How do you destroy a railroad?

The list of complaints against CSX and E. Hunter Harrison since the latter undertook to redesign CSX’s operating plan and turn CSX into a precision scheduled railroad has grown almost as long as the list being composed by Washington establishment types for a Trump impeachment. (No. That’s understatement. The Trump list is much, much longer.)

Harrison took over as CEO at CSX in March, and immediately instituted changes that he believes will improve the railroad’s bottom line. Many of the changes did not sit well with CSX’s customers, mostly shippers, but Amtrak as well, many of whom (which?) filed complaints with the Surface Transportation Board (STB). As a consequence, the STB has been communicating with Harrison, stating in no uncertain terms that the failures to satisfy shippers must be addressed. The STB took a big-brother stance, wanting frequent reports on progress in rectifying poor service issues.

This hasn’t played very well in Harrison’s corner of the executive suite, with Harrison blaming everything from shippers’ unwillingness to flex to employee resistance to change, thereby alienating both groups.

Among these complaints...where do I begin? I think I’ll start with Amtrak. Amtrak says some trains, particularly the Hoosier State, have seen poor schedule keeping solely as a consequence of CSX. The STB has cited CSX’s “deteriorating service”, “unreliable” and “inefficient” operations, and “poor communication and coordination”. Amtrak says it will monitor the situation as closely as the STB intends. Harrison has apologized to customers and initially blamed his new operating plan. Bottom line: It is HIS operating plan.

Shippers have different, more complicated, though not any less valid complaints. On August 17, 2017, as reported by Reuters, Harrison accused shippers of “grossly exaggerating” their complaints. These include reroutes of cars needed by shippers, cars sitting idle for no good reason, and failure of the railroad to timely deliver cars. Shippers have reported having to idle plants and workers due to service failures, and having to find other means of making shipments to satisfy their customers.

These “other means” have reportedly been CSX's rival railroad Norfolk Southern and truckers.

Harrison is right when he says that big changes have caused disruptions. In March, CSX laid off about 1,000 management workers, beginning on the day of Harrison’s appointment as CEO. Layoffs continued this past week, although CSX spokesman Gary Sease has attempted to tell the media that these layoffs are still part of the March figure. It appears that most of these layoffs have been in the Jacksonville, FL, headquarters.

What’s also unclear is how these layoffs have translated to problems in outlying areas. Take Chicago, for example. Rumors have swirled that CSX will close Barr Yard, long a southern gateway into the large complex of industrial track within the city. The Chicago Tribune reports that there were 60 employees laid off the week of August 10. Other sources report that cars have been diverted from Barr, giving heft to the rumors. Most shippers familiar with the Chicago Area do not see how closing Barr will improve CSX’s performance for shippers in the area, at least in the short term. In other words, shippers expect things to get worse before they get better.

And in the back of the minds of shippers and those laid off is the knowledge that CSX has done this to itself. In the quest for a better bottom line, the way they see it, investors have taken the railroad hostage and will do with it as they please, customers (and employees) be damned. Harrison, after all, is tethered to the investment group that owns a big chunk of CSX.

For all his bluff and bluster, Harrison can't last long, probably won't. He's got the money now, and will take it and run if he has to. If anybody can take it with him, it's Harrison. Watch for a mausoleum with a large steel money vault going up in a cemetery near you.

No, I don't think they're preparing to drive CSX into a merger. All of the remaining class ones would rather eat creosote than throw their railroads into a merger at this stage of the game. They'd prefer to watch as CSX strangles and eats its own shippers.

Shippers never like being blamed for service disruptions over which they have no control, and none will stand idly by for very long while waiting for service to improve. They have proven this with myriad complaints to the STB. Will CSX listen? At some point, CSX and Harrison will have to. But both have answered my initial question. The answer?

First you piss off the customers.

©2017 – C. A. Turek – mistertrains@gmail.com

(Charles A. Turek is a writer and novelist based in Albuquerque, NM. After four decades working in areas of the insurance industry related to transportation, he now writes on all aspects of American railroading. Charles is a political conservative but believes in public funding of passenger rail as a part of the federal government’s constitutionally conservative obligation to provide for defense and public infrastructure so that private enterprise may flourish.)