That would be an accomplishment: Since 2011, CSX’s overall traffic volume has been flat while the U.S. gross domestic product grew 37%, according to a review of CSX volume figures and Federal Reserve economic data.
From 2011 through 2018, CSX’s merchandise volume grew 1.7%, coal fell 42%, and intermodal surged 26%.
Foote says railroads have lost traffic to trucks over the years because their service wasn’t reliable or consistent enough.
Now internal and independent surveys of CSX’s customers show the railroad’s service is much improved over the past two years, Foote says.
“What they’re getting in terms of service quality today is off the charts,” he says.
And that, he says, will position CSX for the next phase of its transformation: The railroad will begin to see above average growth in both volume and revenue.
Foote was asked if that meant the railroad would grow faster than GDP, the common measure of economic growth.
“Long term, yes, absolutely I think so,” Foote says, pointing to opportunities in the railroad’s merchandise network, which is less expensive than shipping by truck.
Two things will have to occur for growth to take off at CSX, Foote says.
First, merchandise service reliability, measured by trip plan compliance, will have to improve to around 90% to better compete with trucks. CSX is close, Foote says, but still has a ways to go.
“We will get that business when our service levels get reliable enough,” Foote says, and customers regain trust that the railroad is dependable.
Second, the current economic headwinds will have to subside. Although consumer spending and confidence remain high with unemployment low, the industrial economy is sluggish amid ongoing trade uncertainty. Much of what moves in merchandise service supports the industrial economy, and rail traffic has notched broad declines month after month this year.
Foote notes that it’s mid-November and the traditional fall intermodal peak has not materialized due to changing shipping patterns. “We’re in the peak season and there’s not a peak,” he says.
Intermodal shipments on CSX are running at 98% to 99% compliance with trip plans for containers and trailers, measured from terminal cutoff to terminal availability, Foote says.
The railroad estimates that 10 million highway shipments annually are able to be diverted to its intermodal network, which carried 2.9 million containers and trailers last year.
Foote spoke at the Stephens Nashville Investment Conference on Wednesday.
I learned from working in corporate America that the CEO usually knows very little about how the company works.
“Changing shipping patterns…” between the US-China trade wars and CSX’s mantra of “if it works, change it,” I don’t know how much longer that RR can toddle along.
CSX service levels are beginning to look a lot like PRR.s and NYC’s in the late 60s. We all know how that turned out. There are,of course, many structural differences but when service decays, the financials will inexorably follow. There is a fine balance between service, cost inputs, growth and long-term viability. CSX hasn’t found the sweet spot yet, nor will it so long as the PSR shibboleth is worshipped. When enough shipper logistics managers show up at STB hearings, complaints in hand, and politicos demand Directed Serviced Orders to keep constituents happy–or at least less noisy, perhaps we’ll see some substantive changes. The quaint idea that public utilities should be regulated in the public interest needs to be resurrected, not buried in a flurry of flim-flam and stock-jobbing.
none of what he says will happen with psr . and despite what he says , you will not find a single happy customer on any railroad that has psr. The customers need to be first and NOT the shareholder
Talk is cheap. Your service offering isn’t.
Raising expectations is great if only you can back it up.
Sometimes, you just need to stop talking. Please, Foote, just stop. Every piece of data that isn’t created under your rules is working against you.
Why is CSX still trying to figure it out. Just run trains with ot performance with tariffs below the competition and there is a chance to keep and grow the business. As it stands now, Moody’s recommends selling railroad stock.
No shipper gives a crap about trip plan compliance. All they want to know is when are their cars/goods being delivered, picked up, or recieved at the destination. Every other metric means nothing. Service and reliability will get far more credit than fuel consumption optimization compliance plans.
The best indicator of future behavior is past behavior.
Lots of luck with that. An 8 year relative decline calls for more than a hopeful future. Some of that OR is going to have to be shared with customers, and more flexibility with picking up customers loads as well as shorter times to delivery. More of the same will continue the present trend.
If you didn’t screw the service you’d be farther ahead in making it better service, but now you’re having to fix it from way behind at more costs.