Saturnalia daveklepper Please let us return to the emphasis on cutting costs vs. growing the business. I think it is wrong to say that all Class Is emphasis the former. Certainly BNSF does not, NS and UP seem to be doing a balancing act. Both NS and CSX were heavily dependent on coal. Losing much of that business, before HH, both NS and CSX were trying to grow the business as well as cut costs. With HH, CSX changed to emphsise cutting costs over growing the business. NS did not change. So who is going be the major player in the years to come in the East? I think you're incorrect, daveklepper, on your assertion that since CSX came under the EHH spell that is has shifted from growth to cost-cutting. From all my observations, particularly since the merger noise a few years ago, is that CSX shifted into full cost-cutting, which definitely hurt their network in various ways, while NS kept their cool, and agreed to keep working, like they had, on cost control and asset utilization. So I think since EHH came on board, CSX is still of course in cost-cutting mode, albeit with an entirely different, and much more visible methodology. CSX of Yore wanted to run 28-hour trains, basically squeeze as much out of each train as possible. Harrison is also looking at the physical plant, and trimming the fat there. CSX of yore didn't look at closing humps, but by golly EHH did...and too fast, as previously discussed. Additionally, Harrison is on the record believing in growth in loose carloadings. Actually, I don't think he gives enough credit for that. CSX and many other Class One operations have despised loose carloading for years, due to its lower margins. But now that coal is no longer king, everybody is starting to warm back up to it. But CSX of yore? No way they were seriously contemplating real mixed carload growth the way they chose to operate their trains, particularly locals and the 28-hour schedule. So I'd argue that Harrison has pushed cost cutting in a different, more "cost control" direction, while believing that loose carloads can make plenty of cash. In fact, that's why he's closing humps: to lower costs for loose carloads, to improve those margins. Harrison rightly believes that coal is on the long slide towards being obsolete (much to the chargin of many forum members here), while also recognizing that mixed carloads can earn money - but they must reduce their costs, particularly the fixed costs, and modify the market to flatten out the weekly spikes in traffic, among other measures. I think part of the challenge in this respect - that is traffic growth - is that the Western Carriers not only have a long haul, but their networks were built more on connecting passenger and long-haul freight than CSX and NS's coal-centric routes. If you look at Union Pacific in particular, they've always been just as relient on coal as the eastern carriers. They've been mining in Wyoming from Laramie to Green River and beyond pretty much since the rails went down in the late 1860s. Coal from Hanna, Rawlins and Rock Springs (among others) literally fueled the railroad, and the bottom line. Fast forward and now they've got the Powder River. But - here's the thing. Erase from UP their lines dedicated to coal, and see how much dissappears. Almost nothing! Sure they'd be wise to really trim northwest of Sutherland, and perhaps Sutherland to Gibbon could also see trimming if other growth doesn't take up the slack, but really, UP hauls coal on the same tracks as everything else just about everywhere. There are actually very few places where coal is everything, and even on the main trunk east of Sutherland, there's still a huge amount of non-coal tonnage. Erase the Powder River, and it isn't an insurmountable hit. So, its very easy to see how in the long run, UP can most definitely afford plenty of traffic growth to offset coal. BNSF is the same way, albeit to a less beneficial extent, since their coal franchise sees much less traffic otherwise. But how about CSX and NS? Their whole cores are built for coal, and minus that, they've got a TON of track with nothing or almost nothing on it. The C&O isn't pushing a couple dozen stacks, racks and manifest trains daily. NS is mostly the same way - their networks just aren't built for speed or long distance, and tend towards modest traffic over many lines instead of a handful of long-haul, high density routes. This is the great spaghetti bowl everybody talks about when considering if EHH can implement PSR on a much less linear network. So if you look at CSX and NS, with their highest-density lines, they're not loaded up with coal. The B&O west of PA sees almost no coal - actually most of it is Western - while the Chicago-SE link certainly doesn't have much, and neither does the East Coast Run. So those lines, which they're relying on for their main trunks, it isn't like less coal means more space to run other things. Traffic growth without grinding the B&O to death is almost impossible now west of Greenwich. So where is that traffic growth going to come from, and where is it going to go?
daveklepper Please let us return to the emphasis on cutting costs vs. growing the business. I think it is wrong to say that all Class Is emphasis the former. Certainly BNSF does not, NS and UP seem to be doing a balancing act. Both NS and CSX were heavily dependent on coal. Losing much of that business, before HH, both NS and CSX were trying to grow the business as well as cut costs. With HH, CSX changed to emphsise cutting costs over growing the business. NS did not change. So who is going be the major player in the years to come in the East?
