Eastern Railroad Discussion > CSX: Cowen 2020 Global Transportation & Sustainable Mobility Conf

Here's the Seeking Alpha transcript of Jason Seidl's (transport analyst with Cowen) interview ith Mark Wallace (CSX Executive Vice President of Sales & Marketing).

Basic focus of Q&A is on the rebound in intermodal business following the onset of the pandemic

Interesting excerpts:

Jason Seidl Mark you mentioned sort of adding that incremental business to your trains. Where do you think you have the most opportunity to add to those train lines? Is it intermodal? Is it merchandise? Is it something else?

Mark WallaceI would say it's both intermodal and merchandise. As I said we do have -- we talked pre-COVID levels, we were talking 30% additional capacity on existing train starts. And we have line of road capacity as well. So, we have ample capacity across the railroad. And as we do look at sitting down with our customers talking to them especially in this time Jason when businesses are challenged things are tough out there our shippers our customers are looking to save a buck and we're able to go in and sit down with our customers and show us your book of business, show us your lanes where you're shipping....

and

Jason Seidl
And getting back to sort of that longer term OR outlook is your physical network where it needs to be or are you guys still potentially going to make some more changes around that into the future?

Mark WallaceYes. No, I mean clearly we've done a lot right? I mean I don't think we're going to be closing eight more hump yards anytime soon. We don't have eight more hump yards to close. Clearly, we've done a lot on the operating side...On the intermodal side, we went through 18 months of rail rationalization. We've gotten that network now on our intermodal side to where we really like it. We don't expect any more changes there. Listen, we're always looking for opportunities. If we see a high-return project where we think we could have -- we could spend some capital and get a very, very high return on that project, then we're looking to do that, we would do that. Nothing on the horizon.So from a capital perspective, I don't see anything really material that's going to change our view of sort of where we are every year sort of that $1.6 billion to $1.7 billion outlook. Really there's nothing I see that would have us deviate from that....


Poster's comment: So, it's steady as she goes - no big-win investments are seen in the future...

https://seekingalpha.com/article/4373256-csx-corporation-csx-management-presents-cowen-2020-global-transportation-sustainable-mobility?part=single

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Edited 1 time(s). Last edit at 09/09/20 08:24 by JPB.

Mr Wallace also noted the increase in port tonnage at East coast docks. They expect to take 15% of West coast landings, and a big piece of Suez passage.

As production moves to places like Sri Lanka, India, and Burma, the East coast is closer than the West coast.

Posted from Android

Lackawanna484 Wrote:
-------------------------------------------------------
> Mr Wallace also noted the increase in port tonnage
> at East coast docks. They expect to take 15% of
> West coast landings, and a big piece of Suez
> passage.
>
> As production moves to places like Sri Lanka,
> India, and Burma, the East coast is closer than
> the West coast.

Now that is interesting. 

ts1457 Wrote:
-------------------------------------------------------
> Lackawanna484 Wrote:
> --------------------------------------------------
> -----
> > Mr Wallace also noted the increase in port
> tonnage
> > at East coast docks. They expect to take 15% of
> > West coast landings, and a big piece of Suez
> > passage.
> >
> > As production moves to places like Sri Lanka,
> > India, and Burma, the East coast is closer than
> > the West coast.
>
> Now that is interesting. 

Yes.

There have been long discussions about this in the context of the new Panama Canal locks.

China is no longer a major producer of cheap clothes, low end shoes, etc. That low value added work has been outsourced to other places.

The Chinese have upskilled their work force to make chips, medicines, iPhones, cars, etc.

ETA: The changes in Chinese workforce development over the previous 30 years are nothing short of amazing. Medical and electronics technology, research, many US and European educated teachers.  While there is still a large rural component to the society, the education and technical progress is huge.



Edited 1 time(s). Last edit at 09/09/20 10:05 by Lackawanna484.

While he says that CSX has pretty much completed downsizing, an argument can be made that they went too far just to placate their Hedge Fund masters.  In their largest terminal in the southeast, Waycross, it is almost common that train crews sit around waiting for motive power to become available.  With hundreds of engines sitting in storage in the Rice Yard deadlines, trains are stalled waiting for another one to come in to get their locomotives.  As a result, crews don't have enough time to complete their runs causing recrews.  I'm not sure how this saves money.  Crew shortages are a daily problem here, sometimes resulting in cancelled trains (usually locals) which has got to frustrate customers.



Edited 1 time(s). Last edit at 09/09/20 11:06 by RFandPFan.

Interview aside, NS is still eating CSX's intermodal lunch, big time.  They chased away too much business in their haste to set a record OR, and as long as NS performs, CSX will never get it back.

RFandPFan Wrote:
-------------------------------------------------------
> While he says that CSX has pretty much completed
> downsizing, an argument can be made that they went
> too far just to placate their Hedge Fund
> masters.  In their largest terminal in the
> southeast, Waycross, it is almost common that
> train crews sit around waiting for motive power to
> become available.  With hundreds of engines
> sitting in storage in the Rice Yard deadlines,
> trains are stalled waiting for another one to come
> in to get their locomotives.  As a result, crews
> don't have enough time to complete their runs
> causing recrews.  I'm not sure how this saves
> money.  Crew shortages are a daily problem here,
> sometimes resulting in cancelled trains (usually
> locals) which has got to frustrate customers.


I'm surprised someone actually wrote this...<sarcasm>

And yet some on here STILL think that the RRs are just trying to survive (like what was posted recently on another thread).

Posted from Android

RFandPFan Wrote:

SNIP

  With hundreds of engines
> sitting in storage in the Rice Yard deadlines,
> trains are stalled waiting for another one to come
> in to get their locomotives.  As a result, crews
> don't have enough time to complete their runs
> causing recrews.  I'm not sure how this saves
> money.  Crew shortages are a daily problem here,
> sometimes resulting in cancelled trains (usually
> locals) which has got to frustrate customers.


That is one of the many conundrums of modern railroading. 150 double stacks of profitable freight waiting on two guys who make, maybe, $35 an hour plus benefits.

No different than having a jitney driver who makes $8 an hour get lost on the way to a pickup. $70 an hour crew waiting on a lost driver.

You would think the railroad would get these guys to rest lickety split.

Squeezing nickels while $5 bills blow away...

Posted from Android