STB schedules hearing on September 12 on CSX service issues

The Department of Transportation’s Surface Transportation Board (STB) recently announced it will hold a public listening session on Tuesday, September 12, focusing on recent rail service issues regarding Class I railroad CSX Transportation 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.”

And it added that as part of the STB’s ongoing efforts to ensure reliable rail service is restored as quickly as possible, STB is holding weekly calls with CSX senior management and receiving weekly service metrics from CSX, adding that it has been updating Congressional oversight committees and other stakeholders informed of its actions and continue to transparently address CSX’s service reliability issues so that shippers, carriers, and interested stakeholders are up to date.

As previously reported, a July 27 letter to CSX’s Harrison from STB leadership, including STB Acting Chairman Ann Begeman, STB Vice Chairman Daniel Elliott, and Board Member Deb Miller expressed their concerns over on a number of informal complaints from both CSX customers and railroad industry stakeholders in regards to various service issues, including: transit times increasing significantly and/or becoming unpredictable; loaded and empty railcars sitting for days at yards; switching operations becoming inconsistent and unreliable; car routings becoming circuitous and inefficient; CSX customer service being unable to provide meaningful assistance; and slowing train speed and increasing dwell time along with numbers of cars online.

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.”

STB subsequently issued a follow-up letter to Harrison on August 14 in which it that it was not apparent to the Board or invested stakeholders that there have not been tangible service improvements.

And it added that even though it previously requested that CSX’s senior management participate in weekly calls with CSX staff to review the state of the CSX network, as well as informal complaints submitted by rail shippers, it explained that much of the initial information offered up by CSX was in “narrative form without reference to railroad data or service metrics.”

STB said this made it difficult for it to assess the magnitude of CSX’s problems along with the pace of recovery, while rail service data submitted by CSX to the STB shows that it is still dealing with myriad service-related issues.

This prompted the STB to request CSX to provide various performance indicators it said are vital in assessing CSX’s recovery efforts, including:

• train performance (on-time departure and on-time arrival);
• car connection performance (right car/right train);
• car ordering (weekly car orders versus order fulfillment percentage);
• gateway/interchange performance for key gateways (average daily cars interchanged inbound/outbound);
• last-mile performance (industry spot-and-pull percentages);
• equipment and personnel resources (number of locomotives in service, number of T&E personnel in service, and train re-crew rate); and
• weekly number of problem logs generated for car delay, missed switch, and bad order cars

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.”

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 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.  

And in a recent survey based on feedback from nearly 60 rail shippers, Stephens Inc. found that on a scale of 1-10, the average ranking of CSX’s current service levels was 2.3, which was down from a previous reading of 6.6, while the rating for Norfolk Southern was 6.9.

As for when the CSX service issues may be resolved, the Stephens survey found that most shippers (60%) have not been provided with a timeline on when CSX’s service levels are expected to recover and for others, the message around the timing of a recovery ranged between several weeks (21%), several months (12%) and several quarters (7%).

“We also asked shippers if they believed these disruptions were temporary and would lead to a better service product over the long term,” Stephens noted. “In response, 51% said maybe, 42% said no and 7% said yes. In summary, shippers remain uncertain about both the near-term and longer-term progression of CSX’s service levels.”

Perhaps the most telling metric in the survey was the one focused on if shippers intended to move business away from CSX, with 70% saying yes, 23% saying maybe and 7% saying no. And on average, the respondents said that 34% of their current business with could shift away from CSX by the end of the year, it added.

“As it relates to who could pick up this market share, 48% said NSC, 39% said truck and 13% said other railroads / modes,” the firm wrote. “In summary, it is clear that the near- term market share shifts could be meaningful.”