Moving goods via rail comes with a plethora of perks for shippers, consumers and the general public. Unfortunately, the lower shipping costs and reduced carbon emissions often come at the expense of reliability and service. CSX is committed to changing that.
Before CSX CEO Joe Hinrichs joined the company in 2022, he spent over three decades working in the automotive, manufacturing and energy industries. During that time, he experienced the advantages – and disadvantages – of rail firsthand.
“I watched the auto industry move many things from rail to truck,” Hinrichs said.
While finished vehicles still typically move via rail, the majority of other automotive components now move via truck. This switch can be partially explained by the rise in just-in-time manufacturing models, but Hinrichs also noted a sector-wide loss of faith in the railroads’ ability to be on time as a contributing factor.
“The biggest inhibitor to growth in the rail industry is our service levels,” Hinrichs said.
Now, Hinrichs is tackling the rail reliability and dependability issues he used to face from inside the industry. For him, improving customer service starts with creating a better work environment for employees.
“You have to change the culture of the railroad to be more employee-centric,” Hinrichs said. “If we don’t work on the culture and experience our employees have, we aren’t going to get the level of customer service our customers deserve”
Hinrichs stressed that creating a more employee-centric work culture can be as simple as listening to employees talk about what is bothering them and implementing solutions to address those issues.
For example, CSX has made it a priority to create more predictable schedules for their employees despite the inherently unpredictable nature of railroad work. The company also worked hard to get every single employee home on Christmas last year.
“Feeling valued and appreciated goes a long way for people being motivated to do the work,” Hinrichs said. “It is all about listening to each other to improve safety, customer service and efficiency.”
When employees feel appreciated, they perform better. When performance improves, service levels naturally follow suit. In this way, creating a more work-friendly culture is a strategic step toward improving customer service.
Beyond improving work culture, railroads need to be innovative with their offerings in order to spark profitable growth.
“The big opportunity is for us to think differently about intermodal,” Hinrichs said. “We used to load auto parts into box cars. Those docks don’t exist anymore in manufacturing plants, but also [manufacturers] didn’t trust the reliability and repeatability of that service. What if we were able to think differently about loading those materials into containers and trucking them over to the rail yard?”
CSX’s 2021 acquisition of chemical transporter Quality Carriers has provided another opportunity for the company to expand its intermodal capabilities. Working together, Quality Carriers and CSX developed an ISO tank proposal for intermodal.
Reimagining the ways things move is an important part of truly revitalizing the railroads. For CSX, this also means taking shipments off the rail if leaving it on is going to cause a delivery delay. This level of commitment to service is necessary in today’s logistics landscape.
CSX’s approach is working. During the second quarter of 2024, the company was one of the most efficient railroads in North America while still delivering on the highest levels of service in the industry.
“You can expand margins by lowering your cost, and you can also expand margins by increasing your revenue. We want to do both,” Hinrichs said. “The industry is sold this idea that there is a conflict between creating good service for customers and having a low operating ratio. Our view is: You can do both. We are trying to show that to people.”
