Eastern Railroad Discussion > Hunter Speaks - "Dramatic Changes" for CSX

On April 20, CSX presented 2017 First Quarter results and plans for the future.
Here’s a compilation of future plans as presented.

Cindy Sanborn, Executive Vice President and Chief Operating Officer :

“We’ve adapted our operating plans to incorporate some of our unit train business into our merchandise service.”

“We have 12 hump yards across the system. To date, we have converted four of those over into flat switching operations. This has allowed us to reduce support resources, particularly in managing the infrastructure that’s necessary to support hump yards, and the humping process. Reduce that. As well as, again, our plan has been focusing on improving the cycle time through those terminals. So, we have been able to do both of those things. As we look forward, we expect to continue to reduce several hump yards. We don’t have a hard and fast specific number. We will look at each one individually.”

Hunter Harrison, President and Chief Executive Officer :

“I’m back”

“This franchise, if you apply it to my career to some degree, has more potential than any one I’ve dealt with”.

“If you look at our service offering as it is today. We do, I think, there’s a lot I’ve got to learn, a pretty good job in our bulk movement and cycles, do a good job in the intermodal area. I think all of us would say that in our ‘merchandise’ category, we can make some significant improvement”
“I think you’ll see some of what I would characterize as some pretty dramatic changes in our cycles and I think you’ll see things like from Chicago to Florida markets that we’ll take two and three days out of that.”
“I think that’s pretty exciting for the customer base.”

“Where we had nine Divisions, I think we’ll go down to maybe a couple. Lines on organizational charts just cost money.”

“I don’t think any railroad has nine dispatching offices. We’re going to make some efforts there.”

“I would expect that before the summer is out, we’ll have 550 or so locomotives stored. We’ll probably have 25,000 freight cars put up.”

“Atlanta is a good example. Where I think we have four yards there. Cindy is helping me here. I think we’ll be down to maybe there’s one super-operation there. I know we have a tract of land there, that’s an operating property that doesn’t need to be, that’s worth a good deal of money”

“Prior to my arrival, this group had already taken on some initiatives to take 1000 positions out of this organization”.
“Those were all management positions”.
“I think the potential is there that sometime around the first of the year, there will probably be a similar number taken out also.”

“We’re bringing some jobs home. We have 250 or 300 employees in India. We’re bringing those jobs back here.”
“I’m more worried about CSX and Jacksonville and Made in America”
Someone else added that the “folks in India are contractors” and that they will "in-source that work" and “absorb that with the existing workforce”.

“I just think longer term, coal is not something that rails should depend on”.

“I would emphasize, and emphasize this. M&A has nothing to do with the strategy of me being here at all. One thing that I take great pride in is my integrity. I’m telling you that there is no such plan. I don’t have time. Look, I’ve only got 4 years.”

“I’m not a one man crew advocate."
“Today, to take a 20,000 ton train on line of road with one person. I don’t think is good business.”

“I’m a big advocate of day of the week pricing” for intermodal.

“My personal view is we’ll see a day where there won’t be ‘contracts’ as we think about. There will be tariffs, but they will be shorter even in length”

“We’re starting to re-schedule the railroad. I know that Cindy and company have gotten effectively Florida re-worked and done. I’ve been doing some looking westward towards New Orleans.”

“I know of no reason that this railroad cannot become the greatest railroad in North America. If you’re the greatest in North America, you’re probably the greatest in the world.”

"I'm going to take this major league franchise and turn it into a Single A ball club, and I've got four years to do it...."



Edited 1 time(s). Last edit at 04/20/17 13:31 by NSTopHat.

Integrity huh! Then why did the guy need personal bodyguards when at CP.
Integrity usually means respect and not employees trying to take him out!

Mike Bannon
St Catharines, ON

EHH clearly hates hump yards as he closed most or all of them on CP. But I would think an automated hump yard could push cars through the terminal faster and cheaper then a flat switch yard assuming both are run well. I agree that no classification and block swaps is faster and cheaper. But how can flat switching be faster then humping. Is it really? I see how maintaining the electronics and retarders in the hump yard adds cost but surprised those costs out weigh the benefits. Or are the humps he is closing that under utilized such that flat switching makes sense.

John

CP4743 Wrote:
-------------------------------------------------------
> EHH clearly hates hump yards as he closed most or
> all of them on CP. But I would think an automated
> hump yard could push cars through the terminal
> faster and cheaper then a flat switch yard
> assuming both are run well. I agree that no
> classification and block swaps is faster and
> cheaper. But how can flat switching be faster then
> humping. Is it really? I see how maintaining the
> electronics and retarders in the hump yard adds
> cost but surprised those costs out weigh the
> benefits. Or are the humps he is closing that
> under utilized such that flat switching makes
> sense.
>
> John

I can tell you this. I was talking to a Hamlet guy in the hotel in Rocky Mount just before they stopped humping in Hamlet. He said when he hired out was just before the put the automated system in, like I dunno 15 years ago or something, so they still had retarder operators. He said they could hump at ~3.4 mph or so because a good operator wouldn't use much of the master retarder, he'd let the car get further into the bowl and use the smaller ones. But the automated system bleeds off so much speed with the master retarder that they were only able to hump at 1.7 to 1.8 mph. They tried turning it up to 2mph a few months ago or something and had a sideswipe in the bowl the first night.

Some context from what Hunter did with the hump yards at CP.

He closed four of the five humps very quickly.
He kept the St Paul hump, which they said humped over 1000 cars per day.

He cranked up the hump speed from 1.25-1.5 MPH to 2.5 MPH
to increase the throughput by 23 percent.

> “I would expect that before the summer is out,
> we’ll have 550 or so locomotives stored.
> We’ll probably have 25,000 freight cars put
> up.”

