcement of its own regulations, but also in collaborating with industry stakeholders on improvements to establish state-of-the-art programs such as the Confidential Close Call Reporting System and the Safety Assurance and Compliance Program. In addition, the National Transportation Safety Board finally saw its long-sought Positive Train Control come into law with the Rail Safety Improvement Act of 2008.

Now, however, we see a disturbing trend. Rail labor is concerned about what is occurring on CSX in the wake of a hedge fund taking control early in 2017. We have seen 4,000 loyal workers dismissed while the company brags of diverting $5 billion in profits and tax-reform savings to buybacks of stock and an increase in the dividend—all intended to bolster the stock price. And to help pay for all of this, CSX has rescinded the aforementioned restriction on getting on or off of moving equipment in the name of increased productivity.

Meanwhile, service quality is diminishing according to customers, and overall safety is headed in the wrong direction. CSX’s train accident rate—the lowest among the Class I railroads in 2013—was the highest among the big seven systems through the first 11 months of 2017, according to the latest FRA data available. It now stands at about the level it was a decade ago. CSX’s train accident rate increased 73% from 2013 through 2017, while the employee personal injury frequency rate rose 38% over the same five-year period, according to a review of the safety figures the railroad reports quarterly alongside its financial results.

History records what hedge funds can do to other industries, where a company is hollowed out to improve stock price ahead of the investors cashing out at a handsome profit and leaving the shell bound to crushing debt, thousands of families devastated by layoffs and the eventual ruination of the company. The impact in our industry is even more severe: The abandonment of a safety culture in exchange for stock buybacks and increased dividends can, and far too often does, cause death and destruction to people and property.

The latest troubling news from CSX is that it intends to sell off a large chunk of the railroad, and that means to short line railroads, where employee protection and regulatory oversight is minimal. Reduced regulation of such line sales may have had a place in 1980 when the Staggers Rail Act was passed, because it was intended to save light-density lines from abandonment. That is not the case today with CSX, as its management has indicated much of the railroad could be up for sale. These are not light-density lines unable to earn their keep. It is a sale intended to generate even more cash that we assume will be disbursed to stockholders.

With just seven major railroads left operating in North America, seamless interconnectivity is essential to keeping the network fluid. CSX actually cut its 2018 capital expenditures by a staggering 20%, a decision with far-reaching consequences for the industry overall. A failure of fluidity on any of the majors quickly cascades, affecting the entire network. This adds to the urgency of regulators looking closely at the current workings of CSX.

The good news is the Surface Transportation Board still has tools to investigate intended line sales, and we hope they will use those tools to require public hearings and full disclosure of the company’s intent, and allow experts to testify on the impact of such transactions to the public interest to which railroads are required by law to service. The bad news is that the Board currently has three vacancies mired in the backlog of unfilled positions in the Trump Administration, with no light yet showing at the end of that tunnel.

We are heartened that the Senate on Feb. 13 confirmed Ron Batory as the new Federal Railroad Administrator. Administrator Batory himself comes from a railroad family, his father having been a rail labor officer. Ron Batory brings a solid background in rail operations and safety to the job, which is essential to the statutory mission of the agency, and we are confident he will have an open-door policy to hear safety concerns of all stakeholders.

Going forward, expect rail labor to be aligned with shippers and the public to ensure that proper congressional oversight and administrative agency regulation is in place to protect the safety and security of the employees and the public, and to promote safe and efficient rail service at a reasonable price.

[Chacal]

History records what hedge funds can do to other industries, where a company is hollowed out to improve stock price ahead of the investors cashing out at a handsome profit and leaving the shell bound to crushing debt, thousands of families devastated by layoffs and the eventual ruination of the company.

This. Slightly off-topic, but this is exactly what happened to Sears Canada, after being bought by a hedge fund in 2005. It is now bankrupt, with thousands of retired employees discovering their retirement fund has vanished.

[JohnS]

History records what hedge funds can do to other industries, where a company is hollowed out to improve stock price ahead of the investors cashing out at a handsome profit and leaving the shell bound to crushing debt, thousands of families devastated by layoffs and the eventual ruination of the company.

This. Slightly off-topic, but this is exactly what happened to Sears Canada, after being bought by a hedge fund in 2005. It is now bankrupt, with thousands of retired employees discovering their retirement fund has vanished.

That's awful! I can't imagine what that must be like.

[buzz456]

From today's Wall Street Journal:

Railroads Embark on Apology Tour to Make Amends for Hunter Harrison’s Ways
The late executive revolutionized the industry, but successors look to buck contract losses with kindness

TORONTO—Two big railroads are reaching out to customers put off by the initiatives of the late Hunter Harrison, a hard-nosed turnaround expert who led both companies during a five-decade career.

Canadian Pacific Railway Ltd. CP 0.70% is using a charm offensive to woo back customers, a key part of its strategy after Mr. Harrison stepped down in January 2017. The railroad veteran went on to run Jacksonville, Fla.-based CSX Corp. CSX 0.66% , which is also undertaking an apology tour after suffering widespread disruption from implementing his turnaround strategy.

“I get on an airplane, go to someone’s office with my hat in my hand and say, ‘I’m sorry about last year, we screwed up and we didn’t do a really good job for you,’ ” CSX Chief Executive Jim Foote said in an interview last month.

Mr. Harrison, who died in December at the age of 73 after a brief leave from CSX, was best-known for revolutionizing the industry with his “precision railroading” strategy, used to reshape four of North America’s major railroads during his career. The strategy aims to cut costs in part by having the railroad dictate deadlines for customers’ cargo, instead of having railroads beholden to customers’ schedules.
Steaming Ahead
Canadian Pacific Railway's bottom line has improved under CEO Keith Creel's leadership thanks to improved customer relations.

