Top CSX executive places a sharp emphasis on railroading as a career path and service at NEARS

A focus on continued service improvements and making railroads a more desirable place to work were key themes presented by Joe Hinrichs, President of Jacksonville, Fla.-based Class I railroad CSX Transportation at last week’s NEARS (Northeast Association of Railroad Shippers) Fall Conference held in Portland, Maine.

Hinrichs made it clear that employee buy-in, in any business, is key, noting that a successful business cannot be run without employees leaning into providing high service levels and wanting to be part of a solution.

“People naturally want to do a good job, and they naturally want to serve,” he said. “Nobody likes going to a customer that has been waiting for a rail car that is two days late. You have to start with the belief that we are a service business. That is important and why we exist. The best service businesses have the best employee cultures that want to be part of a high level of customer service.”

And at the company’s daily management calls, Hinrichs stated that the number one issue discussed each day on getting to even better levels of service or better levels of performance is manpower availability.

“In this industry, we went from a situation where we went from being one of the most desirable jobs in the community to not even being able to fill them,” he said. “These are well-compensated jobs [with retirement plans] that don’t even exist in most places…yet, we can’t fill a lot of jobs. We got to a point in this industry in the last five years in which employees were recommending family and friends to not work here. We have to create a better and different experience for our employees. That does not mean lowering standards for what we expect for attendance, work ethic, safety, and other things.”

Instead, he said it is imperative to create an environment where people feel valued, appreciated, and respected and are listened to and want to be part of the team.

“It is more fun to support each other and that is how you get the kind of culture—ultimately, we are not there yet—where people take care of and look out for each other and are part of a team that motivates itself and not letting each other down,” he said. “We are not there yet, but those are the objectives and the goals that we have.”

From a service perspective, Hinrichs made the blunt observation that “people do businesses with the railroads because they have to, not because they want to,” which he said needs to change.

“We have motivated people to find ultimate solutions for decades but have not grown any volume,” he said. “We exist to solve a problem for a customer…and shareholders give you money and capital to invest in that. But your purpose is to serve the customer and we can never lose sight of that. We have to be motivated to compete for the right reasons to prepare ourselves or the regulators force that upon us.”   

In the summer of 2022, Hinrichs observed that CSX had a bad summer, for various reasons, including staffing numbers, but things began to turn around by that September, due largely to the company’s trip compliance efforts.

And in that roughly 14-month period, he said CSX has been running carload operational efficiencies in the mid-80s [to get it closer to truck levels in the high 90s to drive conversions, noted TD Cowen analyst Jason Seidl in a research note], with intermodal in the high-90s, adding that those respective ranges remain intact today.

“It is important for customers to know this is not a blip but it is reliable,” he said. “We have gotten to that threshold and sustained it and now it is in our vernacular and in our DNA. Ultimately, if we want modal conversion, we may never get to truck levels, but we have got to get it near there.”

To that end, he pointed to the various advantages freight railroads can provide compared to other modes, including: lower costs; less congestion, and environmental benefits. In order for railroads to bring in more business, he said they need to be predictably reliable, consistent, and repeatable.

But even with the achievements CSX has made, which Hinrichs said may be record-setting over the 12-month period through September, he said more needs to be done, as the company is still leaving roughly 10,000 cars, out of 107,000 in its network, not getting to their destination on a daily basis.

“We have to think differently about what our expectations are of ourselves to deliver our service,” he said. “There was a belief that scheduled railroading and customer service could not co-exist and were in conflict with each other. Even though the five guiding principles that were put forward from the original scheduled railway ideas were—improved safety, control costs, improve asset utilization, improve the employee experience, and improve customer service—in the implementation was a matter of prioritization and focus. The fascinating thing we get to leverage our scheduled railroading to run a better network and serve our customers better. And in so doing, what is the number one cost of the railroad? How fluid the network is.”