CSX, what changed?

Posted by Jim Wrinn
on Wednesday, February 08, 2017

Like a deer caught in the headlight of a southbound Clinchfield Railroad manifest in a tunnel near Altapass, N.C., I am a bewildered at the thought that Hunter Harrison may be about to run CSX. In my mind, Harrison is a railroad executive of the Midwest and Canada. He’s a Frisco, Burlington Northern, Illinois Central, Canadian National, and Canadian Pacific kind of guy. As we say in the South, and I am a Southerner so I can say this legitimately, “He ain’t from around here.” He is not CSX or its long laundry list of predecessors strewn up and down the Atlantic states: Chessie, Seaboard, Louisville & Nashville, Baltimore & Ohio, Pere Marquette, Western Maryland, Seaboard Coast Line, Atlantic Coast Line, Seaboard Air Line, Clinchfield, or Georgia Group. He is not the home team. He is a hired gun — a man out to prove himself once more, intent to put his imprint onto this Eastern giant before, at age 72, his time is up.

If I were a shareholder just in it for the money, I’d be OK with this: Harrison’s unarguable track record is one of low operating ratios and solid profits. But in my sense of right and wrong, this strikes me as wrong. Michael Ward, the big burley son of a Baltimore pool hall owner, a guy’s guy who came up through the ranks on the coal side and got the top job in 2003, is supposed to run this railroad until he rides off into the sunset.

According to the background buzz we hear on the subject, a decision to bring Harrison on board at CSX could come as early as Friday. And therein lies a mystery: CSX fought Harrison and a merger with CP. They fought him hard. But why would they embrace him now as a solo act? This railroad has already slimmed down management ranks. It’s already shuttered or downgraded coal routes. It’s been running Harrison’s model of longer trains and fewer crew starts. I’ve asked all of my contacts, but nobody seems to know why Harrison seems to be welcomed this time.

Last year, this very same week, I was in Jacksonville, sitting in Michael Ward’s office to interview him for a Q&A that ran in our May 2016 issue. Before we began, he told me the board had just renewed his contract for another three years as CEO and that he’d be around through 2019. Oscar Munoz, his heir apparent, had just left for United Airlines. The management team behind him is solid with several good leaders coming up through the ranks. Surely, one of them by 2019 would be ready for the top job. Something has changed, but what is it?

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