“It’s really fun to watch the service improvements happen, to watch the customers embrace the changes that we’ve been through and understand that we had to go through what we went through in order to be where we are today,” Lonegro told an investor conference on Wednesday.
CSX service suffered last year amid the rapid rollout of Precision Scheduled Railroading under then-CEO E. Hunter Harrison. The sweeping operational changes last summer prompted service failures, forced shippers to divert business to trucks and Norfolk Southern, and brought increased scrutiny from federal regulators.
With service problems largely in the rearview mirror, customers have brought business back to CSX, Lonegro says. Some are taking a wait-and-see attitude. If service continues to improve over the next six months or so, those customers are likely to send more traffic CSX’s way, he says.
CSX continues to build on the changes Harrison began last year by focusing on the intermodal network and closely monitoring trip plans that cover every carload and intermodal shipment on the railroad.
The railroad aims to boost intermodal profitability through price increases, improved terminal operations, running longer trains, and reducing the number of handlings en route, Lonegro says.
CSX continues to discuss the Howard Street Tunnel clearance project with Maryland officials. Harrison pulled the railroad out of a joint federal-state-CSX project to clear the Baltimore tunnel for double-stacks.
“We’re continuing to focus on train length,” Lonegro says. The average is up 13 percent year-over-year, to about 7,200 feet across all train types.
Moving the same amount of tonnage on fewer trains translates into a 10 percent reduction in train starts, Lonegro says. Having fewer trains on the network helps reduce congestion and boost average train speeds due to fewer meets in single-track territory.
“Fewer headlights makes the railroad easier to run,” Lonegro says.
The higher velocity means freight cars and locomotives turn faster, enabling CSX to operate with 1,000 fewer locomotives, 15,000 fewer freight cars, and 3,000 fewer employees, Lonegro says.
Trip plans map out every aspect of a car’s movement across the railroad from origin to destination. The plans are closely monitored.
“At an absolute level, the numbers wouldn’t wow you,” Lonegro says of trip-plan compliance. “But the trend line is what would really show you the improvement. We’re up about 10 percentage points in the last 30 days on trip-plan compliance.”
Previously, CSX focused on train performance measures – like whether train Q109 is on time – rather than the carload performance that matters to shippers.
“We understand where all the failures are,” Lonegro says. “If you don’t know where the failures are you can’t fix them.”
Chief Operating Officer Ed Harris and his team are focused on driving trip-plan failure rate down, Lonegro says, which will cut costs, improve consistency, and enable the railroad to land more merchandise traffic.
Lonegro says CSX service is still not where it needs to be, but that everything is trending in the right direction.
He reflected on the year of change that began when Harrison became CEO in March 2017 and brought Precision Scheduled Railroading to Jacksonville, along with a mentality of constantly asking why and pushing for better use of assets.
“It’s not just the operating model but it’s the mentality and the cultural piece that goes along with it, and that gives you momentum,” Lonegro says. “When Hunter first started, it was really just one person trying to lead transformational change…Now you’ve got a small army of people who are trying to drive that change forward. And as time goes by, that gets all the way out to ballast-level employees. And that’s what’s going to make us great is when everybody’s pulling in the same direction under that set of principles.”
Lonegro spoke at the UBS Global Industrials & Transportation Conference.
The total cost of federally mandated safety systems.
So good that CSX is having “fun” with its changes and enjoying its perceived service improvements looking through the rose tinted glass at 550 Water Street. The view from there must truly be spectacular; so much that they are oblivious to the horizons beyond. It would be a different experience for Mr. Lonegro and the EHH disciples in Jacksonville to inquire about their intermodal employees as to just how much “fun” they are having. They are really “enjoying” all of the forced overtime and working on their scheduled days off because of the company refusal to rehire furloughed employees or replace ones that had enough and moved on. What a boost to morale! There are more operating shifts than there are workers to cover them. But that is OK—what do your employees need with rest and work/life balance anyhow? And the latest contract that combines ISRs (office) and ISWs (ramp) into ISEs where all employees are expected to perform at some point all of the job functions at the terminal? Employees that were hired as clerks/office personnel years ago with a number of them now in the twilights of their careers and/or with physical limitations restricting outside work are now faced with the prospect of removal from service if unable to perform the tasks. There was no regard for exempting these employees under these circumstances despite an excellent history performing the duties they were hired for otherwise. CSX has descended into a pathetic organization on a number of counts but none more so than for the treatment of its “ballast level employees”. Glad its all fun, games, and the thrill of Wall Street for the bunch in Jacksonville.
Just a few minutes ago I watched a westbound container train on the Pittsburgh line with about 30 loaded stack cars and about 80 empty stack cars. On the heals of this train was another westbound stack train with two engines and 9 stack cars each with a single container? WOW what a waste of resources
I would encourage anyone seriously interested in the CSX situation to read the May 2018 article in Progressive Railroads by Stagl. The repair of Harrison inspired damage at CN is moving in inverse direction to CSX. The cost, and inevitably OR, is extreme, but extreme damage requires extreme repair. The important object is, CN management understands the neccessary steps and is taking them; CSX management does not and wilfully does not. A smokescreen of diversion and mischarachterization wont change reality on the ground.
