CSX cites gains in service efficiencies from Precision Scheduled Railroading improvements

Coming on the heels of back and forth correspondence with the Department of Transportation’s Surface Transportation Board (STB) over various service issues, Jacksonville, Fla.-based Class I railroad carrier CSX said today that things have started to turn the corner for the better.

“CSX has made very good progress in the last 60 days in transitioning its operating model to Precision Scheduled Railroading (PSR), and I’m confident that many of the challenges we and our customers have recently faced are behind us,” said CSX President and CEO E. Hunter Harrison in a statement. “The CSX team of dedicated railroaders has worked tirelessly over the last few months to implement our new operating model and moved as quickly as possible to address customer issues when they arose. The railroad is now returning to a normal operating rhythm, and our performance metrics are improving. 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 last five weeks, and system-wide velocity is increasing. I am confident that as CSX continues to implement the Precision Scheduled Railroading model, it will provide profound and lasting benefits to customers, employees and shareholders.”

As previously reported, CSX’s Harrison replied to STB leadership in a letter on August 24, in which he explained that CSX is implementing its Precision Scheduled Railroading (PSR) across its rail network and organization, which, he said, is based on five pillars, including improving service, controlling costs, optimizing asset utilization, operating safely, and developing employees.  

Since beginning the PSR conversion process, Harrison said CSX has undertaken profound, transformational changes, including balancing the scheduled network, customer service and communications, conversion of hump facilities to flat switching yards, asset utilization enhancements, and updated metrics.

“Since fundamental change cannot be implemented while working from two separate operating plans, the changes occurred over a short period of time to effectively realize the benefits of the new PSR plan,” wrote Harrison. “Changes of this magnitude tend to give rise to temporary challenges. We recognize that congestion has impacted traffic flows at various western corridor terminals during parts of July and August, and intermittent service issues have occurred elsewhere on our network. CSX has been and will continue to aggressively address remaining congestion, and has renewed efforts to inform customers during our implementation of PSR.”

STB recently announced it will hold a public listening session on Tuesday, September 12, focusing on recent rail service issues regarding CSX in which it will hear from CSX about its rail service problems and the company’s recovery efforts.

STB said that going back to mid-July it has “been closely monitoring CSX’s performance after widespread service problems resulted from CSX’s implementation of changes to its operating plan.”

These CSX service-related issues stem from the implementation of significant changes to CSX’ operating plan, including Harrison’s longstanding practice of precision railroading, which he deployed in previous top executives at both CP and CN. Precision railroading requires cargo to be ready when rail cars arrive for loading or risk being left behind.

Other operational initiatives cited by Harrison since he took over at CSX in March include idling around 550 locomotives and 25,000 railcars and converting hump yards to flat-switching yards that he maintains are more efficient.

STB leadership explained in their late July letter to Harrison that shippers have complained that CSX initiated changes to its operating plan without sufficient lead time and coordination efforts that would have allowed them to adjust their production cycles and supply chain logistics. They also cited a lack of communications on CSX’ behalf in regards to service changes.

The STB subsequently requested that CSX have weekly service calls with the STB’s Rail Customer and Public Assistance staff in order to “better understand the scope and magnitude of CSX’s railroad performance issues and its efforts to resolve these problems,” adding that on these calls “CSX should provide an overview of its operations including congestion at critical yards, availability of equipment and manpower, local spot and pull reports, and service to customer with critical needs.”

Earlier today, CSX CFO Frank Lonegro said at the Cowen and Company 10th Annual Global Transportation Conference in Boston that the CSX of the Hunter Harrison era is still under construction.

“The fundamental building blocks are in place to enable us to provide two very important things,” he said. “The first is consistent high levels of service for our customers, and the second is a radically improved financial trajectory for our owners.

The rollout of CSX’s PSR plan, said Lonegro has been equal parts intense, aggressive, and rapid, with a keen focus on converting to the PSR model, with an eye on refinement and execution.

“As our execution continues to improve, our service for our customers will also improve, as will our volumes and equipment turns,” he stated. “During July and August, we did experience some transitional issues and you saw those flow through in volume numbers and service measures that you see on a weekly basis. Two untimely mainline derailments also compromised our service recovery. Rest assured, the long term vision to achieve what Hunter has achieved at other railroads is still intact at CSX.”

And the changes Harrison is making at CSX are consistent with changes he has made at other railroads, explained Lonegro, in the form of restoring balance to the network, and redesigning building blocks such as the blocking plan, the train plan, and the terminal plan and are designed to bring a competitive service offering to its customers.

While CSX is full underway in its efforts to augment service, some shippers continue to voice their dissatisfaction to date.

“Service is still very unreliable with cars off-route and sitting,” said Janet Breese, distribution specialist for logistics at Marietta, Ga.-based AkzoNobel Pulp and Performance Chemicals, in a recent interview. “In addition, several diversions I’ve entered in August – which were accepted by CSX – and then summarily ignored.  This has caused one of our productions units to make adjustments to stay in operation.”

Breese noted that along with CSX service still not improved, AzkoNobel has had cars returning from Kentucky to Quebec that they took to Chicago and were delayed over the local lines for well over a week, explaining that the move to Chicago was supposed to allow the cars to move more quickly.