Grain industry seeks solution to CSX service problems

by Ron Sterk
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CSX train
 Service issues with CSX Transportation have prompted the U.S. Department of Transportation’s Surface Transportation Board to institute weekly calls with the railroad to resolve the problems.
 

KANSAS CITY — Significant service issues with CSX Transportation, Inc., noted by the grain, milling and baking industries, as well as coal, chemical and other major shippers, have prompted the U.S. Department of Transportation’s Surface Transportation Board (S.T.B.) to institute weekly calls with the railroad to resolve the problems.

The American Bakers Association, the North American Millers’ Association, the National Grain and Feed Association and others have encouraged their members to directly contact the S.T.B. about shipment problems on CSX.

“We have become aware that some bakers are experiencing significant service disruptions with the delivery of grain and other ingredients to facilities in Tennessee, New York, New Mexico, Ohio and Georgia by the rail provider CSX,” Mike Goscinski, A.B.A. director of government relations said in a note to members of the A.B.A.’s Commodity and Agriculture Policy Committee. “A.B.A. is seeking feedback from our members that may be experiencing disruptions so we can gauge the scale of the impact to the industry and assess whether further action is needed.”

A source at a major milling company said service from CSX was “definitely down” for their flour shipping operations, and that they were closely monitoring yard closures and delays. He said it was fortunate that pipelines mostly were in good shape at this time of year. He also noted that some CSX cars had been parked on the company’s private tracks, which may allow CSX to “massage” the numbers since cars on private tracks aren’t counted in dwell time and certain other statistics.

In a recent quarterly earnings call, CSX chief executive officer Hunter Harrison said there’s going to be “a little pain and suffering” when asked about customer reaction to changes at the railroad.

“Well, we’re feeling the pain,” one high-level grain company executive told Milling & Baking News. He blamed the problems “100% on new CSX leadership that doesn’t care about customers.”

The S.T.B. sent a letter to Mr. Harrison on July 27 “expressing concerns about deteriorated service resulting from the railroad’s recent operating changes.”

“Recently, the board has received a number of informal complaints from shippers who rely upon CSX rail service,” the S.T.B. letter said. “These shippers have reported that CSX’s service deteriorated markedly during the second quarter of 2017, which coincided with CSX’s implementation of significant changes to its operating plan.”

The S.T.B. said shippers complained about increased and unpredictable transit times, loaded and empty rail cars sitting for days at yards, inconsistent and unreliable switching operations, circuitous and inefficient car routings and the lack of meaningful assistance from CSX customer service. The S.T.B. also was notified of delays from CSX congestion at critical gateways, including New Orleans and St. Louis. 

“We understand that these disruptions have forced a number of rail shippers and their customers to curtail production, temporarily halt operations and/or utilize other transportation options that have added additional expense and inefficiencies to their operations,” the S.T.B. said.

The board also noted in its letter that shippers complained that CSX “initiated the changes to its operating plan without sufficient lead time and coordination efforts that would have allowed them to adjust their production schedules and supply chain logistics. It appears that rather than doing proactive outreach, CSX put its customers in the position of having to contact CSX’s marketing staff to learn the details of service changes after the fact. We are very troubled by the apparent lack of communication with customers and urge your immediate attention to remedy this situation.”

In the letter the S.T.B. requested CSX senior level personnel conduct weekly service calls with the board’s Rail Customer and Public Assistance staff “so we may better understand the scope and magnitude of CSX’s railroad performance issues and its efforts to resolve these problems.”

The S.T.B. also urged CSX to establish a service hotline for its customers and provide frequent operations updates to customers directly and in web postings.

Mr. Harrison apologized in a personal email to customers on July 31, and in part blamed the service disruptions on “pushback” by some employees to rapid changes instituted at CSX.

A spokesman for the union that represents CSX operations employees strongly disagreed with Mr. Harrison, saying “no one is more to blame” for the service disruptions than Mr. Harrison.

CSX spokesman Rob Doolittle acknowledged to Milling & Baking News that some customers were having service issues as transitions were being implemented, and cited Mr. Harrison’s letter to customers that offered an apology and restated the company’s commitment to work with customers to resolve service issues.

“Throughout our transformation, CSX’s dedication to our customers and the effort we put forth to deliver customer service have remained constant,” Mr. Doolittle said. “Our customer service teams have recommitted themselves to working through and resolving service issues as quickly as possible. Ultimately this transition will result in better service to our customers, and we are committed to working with customers to ensure they receive the support they require to meet their business needs as we move forward.”

The company’s stock price climbed to an all-time high shortly after Mr. Harrison took the helm at CSX in March. He joined the company in January from the Canadian Pacific Railway, Ltd. But CSX shares tumbled as the result of a surprise announcement on the company’s second-quarter earnings conference call in mid-July that his tenure at CSX would be short. Stock values continued to decline amid the ongoing service problems. He is credited with turning around the struggling Canadian Pacific and Canadian National railroads.

CSX is the nation’s third largest Class 1 railroad with 21,000 miles of track serving major markets in 23 states, the District of Columbia and two Canadian provinces. Its tracks are east of the Mississippi river with service to the West coast through alliances with western railroads. 

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