CSX has lost nearly a quarter of its merchandise traffic over the past two decades but has seen its carload traffic hold steady over the past three years.
“It took the railroad industry decades of poor service to drive the business off the railroads onto the trucks,” Foote told investors and analysts on the railroad’s earnings call last week. “We are not going to get the business off the highway back onto the railroad in two weeks. So we’re going to have to earn it.”
CSX has to provide reliable service, prove it can deliver customers’ freight with trucklike dependability, and convince shippers that its service improvements are sustainable, Foote says.
Trip-plan compliance, which measures a car’s on-time performance, improved from 35% two years ago to around 85% today for carload traffic, Foote notes.
But given the way rail service has varied — good one year, poor the next — shippers are understandably skeptical of the improvements at CSX, Foote says.
CSX aims to sway shippers by providing trip-plan compliance data for every carload and intermodal container via the online ShipCSX portal, a feature the railroad rolled out late last year.
“We need to show him through this transparent tool that he can trust us to get his product there when we said we’re going to get it there,” Foote says.
Shippers will shift more business to rail — and pocket a 15% savings versus truck — once they trust the railroad, Foote says.
“We need to prove to that customer that this is a long-term … structural fundamental change in the way we do business,” Foote says. “And when we do that we’ll continue to see where we grow our merchandise and intermodal volumes at a rate that is faster than the industry.”
Foote downplayed CSX’s opportunity to gain market share from rival Norfolk Southern.
“We have billions of dollars of opportunity available to us from truck. Customers today that are shipping products with us in a boxcar … are also shipping 50% to 60% of their product in a truck because the truck is more reliable. I want that opportunity, which is billions,” Foote says. “It is crazy for me to go over there and price my service as a commodity to try and pick up a couple of million bucks off the other railroad. That’s the business model that has run the railroad industry down for decades. And that is not the business model that we are pursuing.”
Foote lives in transportation fantasy land. Shippers are voting and the results is less business. I understand the need for capital, but until the railroads break its worship of WS, the industry will continue to shrink.
I work with class 1 railroads every day and in 25 years I have never seen a more disfuctional industry as the class ones. all the class 1 CEOs need to be replaced.
More hot air from an incompetent railroad. It is like these guys are just learning how to run a railroad.
Talk is cheap. And, we hear a lot of it.
Does America want to make new steel?
Thyssen Krupp Technology
Amazon Traffic
Replacement of coal power plant customer.
Lackawanna Wind Mill Performance
Although he doesn’t call out NS by name; in that last paragraph Foote seems to be saying he has no interest in competing with NS. If this isn’t a validation of the need for competitive switching options for captive customers – nothing is.
Hey CSX: Get the lumber yard back as a customer who hasn’t shipped by rail in 30 years. That would be the real test of “the railroad’s increasingly reliable service.”
“Dependability and transparency keys to merchandise traffic growth”, which is exactly why it’s not happening. PSR operations are neither precise nor scheduled, PSR is merely a savage cost-cutting exercise that depletes railroads of both capacity and resilience; the smallest snow episode is generally enough to throw them into turmoil.
Hmmm. From a skeptical observer…. He says a lot of the right things. But if your intent is to chase the “billions and billions” currently running by truck, does it make sense to be cutting capacity back to fit a smaller traffic base? Yes, he’s right that it won’t come back in 2 weeks, but it seems to me that by trimming capacity, it’ll make it take even longer.
CSX has an amazing, yet sad ability to come up with, on a semi yearly basis, something NEW for the shippers that reeks of some front office cheerleading rah rah rah sales them. Put up posters around the freight yard and yard office (like we employees need to know?) Put out a press release to a public who wonders what CSX is, oh yeah, they’re the SOBS that run 17000 foot trains thru town and cut off access to home at 5PM.
Heard it all before, for 35 years, and yet they seem to still give away their traffic base and PO customers and make for poor moral with the ants on the ground.
So it goes.