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Rail News: CSX Transportation

Expanding capacity, fine-tuning ONE Plan will help CSX reach service-improvement and growth goals, top execs say


During his 30-plus-year railroading career, CSX Corp. Chairman, President and Chief Executive Officer Michael Ward has never seen the “stars align” as much as they have today in the railroad industry.

“The rail renaissance is here. Demand for transportation is very robust,” he said at CSX’s investor and analyst conference held today at the New York Stock Exchange. “The question is: How can CSX get the most from the assets and market reach we have, and position the company to meet and exceed customers’ needs to participate in the rail renaissance?”

The answer, as outlined by six senior executives at the conference: Spend between $300 million and $400 million between now and the end of 2007 to expand capacity on lines between Chicago and Florida, and New York City and Albany, N.Y.; expand terminals and facilities; acquire locomotives and cars; hire and train more people; and implement new technologies. CSX also plans to instill leadership and accountability at the field supervisor level and tweak the ONE Plan. If the Class I — which has increased income the past six quarters and registered quarterly revenue gains, yet continues to struggle with velocity, terminal dwell time and on-time performance — can execute its plans, the company will register double-digit earnings and income growth during the next five years, execs said.

In addition, CSX’s annual revenue and volume will rise about 6 percent and 3 percent, respectively, and within five years, the company will lower its quarterly operating ratio into the mid- to high-70s range. During the second quarter, the company’s surface transportation operating ratio improved 4.7 points to 80.5 compared with second-quarter 2004.

“Getting to 80 is no longer a target because the 70s are happening in the industry,” said Executive Vice President and Chief Financial Officer Oscar Munoz. “We want to narrow the gap with the industry leaders.”

To help get there, CSX plans next year to begin installing sidings and signals on its Chicago-to-Florida Southeast Corridor and New York-to-Albany River Line, and improving other infrastructure. By 2007’s end, the company will double its 10,000-foot sidings and space sidings about 15 miles instead of 30 miles apart to operate longer and a higher number of trains. CSX also will expand intermodal terminals and build four integrated logistics centers (providing intermodal, TRANSFLO, warehousing and logistics services) in south Florida, North Carolina, Illinois and Ohio.

To improve service execution and consistency, the company is tweaking the ONE Plan, its “scheduled” operating approach designed to reduce terminal handlings and train miles, balance the network and improve service recovery.

“We need to get people to do the same thing the same way over and over and over, every day,” said EVP and Chief Operating Officer Tony Ingram. “We can’t change the game plan every day.”

Next month, CSX plans to roll out a locomotive-set standardization enhancement to the ONE Plan designed to pair 80 percent of locomotive sets back to back instead of facing the same way. The same locomotive sets will be pre-assigned to the same trains every day. The standardization will reduce the number of trains using three locomotives, speed trains through terminals, help eliminate routing inefficiencies, balance crews, reduce overtime and “dead head” pay and minimize crews’ travel, said Ingram.

So far, CSX has slowly been gaining traction in changing the company’s culture and getting its 34,000 employees to take ownership of the ONE Plan and other new processes, said Ward. The pace will have to pick up if the company is going to meet its five-year projections.

“The future in front of CSX is as bright and promising as ever in the company’s 178-year history,” he said.

Jeff Stagl

(For more CSX coverage, see Progressive Railroading's July issue, page 20.)

Contact Progressive Railroading editorial staff.

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