UPDATE: The numbers behind CSX Transportation’s hump shutdowns

Amid long-term decline in merchandise traffic, just one hump exceeds volume target
RELATED TOPICS: CSX | OPERATIONS | INFRASTRUCTURE
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CSX Transportation Yard hump map
CSX Transportation
NEW YORK — CSX Transportation CEO E. Hunter Harrison has said that hump yards can justify their existence only when they classify more than 1,400 to 1,500 cars per day.

One glance at the volume levels at CSX’s top 10 terminals shows why the railroad is quickly moving to convert its hump yards to flat-switching facilities: The only hump that clears Harrison’s hurdle is Waycross, Ga.

And out of the other 11 hump yards CSX operated last year, only three — Selkirk, N.Y.; Nashville, Tenn.; and Willard, Ohio — processed more than 1,400 cars per day, according to CSX’s annual report. But they are likely to handle less traffic under Harrison’s operating plan.

“It’s not just changing it for the sake of changing switching operations,” Cindy Sanborn, CSX’s chief operating officer, told an investor conference today. “It is part of the larger plan of making transit across the network faster.”

CSX is making sweeping changes to its operating plan, including bypassing intermediate terminals to move traffic as efficiently, quickly, and reliably as possible.

“If there’s not enough cars that want to go there to support the infrastructure needed to maintain and utilize the hump, then we simply don’t need it,” Sanborn says. “We can move over into flat-switching operations.”

Sanborn today confirmed that CSX is transitioning the Birmingham, Ala., and Selkirk hump yards to flat-switching facilities, the sixth and seventh humps to be shut down since Harrison became chief executive in March. When those moves are complete, CSX will be left with five active humps.

But not for long.

“There’s not a specific number we’re aiming at, although it feels like we’ll probably be in two to three humps left when we are finished,” Sanborn told the Wolfe Research conference.

CSX has not yet said how much it expects to save by closing humps. But when Harrison was at CP, and idled four of the railway’s five humps in late 2012, he pegged the annual savings at $10 million or so per yard.

At the time, the Canadian dollar was roughly on par with the U.S. dollar, which suggests that CSX could achieve similar annual savings from shutting down humps, which are both maintenance- and labor-intensive. The total is a big number: $100 million annually if 10 humps are idled.

CSX’s carload traffic has been in long-term decline, reducing the need for hump yards.

Last year, CSX hauled 2.32 million merchandise carloads, not including automotive traffic that does not move over humps. That’s 605,000 fewer merchandise carloads than the railroad carried in 2000. Put another way, the traffic loss represents 22 fewer 75-car trains per day.

Merchandise traffic is CSX’s biggest business segment. It accounted for two-thirds of the railroad’s revenue in 2016. Sanborn says implementing precision scheduled railroading has the greatest opportunity to improve CSX’s merchandise service by making it faster and more reliable. And that, she says, should enable CSX to grow its merchandise traffic.

“Concurrent with making the changes in the hump network, we also are doing a very detailed deep dive into the overall operation in general,” Sanborn says.

CSX is bringing balance to its train plan, moving some unit train traffic into the merchandise network to create the density necessary to provide daily through train service, and adding local service seven days per week in some areas.

Wolfe Research analyst Scott Group noted that Harrison has written books explaining precision scheduled railroading. So why, he asked, didn’t CSX follow his recipe before?

“You can read a book about brain surgery but that doesn’t make you a brain surgeon,” Sanborn replied.

Having Harrison at the helm is like learning from the professor who wrote the textbook, Sanborn says. Plus, Harrison has been through this several times before and has invaluable insights about making operational changes, she adds.

CSX has experienced some service hiccups when making operational changes, Sanborn says, but it has been able to quickly iron out the wrinkles.

“His active leadership has really put us on a great trajectory as we implement precision scheduled railroading on our railroad,” Sanborn says, noting that on-time performance, train speed, and terminal dwell have all improved dramatically since Harrison arrived.

UPDATE: Full story with comments from CSX Chief Operating Officer Cindy Sanborn. May 23, 2017, 3:39 p.m. Central time.

NEWSWIRETrains News Wire

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