STB hearing highlights CSX’s service improvements and mixed views on service from shippers

Freight railroad stakeholders congregated in Washington, D.C. yesterday for a public listening session at the Surface Transportation Board (STB) focusing on Class I rail carrier CSX’s service issues.

The objective of the session, which was originally scheduled for mid-September but was pushed back because of Hurricane Irma, was to allow the STB to hear from CSX about its efforts to implement a new operating plan and to address service problems on its network, as well as to hear from rail shippers and other stakeholders regarding recent CSX rail service issues they have experienced and to discuss whether additional service recovery efforts may be necessary, STB officials said.

STB said that going back to mid-July it has “been closely monitoring CSX’s performance after widespread service problems resulted from CSX’s implementation of changes to its operating plan.”

And it added that as part of the STB’s ongoing efforts to ensure reliable rail service is restored as quickly as possible, STB is holding weekly calls with CSX senior management and receiving weekly service metrics from CSX, adding that it has been updating Congressional oversight committees and other stakeholders informed of its actions and continue to transparently address CSX’s service reliability issues so that shippers, carriers, and interested stakeholders are up to date.

As previously reported, a July 27 letter to CSX’s Harrison from STB leadership, including STB Acting Chairman Ann Begeman, STB Vice Chairman Daniel Elliott, and Board Member Deb Miller expressed their concerns over on a number of informal complaints from both CSX customers and railroad industry stakeholders in regards to various service issues, including: transit times increasing significantly and/or becoming unpredictable; loaded and empty railcars sitting for days at yards; switching operations becoming inconsistent and unreliable; car routings becoming circuitous and inefficient; CSX customer service being unable to provide meaningful assistance; and slowing train speed and increasing dwell time along with numbers of cars online.

These CSX service-related issues stem from the implementation of significant changes to CSX’ operating plan, including Harrison’s longstanding practice of Precision Scheduled Railroading (PSR). PSR is a cornerstone of the ongoing implementation of CSX’s operating plan by its President and CEO E. Hunter Harrison, which he deployed in previous top executive positions at both CP and CN. Precision railroading requires cargo to be ready when rail cars arrive for loading or risk being left behind.

Other operational initiatives cited by Harrison since he took over at CSX in March include idling around 550 locomotives and 25,000 railcars and converting hump yards to flat-switching yards that he maintains are more efficient.

While service issues have been front and center for CSX over the last several weeks, it said on October 5 that that some of its key service metrics are now showing positive gains as it works to implement its PSR efforts.

That was a theme Harrison made clear at yesterday’s hearing, according to a Reuters report.

The report noted that Harrison apologized to its customers for the service disruptions, attributing them to derailments and internal mistakes such as closing too many yards.

And it added that Harrison said his PSR strategy was “critical” to turnarounds he orchestrated at both CP and CN, saying the “best is around the corner,” Reuters reported. What’s more, the report said this plan requires some “fine-tuning,” also suggesting that more “layoffs and other yard changes” are possible.

While Harrison stressed CSX is back on the right track, so to speak, some comments submitted to the STB by its rail shipper customers ahead of the hearing made it clear more work needs to be done, and other indicated they are pleased with the progress that has been made in recent weeks.

Ed Purtill,  Director Procurement for  Indianapolis-based Ardagh Glass Inc., wrote that its Dolton, Illinois facility that is adjacent to a CSX main line serving Chicago runs on a lengthy spur, with the main line needing to be closed down to deliver to its plant

“The Dolton facility is scheduled to have 3 switches each week however currently we are only receiving one,” Purtill wrote. “Often these cancelations occur at short notice and despite assurances that the delivery will be made by the CSX. As a result of continually being shorted in our raw material deliveries we are incurring expedite fees to truck raw materials. In addition, materials that are in transit become bunched and delivered in volumes that we cannot quickly consume; thus, we are financially impacted twice by the poor quality of service into the Dolton plant. Apart from this ongoing issue in Dolton, recently we encountered serious service issues in our Winchester, IN plant whereby the CSX decided to make operational changes without communicating these changes to us. Specifically, this change moved traffic from the CSX locations in Avon to Hawthorne. These continual issues are greatly impacting our operations and the profitability of plants and we would urge you to place greater controls in place to force the railroads to have greater accountability for the quality of their service, specifically on time and in full.”

T. Furman Brodie, Vice President of Charleston, SC-based Charles Ingram Lumber Company, Inc., wrote that January 2017 was the last month that Ingram received all of the cars ordered from CSX and since then, CSX “has repeatedly failed to deliver the total number of cars requested on the dates promised.”

“Additionally, CSXT has begun limiting us to five cars per week,” he wrote. “ However, we have not consistently received these five cars per week or had them arrive on the days scheduled. Since April CSXT has provided only 76% percent of the cars ordered on an average monthly basis, with only 60 percent of orders being filled in July. This level of service is unacceptable for any organization or industry, much less when you are the only option available for shipping by rail. The on-going issues with CSXT rail service are causing delays, confusion, lost production and thousands of dollars in unnecessary costs for lumber mills and all of our customers. As a single site family owned company, CSXT is the only option that we have to ship by rail. We need CSXT to correct their shortcomings immediately so that we can efficiently service our customers and successfully operate our companies.”

On a more positive note, Glenn B. Smith, Director, Feed Ingredient Procurement for Oakwood, Georgia-based Wayne Farms said it made a major investment in its Ozark, Alabama feed mill, which replaced three smaller feed mills, with this investment in this expansion in large part due to its longstanding partnership with CSX and its confidence in their performance.

“For the last several months, we have been hyper-sensitive to the recent challenges presented by the evolution toward [PSR],” he wrote. “Our local and corporate management have been in daily contact with CSX  local, unit train, and sales and marketing management team to insure our pipelines are moving expeditiously…I cannot say that there have not been some challenging situations that have arisen, but the positive news is that CSX as a whole has been very responsive and dedicated to providing a seamless supply chain for Wayne Farms,” adding that CSX has risen to the challenge of the recent operational changes, with communication being consistent and proactive from the local level to senior management.