That is exactly one of the first moves he made at BN back in the early '80s. He put a bunch of grain cars in storage and basically forced everyone to make do with what was left to handle the grain harvest. That was before he (and others in the school of Frisco management team) starting ripping out double track, closing humps, and implementing precision execution operating practices. So he is implementing practices that he has learned and perfected over the last almost 40 years on what amounts to about half of all the US and Canadian rail systems.

25% stock price increase predicted.. AP story today in the local paper.

http://host.madison.com/business/csx-predicts-percent-profit-jump-as-restructuring-begins/article_d3d14d6a-f6ac-5c86-96a8-0f8db6180725.html

chico

"CSX shareholders will vote June 5 on whether the railroad should cover an $84 million compensation package for Harrison that would reimburse him for compensation he forfeited at Canadian Pacific when he retired early.

Harrison has said he'll resign if the compensation isn't approved."

I'm still not sure I understand why CSX stockholders should pay the $84MM HE forfeited when HE decided to leave CP. I understand that some of the larger shareholders will see it as a small price to pay, since they have already seen a nearly 31% increase in shareholder value since he first wanted the job back at the beginning of the year.

Russ

Stock price closed up another 5.6% today . . . . .

Gordon

300 CSX employees in India? I wonder if there are that many in Indiana.

Seventyfive Wrote:
-------------------------------------------------------
> 300 CSX employees in India? I wonder if there are
> that many in Indiana.

I think Mr. Harrison may fall short on this one. These are IT people. Good IT folks are in very short supply.

The way CSX can bring those job back home would be to get in a salary war with every other US company. He could fill the jobs by paying more than other firms. But if CSX offers $100 thousand a year right out of college some other company will offer $105 thousand a year.

The IT work can be done in India, or Ireland, or wherever. Or CSX can pay through the nose for scarce talent and ability. Mr. Harrison might want to stick to railroading and leave the IT things to his top wire head.

I helped run a major hump yard in California for 14 years. Hump yards can only expedite traffic if they "block" or sort traffic to avoid other yards. A car that passes thru a major hump yard in the normal flow, that is inbound inspection, humping, re-assembly into a outbound train, re-inspect, and depart will consume a minimum of 24 hours, and the dwell time averages will probably get close to 30 hours. If the yard makes up a lot of once a day trains, dwell times can even be longer.
With the information systems available now, hump yards are most effective when they make destination groups that bypass intermediate yards. CSX had hump yards as close as 400 miles to each other. If their manifest traffic has declined just as it has in the West, some of the hump yards are doomed.

Norm

Norman Orfall
Helendale, CA
TIOGA PASS, a private railcar

aronco Wrote:
-------------------------------------------------------
> I helped run a major hump yard in California for
> 14 years. Hump yards can only expedite traffic if
> they "block" or sort traffic to avoid other yards....
>
> With the information systems available now, hump
> yards are most effective when they make
> destination groups that bypass intermediate yards.
> CSX had hump yards as close as 400 miles to each
> other. If their manifest traffic has declined
> just as it has in the West, some of the hump yards
> are doomed.
>
> Norm

Exactly. I believe your are talking about Barstow. ATSF did not have a whole lot of hump yards for the size it was.

I think EHH might actually come out way ahead on this one.

In theory, running short fast trains that bypass intermediate yards should loosen up the bypassed yards.

But, will customers pay more for that?

Posted from Android

I doubt we will ever see "short fast trains" again due to increased crew starts/costs and more trains pushing the limits of track capacity......

66

Lackawanna484 Wrote:
-------------------------------------------------------
> In theory, running short fast trains that bypass
> intermediate yards should loosen up the bypassed
> yards.
>
> But, will customers pay more for that?

You don't need fast. You just have to keep the trains moving at a consistent pace.

You need to be able to run a short train if you have to to stay on plan, but bigger is cheaper as long as you can maintain the reliability (not increasing breakdowns, having the fixed plant to move the train of that size, etc.)

The costs are reduced by switching cars as few times as you can. Whether you give some of that back to the customer is another issue handled by another department.

If customers are willing to pay more for fast / reliable, that should handle the increased cost of more few starts.

EHH mentioned taking two days out of Florida to Chicago travel time. Needs faster trains, fewer yardings to make that happen.

Posted from Android

Greyhounds Wrote:
-------------------------------------------------------
> Seventyfive Wrote:
> --------------------------------------------------
> -----
> > 300 CSX employees in India? I wonder if there
> are
> > that many in Indiana.
>
> I think Mr. Harrison may fall short on this one.
> These are IT people. Good IT folks are in very
> short supply.
>
> The way CSX can bring those job back home would be
> to get in a salary war with every other US
> company. He could fill the jobs by paying more
> than other firms. But if CSX offers $100 thousand
> a year right out of college some other company
> will offer $105 thousand a year.
>
> The IT work can be done in India, or Ireland, or
> wherever. Or CSX can pay through the nose for
> scarce talent and ability. Mr. Harrison might
> want to stick to railroading and leave the IT
> things to his top wire head.

What makes you think Offshore IT jobs are working? I have worked with India DBA's for many years now and they have to be hand-held....!!!!!!

Lackawanna484 Wrote:
-------------------------------------------------------
> If customers are willing to pay more for fast /
> reliable, that should handle the increased cost of
> more few starts.
>
> EHH mentioned taking two days out of Florida to
> Chicago travel time. Needs faster trains, fewer
> yardings to make that happen.
>
> Posted from Android

i remember when a certain "hot" premium train ran the rails and "CRATERED" the railroad with casualties (i.e., other dead and delayed trains) so it did not take any hits. bottom line, will the money paid for "super hot" short and fast/reliable" trains really be worth it?

sure will be interesting to see........

66