Uphill slow, downhill fast, tonnage first, service last…New CSX slogan perhaps?
Steven Bauer your comments were genius level. More of depth and reality than any of the waste of time hours of horse ball writing that now prevails. Upfront .is a death spiral of Trains editorial leadership that rejects controversial intelligence. Fred Frailey is missing in action lately. What survives are new contributors that are self promotional, and a whole magazine of sales orientation. The men who loved trains are gone; with the men and women who love lies. CSX, UP, AMCRAP, and doped up contributors that end comments with some maniac fantasy disclaimers Keep up your great thoughts a glowing light in this hell of darkness.
Tell me how fewer and longer trains are more customer friendly? I’d say that CSX is creating a new reality. CSX continues to serve only the shareholders. Service is by accident only.
Mutual funds and pension funds represent real people
One should ask CN and CP current and former customers how they feet about PSR. Being served once or twice a week instead of daily because of an obscure need to reduce engine and train crew counts is hardly convincing for a customer who could not care less about the operating ratio.
One should also look at CN today to understand why PSR is a folly: cutting capacity harms growth, and it is extremely expensive to restore later.
Also, Mr Foote, what about safety?
Amen Mr. Berg!
When I see these statements; my first question will always be, which customers are they talking to.
As a CSX customer; I will assure you no one from Jacksonville or even our CSX account manager has reached out to get our opinion on how PSR is working.
From conversations with industry peers or through participation in industry working committees, my take is that shippers have simply resigned themselves to working with the level of service CSX is providing. I would submit that surrendering to PSR cannot be characterized as “embracing”.
The naysayers of EHH just can’t stand the success his plan brings. I even read that Union Pacific are adopting many of his tactics, but they will never give him credit for it. EHH and Donald Trump, no matter how successful they are, people won’t acknowledge it.
Blah blah blah….still not convinced.
When you hit bottom, where else can you go but up?
I agree with Mr. Wareham in one respect. The late EHH did share a few character traits with Mr. Trump: an impossibly inflated ego, hogging all credit for anything positive and blaming others for any failures. SO UNFAIR.
Gerald McFarlane: Yes, institutional investors are still classified as stockholders, but these funds operate a lot differently than individuals. Further, I would guess that quite a few are not based on Wall Street or even New York City. That is certainly true of the top holders of CSX stock. Only 2 of the top five funds (Black Rock and Mantle Ridge, #3 and #4) are based in New York state.
James F Shigley
Those are still stockholders, whether it’s a mutual fund or investment firm, and those people are exactly whom these businesses are trying to keep happy…it’s called Wall Street. Just recently Warren Buffet and Jamie Dimon again called on CEO’s and companies to eliminate quarterly guidance for Wall Street types.
As for the operation parameters, I’d like to get a hold of IBM’s Big Blue or some other super computer and run to simultaneous simulations…both with the same base stats, one simulation would run multiple short fast trains, and the other would move the same stats running under the parameters of PSR…and then tabulate the OR metrics and see which one is better.
Commenters on this site (and elsewhere) talk about railroads (and other businesses) just interested in keeping stockholders happy. That statement can be misconstrued.. There are 875.3 million shares of CSX stock outstanding. Of those shares 77%, or 674,3 million, are owned by mutual fund companies, pension funds, and other investment firms, not by real people. In the case of CSX, five of these “institutional” investors own 284.1 million shares, or 32.5%, of the outstanding shares.
I swear that everyday these execs come to work they must light a candle and worship in front of an EHH statue that must be in the head office somewhere. Guess what guys? IT’S YOUR railroad now. So quit throwing the EHH initials into every statement you make concerning the railroad.
As for the comment by James below on the subject of acknowledging, it’s funny how when the CSX fell apart that EHH and the gang didn’t want to take the blame and tried to push it off on a few disgruntled players (the field people actually moving the trains). But yet I read this article and here is the CFO basically saying that “yes our service mess was due to the changes we made and that we had to do it.” So why wasn’t that said last year right away instead of blowing sunshine up the shippers backside and saying the service failures were not related to the changes?
Regarding the comment about the changes getting all the way out to the “ballast level employees”, boy what a slam that phrase is against the field people actually out there doing the work. That statement would in no way make me feel valued as an employee. Of course the CSX (and to a lessor extent UP in a recent blurb on here) see their field people as cash drains anyway. When you get told “we could replace you with robots” what is the incentive to be part of the team then? The goal is keep the low hanging fruit for business, junk the rest, and jack the rates up on the shippers we do have and those who are coming to rail because of a lack of trucking capacity right now (not because of their service). As long as the bonuses keep flowing and the stockholders are happy that’s all that matters in the corporate board rooms.