CSX Executive Vice President Operations Ed Harris addressed his railway operating peers at the annual Association of American Railroad Superintendents conference the week of July 22. The topic was his view of Precision Scheduled Railroading (PSR). We have all seen and read about PSR multiple times. What could Harris possibly add, especially for the experienced operating men and women seated before him?
It turns out that Ed Harris offered a whole lot, and at a deep technical level. His was not a public relations-crafted speech. Harris captured his audience with a candid “you and me” discussion—no supporting PowerPoint graphics. He probed his audience with technical questions. Trust me when I say that everyone was paying attention.
Harris is an experienced hands-on operating man. His career spans the likes of railroads that include Grand Trunk Western and Illinois Central. An excellent student, he was offered a prestigious University of Chicago scholarship. He turned it down for the opportunity to acquire a practical, non-degreed education about railroad operations at the 101, 201, and 301 analogous levels—direct from E. Hunter Harrison.
Here is what Harris presented with justifiable pride as he described his first year in a management role with CSX. He began by summarizing the current benchmarks of CSX’s Precision Scheduled Railroading business model, in operations terms.
- One million out-of-route car-miles reduced.
- Train-miles down 15% to 20%.
- Expensive train re-crew failure down 75%.
While Harris sees Norfolk Southern changes under way, they might be a bit slower coming about. But he flatly stated the importance that all railroads—including CSX’s direct competitor—have to improve productivity and service levels in the face of continuing trucker advances.
Why? Fundamentally, because the loss of market share has to be collectively addressed. CSX improvement alone is not sufficient critical mass to maintain rail freight relevance in the marketplace. With more performance precision and improved schedules, CSX clearly sees better employee and asset productivity and cash flow.
Harris is proud that CSX’s operating ratio performance among the strongest of the seven Class I’s at 57.4% in second-quarter 2019. But that wasn’t his prime focus. He is also proud that CSX’s internal numbers show continued improvement at the customer service levels. For faster service, he is encouraging more run-through trains, like Union Pacific’s Bailey Yard (North Platte, Neb.) to CSX eastern yards. Such direct operations with trains bypassing Chicago are one of those “smarter ways to operate.”
As EVP Operations, Harris reiterated that CSX is open for more business deals like the one that has BNSF advertising and operating its intermodal trains directly from Los Angeles to CSX’s New Baltimore intermodal terminal at Toledo, Ohio. Depending on how one calculates time, this operating plan is a CSX “haulage” agreement for BNSF. It cuts out between a half-day to more than one day of Chicago “delay” to customer intermodal inventory movement.
Internally, CSX is rolling out awareness training about the practical, everyday aspects of PSR operations: scheduling, IT reporting, crew scheduling, etc. CSX is introducing better-integrated IT tools to handle faster customer carload routing. This includes a Mobile Reporting Tool (MRT) that allows CSX field crews, from their location out in the field, to direct car dispatching from origin to destination, bypassing intermediate yard delays. What’s the importance? Every yard bypassed can amount to an 8- to 24-hour time savings. Lots of those car-day savings accrue directly to private car owners and lessors, not simply to CSX.
Harris probed his peers with rapid fire questions to the floor, with a resulting give-and take-feedback. He left the podium and walked among the gathered. He peppered people with questions and paused to encourage floor response.
How much improved equipment utilization has CSX witnessed? PSR has allowed CSX to reduce as up to 47% of the previous equipment required. To be clear, active inventory fluctuates daily. Eighteen months ago, CSX had approximately 135,000 pieces in its equipment inventory. That number now is closer to 90,000. It does not include what CSX calls “unmovable” units—stored at a customer location.
As a railway economist, I see this as a big improvement.
Harris challenged the AARS group to think about one of the biggest handicaps to running efficiently His focus was upon the poor quality of internal data that feeds better management. Specifically, he pointed to so-called #999 car movement records, where the O/D or other key movement info is missing. It’s classic “garbage in,” as it feeds suboptimal decision-making. It’s being fixed, and Harris’s superintendent audience is part of a “disciplined superior data solution.”
About those customer service benefits: For carload freight, CSX wants customer service benefits to include a success target of achieving a reliable carload’s final ETA delivery. The target is ultimately “within a two-hour window” of each car’s trip plan. Based upon previous PSR statistical simulation research, this is a big challenge.
To achieve this improved ETA, CSX is now testing various car-trip-plan IT-enabled programs. Haris articulated the value of train delay time. A single locomotive failure delay, he noted, delays both that train as well as following and opposing oncoming trains. The old rule of thumb was that one hour’s train delay might cost a couple of hundred dollars. However, that doesn’t account for situations when multiple trains get backed up behind the failure of just one. A single delay can then balloon into a $2,000- to $6,000-per-hour cumulative impact.
Delays to customer inventory and car rental costs? That’s an additional cost and potential shipper benefit. It is both the private car ownership savings plus the savings to delayed customer inventory en-route that also matters. There’s a definite shipper benefit if achieved by CSX’s version of PSR.
“Seven-day switching with the cooperation and understanding of our customers has given us better consistency of service and helped balance our network,” Harris said. “That also gives receivers and shippers better local pickup and delivery at their private sidings.”
To improve long-distance train performance and reliability, the new CSX operating practice now sees the railroad running about one-hundred trains per day with DP (distributed power). That gives CSX locomotive crews better train thrust, braking, and overall train dynamics.
The next fruits of CSX’s PSR evolution are beginning to blossom. CSX is focused on the economic theory that “the lowest-cost carrier (as the cost of productivity) has the most leverage to compete against highway trucks and other rail carriers,” Harris said. “That gives CSX a sustainable pricing advantage in the market.”
With essential costs and restructuring of assets now in place, CSX’s PSR model is more centered upon managing the company’s assets and the customers’ cars by car movements, as a better-balanced network flow. Crew balance is part of this. CSX is looking to avoid disruptions from “surprise” extra movements. And beyond its internal track network, CSX is working to balance freight car interchange flows to and from its railroad partners.
One method of balancing is to use price as a lever. Price can indeed motivate customers to help re-balance CSX’s network. If CSX improves it precision performance of a scheduled ETA, the benefits could dramatically improve car cycle times. Imagine the outcome in car ownership and fleet size capital costs if CSX can improve car cycles by a factor of 20% or more.
Yet, older metrics are still important. Revenue ton-miles is one critical measure for operating people like Harris. Why? Because revenue ton-miles are a direct measure of physical work (in foot-pounds).
Harris’s talk at the AARS conference was an interesting, deeper look at what’s behind CSX’s more-precise, increasingly scheduled operations, for customers as well as operating people.
Well done, Ed Harris. This was much more informative than a canned investor briefing.
Independent railway economist Jim Blaze has been in the railroad industry for well over 40 years. Trained in logistics, he served seven years with the Illinois DOT as a Chicago long-range freight planner and almost two years with the USRA technical staff in Washington, D.C. Jim then spent 21 years with Conrail in cross-functional strategic roles from branch line economics to mergers, IT, logistics, and corporate change. He followed this with 20 years of international consulting at rail engineering firm Zeta-Tech Associated. Jim is a Magna cum Laude Graduate of St Anselm’s College with a master’s degree from the University of Chicago. Married with six children, he lives outside of Philadelphia. “This column reflects my continued passion for the future of railroading as a competitive industry,” says Jim. “Only by occasionally challenging our institutions can we probe for better quality and performance. My opinions are my own, independent of Railway Age.”