It would seem that ‘precision scheduled railroading’ is some way off from improving the fortunes of US rail giant CSX. Moves to implement such a regime have resulted in severe service problems that have drawn the attention of the US Surface Transportation Board (STB) and prompted shippers to switch to alternative transportation providers.

A rising chorus of complaints about deteriorating service and lack of communication to assist clients with the ensuing problems prompted the STB, the top US rail regulator, to send a letter to CSX top brass on July 27 in which it called for immediate action to remedy the situation.

The letter lists a litany of complaints about service problems, from increased and unpredictable transit times to unreliable switching operations, inefficient routing and congestion at major hubs. In addition, shippers complained about poor communication from CSX about these problems, leaving it to its customers to try and find out what was happening with their cargo.

According to the STB letter, some shippers were forced to curtail production or halt operations temporarily, and a significant number incurred additional costs making alternative arrangements for their shipments to make up for lost transit times.

The STB urged the rail company to set up a customer service hotline to assist clients with problems. Moreover, it put CSX management on notice that it would monitor its performance and the steps to resolve the problems. The regulator asked for weekly calls to provide it with updates on measures to deal with the issues.

In a letter to customers, CSX chairman and CEO Hunter Harrison apologized for service failures and pledged resolution of these problems, which he blamed squarely on employees, accusing them of obstructing his management team’s efforts to improve the rail company’s performance.

“The pace of change at CSX has been extremely rapid, and while most people at the company have embraced the new plan, unfortunately, a few have pushed back and continue to do so. This resistance to change has resulted in some service disruptions. To those customers that have experienced such issues, we sincerely apologize. As we move forward, we will continue to address these internal personnel matters and our teams have recommitted themselves to reaching out to those affected to work through any service issues and resolve them as quickly as possible,” Harrison wrote.

His critics blame the service problems on an aggressive cost cutting programme that Harrison unleashed after he took over the reins at the rail company in March. He has moved to double the length of trains and shut a number of hump yards, where cars of a train are separated onto different tracks. Since his arrival at CSX, Harrison has pushed to implement what he calls ‘precision scheduled railroading’, which was a signature strategic plank in his efforts to turn around Canadian National and CP Rail during his spells at the helm of the two Canadian rail giants.

According to one recent survey, 80 percent of the shippers interviewed who use CSX reported problems with the carrier’s service, and 40 percent have shifted business to rival Norfolk Southern. This contradicts Harrison’s comments during an earnings call in mid-July to the effect that shippers would not defect from CSX. “Some pain and suffering” had to be expected in the course of transforming CSX into a more efficient operation, he declared at the time.

The same survey found that 67 percent of respondents have shifted freight from CSX to a trucking provider.

For his part, Harrison is adamant that his turnaround strategy for CSX will bear fruit, with benefits for both sides.

“Over the past four months CSX has been undergoing a tremendous amount of change, including an operational transformation that will ultimately result in better service to our customers,” he wrote in his letter to clients. “I think we can agree that more reliable service and improved asset utilisation is a win-win for your business and ours. It is with these intentions that we have focused our efforts – moving our customers’ freight consistently, reliably and cost efficiently.”

Apparently the STB is not convinced. It required that top CSX executives should be present during the weekly updates it has called for.

By Ian Putzger

Correspondent | Toronto