Please let us return to the emphasis on cutting costs vs. growing the business. I think it is wrong to say that all Class Is emphasis the former. Certainly BNSF does not, NS and UP seem to be doing a balancing act.
Both NS and CSX were heavily dependent on coal. Losing much of that business, before HH, both NS and CSX were trying to grow the business as well as cut costs. With HH, CSX changed to emphsise cutting costs over growing the business. NS did not change. So who is going be the major player in the years to come in the East?
I think you're incorrect, daveklepper, on your assertion that since CSX came under the EHH spell that is has shifted from growth to cost-cutting. From all my observations, particularly since the merger noise a few years ago, is that CSX shifted into full cost-cutting, which definitely hurt their network in various ways, while NS kept their cool, and agreed to keep working, like they had, on cost control and asset utilization.
So I think since EHH came on board, CSX is still of course in cost-cutting mode, albeit with an entirely different, and much more visible methodology. CSX of Yore wanted to run 28-hour trains, basically squeeze as much out of each train as possible. Harrison is also looking at the physical plant, and trimming the fat there. CSX of yore didn't look at closing humps, but by golly EHH did...and too fast, as previously discussed.
Additionally, Harrison is on the record believing in growth in loose carloadings. Actually, I don't think he gives enough credit for that. CSX and many other Class One operations have despised loose carloading for years, due to its lower margins. But now that coal is no longer king, everybody is starting to warm back up to it. But CSX of yore? No way they were seriously contemplating real mixed carload growth the way they chose to operate their trains, particularly locals and the 28-hour schedule.
So I'd argue that Harrison has pushed cost cutting in a different, more "cost control" direction, while believing that loose carloads can make plenty of cash. In fact, that's why he's closing humps: to lower costs for loose carloads, to improve those margins.
Harrison rightly believes that coal is on the long slide towards being obsolete (much to the chargin of many forum members here), while also recognizing that mixed carloads can earn money - but they must reduce their costs, particularly the fixed costs, and modify the market to flatten out the weekly spikes in traffic, among other measures.
I think part of the challenge in this respect - that is traffic growth - is that the Western Carriers not only have a long haul, but their networks were built more on connecting passenger and long-haul freight than CSX and NS's coal-centric routes.
If you look at Union Pacific in particular, they've always been just as relient on coal as the eastern carriers. They've been mining in Wyoming from Laramie to Green River and beyond pretty much since the rails went down in the late 1860s. Coal from Hanna, Rawlins and Rock Springs (among others) literally fueled the railroad, and the bottom line. Fast forward and now they've got the Powder River.
But - here's the thing. Erase from UP their lines dedicated to coal, and see how much dissappears. Almost nothing! Sure they'd be wise to really trim northwest of Sutherland, and perhaps Sutherland to Gibbon could also see trimming if other growth doesn't take up the slack, but really, UP hauls coal on the same tracks as everything else just about everywhere. There are actually very few places where coal is everything, and even on the main trunk east of Sutherland, there's still a huge amount of non-coal tonnage. Erase the Powder River, and it isn't an insurmountable hit.
So, its very easy to see how in the long run, UP can most definitely afford plenty of traffic growth to offset coal.
BNSF is the same way, albeit to a less beneficial extent, since their coal franchise sees much less traffic otherwise.
But how about CSX and NS? Their whole cores are built for coal, and minus that, they've got a TON of track with nothing or almost nothing on it. The C&O isn't pushing a couple dozen stacks, racks and manifest trains daily. NS is mostly the same way - their networks just aren't built for speed or long distance, and tend towards modest traffic over many lines instead of a handful of long-haul, high density routes. This is the great spaghetti bowl everybody talks about when considering if EHH can implement PSR on a much less linear network.
So if you look at CSX and NS, with their highest-density lines, they're not loaded up with coal. The B&O west of PA sees almost no coal - actually most of it is Western - while the Chicago-SE link certainly doesn't have much, and neither does the East Coast Run. So those lines, which they're relying on for their main trunks, it isn't like less coal means more space to run other things. Traffic growth without grinding the B&O to death is almost impossible now west of Greenwich.
So where is that traffic growth going to come from, and where is it going to go?
Somebody's smokin' too much wacky tabacky!
