“We’re going to be very, very, very careful before we would ever sell anything,” CEO Jim Foote told an investor conference on Tuesday.
“We’re not interested in exiting markets,” he says. “We’re interested in getting into markets and growing this business.”
Spinning off routes used to be a way for railroads to continue to provide service on marginal routes due to short lines’ lower labor costs, Foote says. That’s not necessarily true anymore as Class I railroad systems have reduced their costs and become much more efficient, he says.
Foote also contends that short line traffic growth on routes CSX has spun off over the years has been nil. CSX aims to grow business across its system itself rather than through new short lines, Foote says.
CSX is in the second year of a three-year plan that called for $300 million in line sales, Foote notes.
Former CEO E. Hunter Harrison, who died in December 2017, ordered a review of the railroad’s low-density routes, which totaled about 8,000 miles. At the time, officials said the railroad might ultimately sell or lease up to 4,500 miles of trackage that was not considered part of the core network.
But now CSX seems inclined to hang on to more trackage despite the intense interest in most of the routes the railroad has put up for sale.
CSX has sold three major track segments to date. They include Watco’s 126-mile Decatur & Eastern Illinois, 373 miles of Florida Panhandle trackage to RailUSA’s Florida Gulf & Atlantic, and Canadian National’s pending acquisition of the 236-mile Massena Line linking Syracuse, N.Y., and Montreal.
Remaining routes out to bid include about 415 miles of trackage:
• The Baldwinsville Subdivision branch line near Syracuse.
• Branches in West Albany and Rensselaer, N.Y.
• Cumberland Valley feeder lines extending east of Corbin, Ky.
• Eastern North Carolina branches terminating in Grangers and Plymouth, N.C.
• The Marietta Subdivision extending north out of Parkersburg, W.Va.
Separately, CSX in 2018 sold 176 miles of railroad in Alabama and Georgia to OmniTrax, which had previously leased and operated the lines as Alabama & Tennessee Railway and the Fulton County Railway.
Foote spoke at the Credit Suisse seventh annual Industrials Conference.
“Foote also contends that short line traffic growth on routes CSX has spun off over the years has been nil.” I seem to recall that most every short line that they’ve spun off reports increased traffic. Who do we believe? What are the facts? Looks like a good story for ‘Trains – The Magazine of Railroading’ to pursue.
They could start be re-instituting direct St. Louis – Cincinnati service over the mothballed former B&O – and perhaps doing some serious work to develop traffic along the line.
When they get express perishables going again between California and the southeast, then I will believe it. Until then, its all talk. Short lines are selling at all time highs per track mile right now, sounds like a waste of money to sink into them now, not including all the updates required.
What a stupid game they are playing.
Sell, sell, sell because the revenue per track mile isn’t high enough, the Street wants more. (so PSR arrives)
Now its buy, buy, buy, because now they have excess capital and need to exhibit “growth” for the Street. (place capital to entice new customers)
The only way a rail industry can “grow” is to promote online service. There are only so many containers and hoppers you can take across the country anymore. PSR does exactly the opposite.
Geez, make up your minds.
You should be investing that excess capital in your infrastructure. Start by reducing large grade changes, facilitating congestion bypasses and replacing all those 90+ year old bridges. Yes, I know the Street doesn’t like that because it can take many years for those incremental improvements to support returns.
Short term or long term, make up your minds.
the reason short line traffic hasn’t grown is because of the very poor service the csx has provided which has only got worse with psr .
You forgot to mention the sale of the P&W sub to Allegheny Valley RR, which was previously leased. Now the BPRR operates portion needs sold too. Still currently leased.
Good point Curt Warfel.
Obviously last mile local service with spot and pull each car is more expensive than the line haul where margin per train grows faster the more cars you add since those costs aren’t linear.
And equally obviously short line cost structures are lower.
I wouldn’t doubt that Class 1 maintaining “core pricing” on this higher margin service combined with lousy service hurts the short line growth despite their jumping through hoops to provide timely spot and pull service on their end.
CSX has raised rates and completely prevented shortlines from growing. Almost 100% of nil growth is laid at CSX’s feet. They talk out of both sides of their mouth.
CP just announced plans to buy back track across Maine. Are the Class 1’s legitimately expanding after decades of sales and abandonments?
“Foote also contends that short line traffic growth on routes CSX has spun off over the years has been nil.”
Knowing how CSX liked to maintain pricing discipline even under Michael Ward; I wonder how much of the blame for this failure to grow business on spun off lines can be laid at the feet of the folks in Jacksonville?
Also not mentioned was the lease of the Plymouth line to Lake State Railway which was 55 miles long.