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STB Acts as CSX Service Crisis Grows

E. Hunter Harrison

CSX Transportation CEO Hunter Harrison publicly lashed out at his own customers at the same time the Surface Transportation Board was dealing with his failure to respond to its demands for accountability for the railroad’s service failures.

The STB scheduled a public listening session for Sept. 12. It also demanded additional operational data from CSX, stating that the railroad had failed to file adequate weekly performance data that the board had demanded earlier from the railroad (AA, 8-15-17, P. 1).

Harrison downplayed the reports of widespread service failures throughout the CSX system, stating in a recent interview that, “Some of the characterizations of some of the issues have been inaccurate and have been far overstated.”

The Rail Customer Coalition, representing 64 industry groups, complained to Harrison, the STB and Congress, which it urged to pass legislation making it easier for shippers to file complaints and allow competitive switching while the service disruptions continue.

In reaction to the RCC letter, Harrison responded by terming shipper assertions about service deterioration “unfounded and grossly exaggerated.”

He added, “Since coalitions do not have service issues, we do not intend to continue a discussion with you about the service we provide to our customers. We are also aware that not all members
of your coalition were informed of your letter in advance and some do not agree with your position,” although he failed to say which coalition members these were.

Harrison also has doubled down on his earlier statement blaming part of the problem on recalcitrant employees resisting his efforts to change railroad operations. He even suggested that CSX workers may have caused a derailment in South Carolina earlier this month, which he called “suspicious.”

As you can imagine, the unions are not happy with his characterization of their members. Their leaders earlier reminded Harrison that their members have been given no opportunity to provide input on the radical operational changes he is imposing.

As part of his strategy to reshape CSX operations to more resemble his model of what he calls “precision scheduled railroading,” Harrison has eliminated 2,300 jobs with 300 more scheduled to disappear, and removed 900 pieces of rolling stock from the fleet, with 100 more slated to go.
CSX, which started the year with 12 hump yards may end it with only three, Harrison has admitted.

In an interview with Fortune magazine published Aug. 24, Harrison declared that, “Cultures change one funeral at a time,” and stressed the importance of “detoxing the culture by weeding out the nonbelievers,” from the railroad’s workforce.

STB Adds Pressure

On July 27, the STB sent Harrison a letter asking that CSX supply weekly reports with data regarding yard congestion, interchanges with other Class I railroads, and equipment and manpower availability, local spot and pull reports, and service to customers with critical needs.

Only a few weeks later, the board cited “widespread degradation of rail service” across CSX’s network and said the company had provided only narrative information instead of data and service metrics.

As a result, the board upped the ante, putting additional pressure on CSX by requiring that it deliver a detailed plan describing how it intended to address its service problems by Aug. 25.

“It is not apparent to the board or interested stakeholders that service has improved,” the three board members wrote to Harrison on Aug. 14.

The STB sought data regarding on-time train departures and arrivals, car connection performance, hump and major yard performance, weekly car orders versus the order fulfillment percentage, and the average number of inbound and outbound cars interchanged.

Overlooking no detail, the STB also told CSX to supply last-mile performance data, including industry spot-and-pull percentages. It told the railroad to provide data on the number of locomotives in service, number of track and equipment personnel, and the train re-crew rate. Also sought are weekly problem logs concerning car delays, missed switching and bad order cars.

On Aug. 22, coal shippers Foresight Energy and Murray Energy (the nation’s largest coal mining company) asked the STB to open a formal proceeding to investigate CSX service issues.

Accusing Harrison of having an “open disregard for the coal industry,” the coal shippers said the board needs to take a closer look at CSX’s “brazen refusal to meet the demands for coal transportation.”

Meanwhile the investment community continues to value CSX stock highly, confident that Harrison’s actions will pay off in higher profits later.

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