What was widely expected in freight railroad and intermodal circles became official on March 6th, when Class I railroad carrier CSX officially announced that E. Hunter Harrison was named CEO of Jacksonville, Fla.-based CSX. WSJ’s Jacquie McNish and David Benoit reported that the announcement ended a fight over control of CSX by giving the Hunter Harrison a four-year contract and a mandate to overhaul operations at one of the country’s biggest railways. But the changes won’t be assured to happen until after the railroad holds its annual meeting.
Mr. Harrison (known in railroad circles as the “oracle” of railroading) has developed a philosophy through his several generations of hands-on railroading that has become known as Precision Railroading (PR). One of the great unknowns for CSX is whether by focusing on the five tenets of Precision Railroading (1) Improving Customer Service (2 ) Controlling Cost (3) Optimizing Asset Utilization (4) Operating Safely (5) Valuing and Developing Employees , Hunter Harrison will be able to produce the same results for CSX that he has produced for CN and CP.
CSX’s network is quite large and complex and is the result of combining former components of the Penn Central and many southern railroads into a system that reaches nearly two-thirds of the nation’s consumption and manufacturing markets. They operate in 23 states across the US East Coast, South and Midwest, as well as Quebec and Ontario in Canada.
But CSX is not an industry straggler. In the last two years, CSX has enacted substantial cuts and in 2016 they slashed costs by a record $430 million. And just last month the railroad announced it would eliminate nearly 1,000 management positions — or 20 percent of the management ranks — to further cut costs by $175 million annually.
There are no railroads that have a more storied history and operating service culture than CSX dating back to 1827. Through the years CSX has been conservative and perhaps slow in adjusting to market changes specific to intermodal but it has always been a quality operation. All railroads have a culture and certainly CSX’s has been developed over many generations and changing that culture will be a difficult task.
The US rail system has endured as an economically viable and efficient means of transportation for more than 150 years. Fortunately, our rail network continues to improve because carriers are shedding the inefficiencies that have plagued them in the past. In fact in the recent “Infrastructure Report Card issued every four years by the American Society of Civil Engineers, the only infrastructure sector in the US to receive a B rating was the rail system where the private freight companies have invested heavily to improve service.
Freight rail plays a vital role in the American economy and the industry spurs economic activity while supporting communities and jobs. There will be changes and yes they will be very painful in the short term, but hopefully they will bring CSX to a higher level of profitability, lower operating costs and a renewed focus on customer service, all of which is good for the entire freight rail system that so many industries have come to rely upon.
https://www.wsj.com/articles/csx-agrees-to-hire-hunter-harrison-as-ceo-1488829040?mod=djemlogistics