The progenitors of the 28 hour day are still employed from what I was able to gather on my recent visit. All terminals have been and were investigated for possible closure - the difference between those investigations and what EHH has done - they were looked at from the position of how the system would perform the functions of the closed terminal. What happens at Cumberland has an affect on what has to happen at Baltimore, Philadelphia, Willard, Cincinnati and Chicago.
There is no terminal that operates in a vacuum without affecting other terminals. EHH as done away with point & distributor ignition of the CSX engine, without installing the computerized iginition system that is required for any engine to continue to operate. Hacking terminal operations without a plan is a good way bring things to gridlock and PO your customers along the way.
Never too old to have a happy childhood!
BaltACD According to those involved - they have been given multiple move dates and move locations since it was announced that they were moving
According to those involved - they have been given multiple move dates and move locations since it was announced that they were moving
Whoever told you about "multiple locations" was incorrect. The company has given the ATDA one notification of the move, and the location was Jacksonville for those that are subject to the move. There have been numorous rumors of different locations since EHH said that 9 dispatching locations was too many, but nothing offical from the company.
An "expensive model collector"
And who wil be a major player, instead of even compitition, will eventully affect the bottom line and srock prices.
Numbers for the past week (STB724) are out. Train speed is up over 1 mph lead by intermodal speed. Cars on line are down about 4k. Loads and empties over 48 hrs are down a nice chunk. Dwell is the sticky one. Didn't really budge. Maybe because of traffic held over Labor Day?
The numbers showed the improvment that can happen when you use a slack period to do a 'reset'. Do they have enough resources to hold these numbers and make more improvement? Might take a few weeks to find out with Irma disruption...
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
No problem - you're welcome. I do appreciate our comments, too.
The brilliant move was adding IC to make the T-shaped system that uniquely connects all 3 coasts. I suppose he had vision for that, as IC was a 'friendly' acquistion. I'd agree that the incremental acquistions afterward - e.g., EJ&E - were good moves, and no, nothing to scoff at. But I've always understood - perhaps incorrectly - that the 'value added' came from the network and synergies created thereby as you point out, not from extending Precision Scheduled Railroading to them. Even so, it would have been incremental - not wholesale, as at CSX now - and I think that deliberate approach had a lot to do with it succeeding there.
So he did good work at CN, even if not wholly popular - his 'Hunter Camps' and 2 books were a definite innovation, that's for sure. But I fear that now he's either a "one-trick pony", or another example of the Peter Principle: he's been promoted to his level of incompetence.
- PDN.
Paul_D_North_Jr cx500 . . . CN had already achieved a great deal of improvement prior to buying the IC. It was only then that EHH joined the management team. And Paul Tellier remained the top guy, with EHH under him for a few more years. "+1" x 3 Thank you for pointing that out. I've done it many times before, but am tired of telling those who won't listen or would rather "drink the Kool-Aid" of EHH and his purported wizardry. I bought CN shares in the late 1990's shortly after it was privatized - when most of the OR decrease occurred - and still have the annual reports from back then to prove it in a box upstairs. Anyone who wants the truth instead of a PR legend is welcome to come review them - or find them on-line someplace.
cx500 . . . CN had already achieved a great deal of improvement prior to buying the IC. It was only then that EHH joined the management team. And Paul Tellier remained the top guy, with EHH under him for a few more years.
"+1" x 3 Thank you for pointing that out. I've done it many times before, but am tired of telling those who won't listen or would rather "drink the Kool-Aid" of EHH and his purported wizardry. I bought CN shares in the late 1990's shortly after it was privatized - when most of the OR decrease occurred - and still have the annual reports from back then to prove it in a box upstairs. Anyone who wants the truth instead of a PR legend is welcome to come review them - or find them on-line someplace.
Indeed, an honest oversight for me - I haven't correlated the dates and I've never seen somebody point this out before - thanks!
So let me ask this: would you give EHH credit for its application to the IC and the rest, as they were added to the fold? Clearly, extending the network by the greatest margin seen by any railroad short of a full merger isn't anything to scoff at.
I'm not gonna lie, I'm not super-well versed in the 90s, mostly I suppose because I only lived through the last two years of them! Haha
Saturnalia ...................... I can't believe that this point has been left out of this discussion thus far, but I totally agree. CN and CP were both extremely iffy operations when he joined on, so undoubtedly there was plenty of low-hanging fruit. .......
I can't believe that this point has been left out of this discussion thus far, but I totally agree. CN and CP were both extremely iffy operations when he joined on, so undoubtedly there was plenty of low-hanging fruit.
