CSX defended itself to the Surface Transportation Board over how it has handled service issues, saying that it is working with customers while also continuing to improve network fluidity.
“We are committed to assisting our customers and supply chain partners in overcoming the current supply chain challenges. We will continue to partner with our customers on growth and work with them to ensure their freight is reaching consumers in a safe and reliable manner,” CSX President and CEO Jim Foote said in a Nov. 2 letter to the board.
CSX’s (NASDAQ: CSX) letter was in response to one that STB Chairman Marty Oberman had sent to CSX in October. Oberman’s letter said the board had received complaints about service issues.
Foote acknowledged that when comparing August 2021 with August 2019, velocity had fallen 6% and dwell rose by 16%, while the average number of loaded cars not moving in 48 hours grew by 98%. But Foote said the 2019 numbers were a challenging target to meet given this year’s supply chain disruptions.
“Our current service levels are not where we want them to be. CSX, like all businesses, has been impacted by regional COVID case surges and the supply chain challenges. The CSX of 2019 would be a difficult comparison for any railroad,” Foote said.
Foote continued, “Our 2019 service levels reflect the service we are accustomed to providing. We are working to resume and ultimately exceed those levels. Nonetheless, we continue to perform well on an industrywide basis. Amongst the four largest U.S. Class Is, we are the leader in lowest dwell and lowest 48-hour cars, and we have the highest velocity in the East.”
CSX’s customer solutions department hadn’t seen a recent increase in service inquiries even though STB’s October letter laid out a series of service complaint anecdotes, Foote said. He noted that CSX’s customer solutions team grew by more than 40% in 2021 in order to increase responsiveness, and he said CSX held a second customer engagement forum in October.
“When we have issues raised by a specific customer, we’re able to constructively work towards resolution. Effective solutions generally require collaboration and we urge our customers to contact us directly. Most customers don’t hesitate to let us know when there is a problem to be solved,” Foote said.
CSX laid out its actions to address supply chain congestion and movement of containers in previous correspondence to the board earlier this year, Foote said. But for CSX’s carloads segment, the railroad has implemented the following measures, according to Foote:
- Consolidating train starts by creating multipurpose trains, which includes the combining of intermodal, automotive and merchandise traffic types, where possible.
- Eliminating unnecessary train stops or reducing time at intermediate yards to increase line of road fluidity.
- Extending sidings at select locations to add capacity and improve transit times.
- Upgrading locomotives with distributed power capability, which allows for higher tonnage trains and flexibility in balancing the train plan.
- Strategically positioning locomotives throughout the network in preparation of anticipated upticks in business, such as agriculture products during harvest.
- Upgrading hump yards to increase efficiencies for car switching and classification.
- Ongoing adjustment of blocking plans to optimize car flows in line with traffic patterns, such as “the recent variability of auto plant openings and closings.”
As for the board’s question about how CSX is ensuring that it has an adequate number of employees to meet market needs, CSX told the board it has made hiring conductors a priority and has deployed a number of initiatives to seek out, hire and train new conductors and other employees.
“We have been undertaking these efforts despite substantial headwinds. The transportation industry is facing a particularly tight labor market with longer hiring lead times. Against this backdrop, we’re seeing high attrition rates during the onboarding, training and first year of service for conductors. On top of this are the COVID cases, which have been as high as 5% of the T&E [train and engine] workforce early in the year, although we’re below 2% today,” Foote said.
“The good news is we’ve seen sequential improvements in our new-hire rates. In fact, our new-hire pipeline has increased by almost 300% since July. These efforts will continue through the remainder of the year and into 2022. We will continue hiring until we have staffed the network to match demand.”
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