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CSX battles it out with shippers at STB hearing

E. Hunter Harrison, president and chief executive officer at CSX, said during a hearing Wednesday that the Class I railroad has improved performance, but various shippers at the hearing expressed ongoing disappointment with the railway’s service.

CSX President and CEO E. Hunter Harrison said at a hearing Wednesday that trains are running faster, cars are spending less time in yards, and complaints are down, however, some shippers said at the hearing they are still suffering.

   CSX Corp. President and CEO E. Hunter Harrison clashed with various shippers over service issues during a hearing Wednesday in Washington D.C. that was called by the Surface Transportation Board (STB) amid complaints about widespread CSX delays and congestion over the summer, according to a report from the Wall Street Journal.
   Some of the Jacksonville, Fla.-based Class I railway’s customers said they are still suffering from setbacks caused by the company’s transition to Harrison’s “precision scheduled railroading” operating model.
   Harrison stepped down as president and CEO of Canadian Pacific in January and was named CEO of CSX in March. He was also the former president and CEO of Canadian National. He is well known throughout the freight railroad industry for leading dramatic turnarounds at both of these Canadian Class I railroads, but his tenure at CSX has been rather rocky, both internally and in terms of disruptions for the railroad’s shipper customers.
   Harrison’s precision railroading comprises seven principles – minimizing car dwell times in yards, reducing car classifications, using multiple traffic outlets, running general-purpose trains, balancing train movements by direction, minimizing power requirements, and striving for steady workflow – that, in theory, allow a railroad to transport the same amount of cargo with fewer trains, equipment and personnel.
   Despite Harrison defending the precision railroading model at Wednesday’s hearing, saying that trains are running faster, cars are spending less time in yards, and complaints from shippers are down, Brad Hildebrand, a vice president at commodities trader Cargill, said the strategy has actually resulted in worse service, according to the Wall Street Journal.
   Harrison said problems over the summer were due to bungled execution. He apologized to shippers and acknowledged that it was a mistake to close as many hump yards as CSX did earlier this year.
   Just last week, CSX said that its most recent company report revealed that since mid-July, system-wide train velocity on its 21,000-mile network has increased about 16 percent and is now higher than the 2016 full-year average. The company also said that transit times for scheduled merchandise trains are lower than the transit levels at the outset of its precision scheduled railroad implementation in the first quarter of 2017, and that average terminal dwell is now lower than the 2016 full-year average.
   However, during the hearing, Hildebrand said that as recently as Monday, Cargill had to shut down a plant in Lafayette, Ind. in the morning because local train crew members, having exceeded the number of hours they were authorized to work, could not take its rail cars, according to the WSJ report. A plant in Sidney, Ohio also shut down for two days about a week earlier because it had not received empty cars from CSX to load.
   Hildebrand said service levels have not improved from last year and warned federal regulators about drawing conclusions based on recent CSX reports that show improvement.
   “One month does not make a trend,” he said.
   Other shippers – including Chemours, Cristal and Kellogg – also expressed disappointment with CSX during the hearing.
   Shippers called on the STB to require that CSX provide notifications when it alters train schedules or routes, among other changes.
   Each week, the STB has been meeting with CSX executives to assess the status of the railway and its pace of improvements, and the STB has mediated service problems between some shippers and the railway.