.......
I will more or less agree with you about CP, but CN had already achieved a great deal of improvement prior to buying the IC. It was only then that EHH joined the management team. And Paul Tellier remained the top guy, with EHH under him for a few more years.
Saturnalia, your response appears intelligent. I hope you are correct and my prediction proved wrong. It all depends on how quickly HH learns and applies wha the learns. Possibly the Jury is still out.
oltmannd Most of his magic isn't available to deploy at CSX - because they had already been doing it! CSX and all the other railroads made great gains in the past 15 years employing scheduled railroading. So, what's left is hunting down stuff around the margins, like tinkering with unit train service, yard conversions, and cutting some of the cushion out of the locomotive fleet and crew bases. Even if all this stuff worked out flawlessly, I'd bet you couldn't get more than 5 points out of the OR. Not nearly the huge change at his other gigs. But, not even that is happening. So far at CSX, it's been a failure.
Most of his magic isn't available to deploy at CSX - because they had already been doing it! CSX and all the other railroads made great gains in the past 15 years employing scheduled railroading. So, what's left is hunting down stuff around the margins, like tinkering with unit train service, yard conversions, and cutting some of the cushion out of the locomotive fleet and crew bases.
Even if all this stuff worked out flawlessly, I'd bet you couldn't get more than 5 points out of the OR. Not nearly the huge change at his other gigs.
But, not even that is happening. So far at CSX, it's been a failure.
One of the things I'm watching closely is how Harrison handles traffic in places where things could go more than one route.
Previously, since oh I'd say around 2005, CSX has heavily pushed towards getting as much out of as few lines as possible, which has left a number of secondary lines nearly devoid of traffic. Now of course the PRR, now CFE, made sense to dump at the time, but one has to wonder if CSX's long-term thinking might include grabbing that back, so they have a "Nickel Plate" backup to their B&O artery.
On the more current course, however, there seem to have been many places where the idea has been to move traffic to be more centralized. Let me use the Michigan Example. Some here are currently rolling their eyes because they've seen this before *cough cough CP run-through trains*, but let's look at how CSX has handled traffic for Flint and Detroit.
Now what CSX has in Michigan is essentially a Chicago-Detroit line via Grand Rapids, which is markedly longer that say the Michigan Central or NYC-Wabash routing via Butler. And then there is the other stem from Toledo north to Flint. You have major yards at Grand Rapids, serving West Michigan; Flint, serving that area and taking in the LSRC interchange, and Detroit, handled out of Rougemere. All of the traffic for these three points must come up from Chicago or Toledo.
In the past, each of these three cities ran trains to both Chicago and Toledo. Now as the automotive industry diminished, the trains from Flint and Detroit to Chicago were terminated by 2011 or so. Now Flint and Detroit only "flushed" via Toledo, while GR was still allowed to run in both directions.
Fast forward to the last two years, when the GR-Toledo trains were axed in early 2016. Now GR only could dump via Barr Yard. So what we had was everything had to go to the edge of the system, at Barr, even though a ton of GR traffic goes south and east to the rest of the CSX network. This was pure cost-cutting.
So now, we have tons of Michigan traffic crisscrossing Indiana and Ohio on the B&O mainline, since they cut the trains in Michigan. But now, CSX is maintaining all of this infrastructure for only a few trains. Yes, the B&O is now costing less per car mile, but it's also notoriously congested, particularly on the Chicago end.
This is just one example, but I'm sure there are more. CSX's stated goal was the big triangle, with as much as possible focused on those core routes. That works, except you're asking for congestion on those routes and leaving others shells of their former selves, for no real reason. And it's hard to spin off these secondary lines because they've still got traffic - just very little overhead compared to previously.
So now Harrison, within the last week, brought back the GR-Toledo train. Funny how the majority of GR outbounds now go the right way. But as part of this, GR can now process other overhead traffic again - Toledo has long filled out the GR trains with traffic for Chicago. So we're looking at traffic coming off the B&O, freeing up more space down there, while the infrastructure, including CTC, up in Michigan actually gets used. Signal systems in particular are pretty much fixed costs. Not running any trains? You're still paying for it, so you might as well use it.
So this purposeful avoidence of secondary lines seems to be waning under Harrison. There seems to be no direct aversion to something *just* because of cost. He seems to, at least in theory, value operations as well as cost.