Canadian Pacific freight revenue

8 billion Canadian dollars



Mr. Harrison’s efforts are still widely applauded for transforming the railroads he ran, improving profit and boosting share price. During Mr. Harrison’s 4½ years of leading CP, he cut the workforce to 11,700 from about 19,500, parked about 500 locomotives, sidelined 12,500 railcars and shut down rail yards in several of company’s U.S. and Canadian hubs. The railroad’s share price more than doubled during that period.

CSX shares added about $10 billion in market value in January 2017 after he joined the company to pursue a turnaround. Shareholders also voted overwhelmingly to grant him $84 million to reimburse him for compensation he gave up in switching railroads.

​“In the longer term, the shippers are better served by a more efficient railroad than they would have been if that efficiency drive wasn’t put in place,” RBC Capital Markets transportation analyst Walter Spracklin said.

But while the changes Mr. Harrison implemented made him a darling of Wall Street, they also upset some customers.

At CP, where Mr. Harrison often worked from a home office outfitted with screens and a computer that could monitor the railroad’s entire network, he initially confused customers by demanding that trains be loaded seven days a week despite periods of low traffic, a feature of precision railroading.

“There were several bumps in the road,” said Dan Mack, vice president of transportation and terminal operations at CHS Inc., an agricultural company that uses the railroad.

Mr. Harrison’s approach was partly responsible for CP losing some key shipping contracts to bigger rival Canadian National Railway Co. That pushed CP’s 2016 revenue down 7% to C$6.2 billion (US$4.91 billion) despite improving its operating ratio, a measure of efficiency.

Mr. Harrison’s family members didn’t immediately respond to messages requesting comment.

To buck further declines, CP Chief Executive Keith Creel, who took over from Mr. Harrison, is looking to create a more solicitous company. He is crisscrossing the U.S. and Canada to meet customers in person and holds regular town halls to smooth relations with workers. CP’s revenue in Mr. Creel’s first year as CEO improved by 5% to C$6.5 billion.

“When you take the time to listen, it allowed us to connect in a way that we haven’t in a long time given the changes that we drove [in the past five years],” Mr. Creel said in a recent interview.

In January, about a year after Mr. Creel took over, CP held a special meeting for 16 customers. The event kicked off with dinner in a refurbished business car at the railroad’s Calgary headquarters, where a sommelier paired wines with a four-course meal that included watermelon carpaccio, halibut, roasted lamb and gelato.

Several CP customers welcomed the opportunity to air their grievances. In sessions the day after the railroad’s lavish meal, they told executives about CP’s past shortcomings, including calls to customer representatives that went straight to voice mail, according to some customers who attended the meetings.

“It was critical where they need to hear where they’re failing and not providing the right amount of help to us,” said attendee Josi Santia, a vice president for Maritime-Ontario Freight Lines Ltd., a Brampton, Ontario-based intermodal shipper.

At CSX, the task of mending relations with customers has fallen to Mr. Foote, who assumed the CEO position after Mr. Harrison died. An experienced railroad marketer, Mr. Foote has tried to mollify shippers in face-to-face meetings. Last week, he attended a conference of shippers where in a keynote address he spoke of “charting a new course” for the railroad operator.

CSX has also indicated a willingness to reconsider projects that Mr. Harrison opposed. Soon after becoming CEO, Mr. Foote met with Maryland’s congressional delegation about CSX’s plan to back out of the expansion of a tunnel into the Baltimore ports. The company is now reviewing the plan.

[TheOldDessauer]

From: Progressive Railroading

CSX targets 60 percent operating ratio by 2020

CSX will aim for a 60 percent operating ratio by 2020 and revenue growth at a compound annual rate of 4 percent by 2019-20, the company announced today at its annual investor and analyst conference in New York City.

At the conference, CSX officials were expected to outline plans to build on the scheduled railroading model, increase efficiency, control costs and grow the business.

Since the company implemented the scheduled railroading model a year ago, it has "taken significant strides to streamline the organization and to make CSX more competitive," CSX officials said in a press release.

Over the past year:
• New executive leadership began with a mandate to centralize planning and decentralize execution to eliminate bureaucracy, facilitate decision-making and enhance process improvement.
• Disparate regional operating cultures evolved into a single CSX culture, driven by a flatter and more streamlined reporting structure. Nine operating divisions were converted into four operating regions. Also, the consolidation of nine dispatching offices into a central location has begun.

• The number of hump yards were cut from 12 to four to reduce freight handlings and transit times.
• The network design was altered to create a more balanced train plan focused on long haul, higher density lanes with faster transit times and fewer delays.
• The company produced six consecutive months of performance improvement, hitting record levels for dwell and velocity in 2018.

"While our scheduled operating model has already produced significant operational and financial benefits, substantial opportunities exist to further optimize the network, leverage excess capital, create savings and grow our franchise," said President and Chief Executive Officer James Foote.

In addition to the operating ratio and revenue growth targets, the Class I is aiming for average annual capital expenditures of $1.6 billion through 2020; cumulative free cash flow of $8.5 billion from 2018 to 2020; and a share repurchase of $5 billion to be completed by first-quarter 2019.

"Today marks the beginning of a new chapter for CSX, and we're confident we have the right plan and the right team in place to achieve our goal of becoming the best railroad in North America," said Foote. "The foundation of scheduled railroading has been set, and we expect to identify real growth opportunities that will benefit shareholders as our changes take hold."



We'll see...