CSX Transportation hits service snags amid operational changes

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CSX Corp. Chief Marketing Officer Fredrik Eliasson
CSX Corp.
JACKSONVILLE, Fla. — CSX Transportation executives acknowledged today that the railroad is having some inevitable service problems as it rolls out major operational changes under new CEO E. Hunter Harrison.

“There’s going to be a little pain and suffering,” before operations are smoothed out, Harrison said on the railroad’s earnings call on Wednesday morning.

The railroad’s key service metrics — including terminal dwell, average train speed, and on-time performance — all improved during the second quarter. Transit time is down, as well, Chief Marketing Officer Fredrik Eliasson says. And executives say they’re confident CSX service will be significantly better once precision scheduled railroading is fully implemented.

But, to-date, the operational improvements have not been felt evenly, shippers say.

“A large number of our members have said they are experiencing serious problems with their service from CSX,” says Scott Jensen, a spokesman for the American Chemistry Council. “Some have even reported that it has caused their customers to temporarily shut down operations.”

The scope of the service problems seem to be growing, chemical shippers say. One chemical shipper, who did not want to be named, said they’ve seen transit times increase by 48 hours in several key lanes.

The performance measures for average train speed and terminal dwell don’t paint a bad picture, says Jay Roman, president of Escalation Consultants, a Maryland-based firm that helps merchandise and bulk shippers negotiate contracts with railroads.

And that’s puzzling.

“What the metrics show is not what we’re hearing from shippers,” Roman says. “There seems to be a disconnect between the data and what shippers are running into. We’re trying to figure out why that’s happening.”

Some shippers have experienced a reduction in local service and report having problems with car supply, Roman says.

CSX’s service already ranked behind other Class I railroads in April, according to Escalation’s survey of shippers. And in a Cowen & Co. survey this month, 24 percent of shippers ranked CSX service as “poor.”

But one shipper, who did not want to be named, tells Trains News Wire that they’ve seen significant transit time improvement — enough so that their car cycle times dropped by eight days over the span of a month.

Service improvements have not been felt across all areas of the railroad, Eliasson told Wall Street analysts on Wednesday morning.

“There are certain places where we are not there yet,” he says.

Eliasson declined to provide customer satisfaction metrics.

“We are asking our customers to hang with us,” he says, adding that he speaks with customers every day to ensure they understand that there’s light at the end of the tunnel.

No shippers have diverted traffic to Norfolk Southern or the highway due to service issues, CSX executives say.

“This service disruption has been way overplayed,” Harrison says. Out of the 500 or so customers who provide 90 percent of CSX’s traffic, only two could make the case that they have experienced a “major disruption,” he says.

In one instance, service slid back to previous levels, Harrison says. The other case was a result of a labor slowdown, which Harrison described as “pushback by some of the troops.”

NEWSWIRETrains News Wire

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