Like has been said, it is all a grand experiment. We'll see where it goes, the implementation has been a mess, but I just can't find a way to count him out yet. If he can get implementation under control, he could certainly increase CSX's efficiency overall. I think you could actually see more fluidity on certain parts of the network, if secondary lines are no longer avoided on principle.
Maybe 5-10 points, but CSX has been talking about "low 60s" OR since I really started paying attention back in 2012 or so - yet in 5 years, they barely made headway, despite the changes they were making.
Maybe Harrison's methods are questionable, but if he pulls it off, he'll still have done what the previous management and their philosophies couldn't do.
As I have stated in other threads, I made an appearance at my old dispatching office last weekend - to say good bye just before they moved on to Jacksonville.
According to those involved - they have been given multiple move dates and move locations since it was announced that they were moving - really lets people plan their lives. [/sarcasm] There has been no 'relocation agreement' negotiated with the ATDA for the move. Once all dispatchers are in Jacksonville there will be high rated CSX Train Dispatchers working side by side with low rated former ConRail Dispatchers - I am certain that won't create controversy! [/sarcasm]
Discussing operations with multiple dispatchers - the scheduling and officer emphasis on maintaining those schedules vanished when the official's positions were terminated. Today's operations are in a chaotic unscheduled manner.
Service Design organization has yet to come up with any kind of a scheduled network that accounts for the the decreased switching performance of the closed hump yards; it is unknown how many experienced Service Design employees have been terminated. Those that remain have shown they are not up to the task.
New employee timetables were issued effective Sept. 1, 2017. Each subdivision has it's own timetable - with the resulting waste of 5 pages in each TT printed for information that is common to all subdivisions. The timetables do not contain the name of any Supervisor that is inchage - either at the Division level or at the subdivision level. Who do emplyees report to? Hunter himself? However, Hunter's name isn't on the timetable either.
Precision? Chaos?
But, this still leaves the question of how much cushion should you have and how much can you afford? I'd say the railroads don't really have a good handle on this and they tend to get complacent when things are going well. There is always tension between the requirements of the operating plan and the budget process and the resolution is quite often driven by judgement rather than numbers.
The railroads could use some better asset planning models and a bit more focus on the positive and negative "what ifs" and a bit longer planning horizon to drive a more scientific approach to resource planning and budgeting. But, what they are doing today is an order of magnitude better than what they did 25 years ago.
Saturnalia3. Implements a wide array of changes, focused on cutting excess capacity and costs. If it doesn't have a definite purpose, get rid of it. Get down to the bare bones of the operation, increase car velocity, decrease dwell, etc
Let's look at this one. What PSR has done at the other properties he's employed it is to start to run a fully scheduled railroad and insure that crews and locomotives are balanced, so high utilization is guaranteed. Te hen he looks for ways to increase the velocity of the flow by getting rid of non-7 day a week service as much as possible and allowing traffic to flow on whatever train on the network can handle it.
Most of the magic at CN and CP came from implementing scheduled operations.
What's different on CSX (and the same would have been true had heg gotten NS), is that the railroad was ALREADY running an efficient plan. So, there are not nearly so many underutilized assets out there.
Monkeying with unit train operation by merging some with merchandise is interesting, but not going to create much magic. Most unit train traffic moves on decent cycles with high utilization already. It doesn't matter that it doesn't generate a trainload 7 days a week. If the cycle is 5 days and there are three sets in the cycle and that does the job, there's nothing to "get".
Monkeying with yards by converting them to flat is interesting, too, but also not going to drive huge changes to the bottom line.
I'm sure he doesn't like the day of the week volume swings in the intermodal franchise. The is quite a bit if idle equipment and you could squeeze some there if you could come up with a way to flatten the peak and fill the valley. Perhaps day of the week pricing? Yield pricing? Platform reservations? These are marketing and IT changes, not operational. I'm pretty sure you don't want to get there by scaring away the peak so that it's level with the valley.
Gridlock improves the bottom line! Yea! Thats the ticket!
