CSX Woes Hurting Shippers…Wake Up Hunter Harrison


Dozens of U.S. trade groups have asked federal rail regulators to investigate CSX Corp’s “chronic service failures,” saying problems at No. 3 U.S. railroad have rippled across the North American rail network, according to a letter seen by Reuters.

The letter, from the Rail Customer Coalition sent on Monday, is the latest challenge to CSX Chief Executive Hunter Harrison’s effort to ramp up productivity at the Jacksonville, Florida-based railroad and fulfill investor expectations for substantially better financial performance.

The 44 trade groups, representing chemical and agricultural companies, steel and auto makers, and beer producers and importers, among other companies, told U.S. lawmakers on House and Senate Transportation committees “chronic service failures” could degrade the nation’s broader rail network.

“This has put rail dependent business operations throughout the U.S. at risk of shutting down, caused severe bottlenecks in the delivery of key goods and services, and has put the health of our nation’s economy in jeopardy,” they said.

The shipper groups want Congress to make it easier for them to file complaints and allow other operators to use CSX track during service disruptions, according to their letter.

CSX spokesman Rob Doolittle said the company has acknowledged that some customers are experiencing service issues as Harrison implements his vision for driving efficiency, known as Precision Scheduled Railroading.

The letter comes about two weeks after the Surface Transportation Board notified Harrison of complaints about CSX’s service. And an analyst survey last month found shippers have moved freight to rival Norfolk Southern Corp and truckers.

CSX’s service problems were exacerbated by an Aug 2 derailment in rural western Pennsylvania that forced the company to re-route trains. Federal safety officials are investigating the cause of the accident.

Shippers and employee sources said Harrison’s changes and cuts are causing rail cars and trains to sit idle or be re-routed across multiple states, delaying product shipments, and leading to inadequate customer service.

Crowley Maritime Corporation hauled 150 container loads by truck from Charlotte, North Carolina, to Jacksonville, Florida, and then loaded them onto Florida East Coast Railway trains to avoid CSX’s system issues.

Current and former CSX employees say the railroad is suffering from poor communication from leadership, job cuts, and rapid changes to operations – like doubling train sizes, shutting hump yards where train cars are sorted, increasing the frequency of crew changes on a service line, and blocking overtime pay.

In Montgomery, Alabama, dwell times jumped to 60.9 hours from 35.8 hours a year earlier, and doubled in Nashville, Tennessee, to 71.9 hours. However, some of CSX’s cost-cutting moves do not appear to be dramatically affecting operating performance in other locations, based on data CSX provides to the AAR.

At CSX’s Barr Yard in Chicago, roughly seven managers now run the company’s service line, down from more than 35 managers a month ago, an employee told Reuters. The overall work force has been halved by furloughs, he said.

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