Saturnalia daveklepper Saturnalia: Your analysis makes sense, when applied to CN and CP. But it does not apply to CSX. Because CSX already had cut out most of the dead wood. Because CSX doesn't have a simple route structure, like CN and CP do. Because CSX exists in a much more competitive freight environment, not only vs NS, but also vs trucks and even water transportation. Because average frieght haul is not as long as it is on CN and CP. I predicted that if HH would focus on growing the buesiness, he would be a success. But if he tried to just duplicate what he did at CN and CP, he would fail. And he has tried to just duplicate what he did at CN and CP. And I put my predictions into postings on these forums. Alright, let's play with this, I like it, we're getting somewhere :) Point #1: CSX had already cut much of the dead wood. To that, I'd suggest that while they did cut a lot, they were cutting to cut. At least EHH is trying to make sense of it all - failing in many ways yes, but at CSX previously it was clearly more about cutting based on cost, not need. Harrison's cutting Hump Yards, but he intends to replace that work with flat switching. Previously, CSX just tried that 28-hour schedule, and said "whelp" whenever that hurt anything. They cut trains, forcing the remaining ones to just run huge barges. At least Harrison is a promoter of blocking: clearly he always creates his greatest effencies, and lowers the need for hump yards considerably, by blocking all new traffic. The end-goal is clearly to have most traffic move in two blocks throughout their time on CSX: Origin to middle, and middle to destination. At your origin and destination, you're still probably on another local train, bringing your total train count to four. But, you're not humping cars each time the enter your yards. There's a lot to be gained there, and previous management wasn't doing much to go after it. The biggest cut however, is management. CSX was very top-heavy and not very streamlined. Not that I like seeing people lose their jobs, but businesses have no obligation to keep more people than necessary. There are definite arguments to be made that less is more in management in many ways, including trying to cut down the fiefdom mentality prevailing amongst railroaders. One of Harrison's goals, and it shows with dispatching, is to create one network, not many divisions. If the dispatchers are in Jacksonville, then the whole network flows together, instead of "well it isn't on my division anymore" once the Dispatcher codes up the signals. Harrison cuts with a blunt weapon sometimes, but you have to admit that at least he tries to be somewhat targeted, aiming for "cost control" over "cost cutting". Accurate it isn't always, but at least it happens fairly often and many of the mistakes are eventually undone: see Avon. So consider us in partial agreement. Yes CSX cut some dead wood, but there was so much more to go. And in many cases, there is a huge amount of cost-benefit analysis going on...the actual outcome of which isn't always readily apparent. Point #2: Route Structure Here too there is definitely a case to be made for that. CP is pretty linear, while CN was a giant T. CSX is a triangulated spaghetti bowl. But that doesn't mean you can't optimize a network. I think this is where blocking really comes into play. Consider that Grand Rapids, MI now blocks for Cincinatti, Columbus, Willard, Chicago, the BRC and more. It used to just cut traffic into a "for Barr" and "for Stanley" pile and shove it out the door. This means that the system can definitely be optimized. Now I agree that it'll be more difficult to achieve, given the structure. But why would non-linear systems be disqualified from the principles of "keep 'er movin" and blocked traffic? In theory CSX is still a system with three legs of a triangle, so there is some framework there. What it's going to take is a lot of tinkering and probably some computer modelling. That's where EHH ran into trouble: he clearly knew many of the problems at CSX, but it's too much too quickly. The road requires changes at a slower pace, to allow floes to adjust. We're seeing that now, I think. Will it work as well? I think the jury is still out. But there's a lot more to be said before it is over. Point #3: CSX is tied to the short haul Again, I agree. But here as well I don't think this makes it more difficult. The hauls are shorter but the traffic is more dense. In theory, PSR should get you better results than the existing "system", so in theory competition would still work itself out. The way intermodal traffic isn't changing, and that's the primary competitive edge with trucking. Loose carloads are sometimes ripe for poaching, but not all traffic there is necessarily worth having, either. As for shorter hauls, it's something CSX and NS have to figure out how to deal with. Being honest, it's actually part of the case for transcontinenal mergers, since it would remove this Mississippi divide that largely sinks lanes such as Texas-Ohio for intermodal, since more than one carrier handles it. It's clearly time for more cooperation on intercarrier intermodal, but again railroad's long-standing fiefdom model isn't helping. That's a weakness on most roads. So I guess on all three points, we partially agree, but I think on these three particular issues, the topics run significantly deeper than a single sentence, and as far as Harrison's changes at CSX goes, the jury is still out, operationally. Before I wrap this up, a few points on railroading in general I'd like to make. The first is that railroads now have reached capacity on many routes - think the Southern Transcon, the Chicago Line, and the B&O. Unlike anything the industry has seen since WWII, there is now more traffic which could move by rail profitably than the railroads can handle. This is where the railroads have gained considerable pricing power since the 1990s, and is why overall traffic growth has become lackluster. The simple truth is that railroad capacity is finite and we've reach that point in a lot of lanes. So naturally, the law of supply and demand is kicking in. If railroads have 50 cars that show up, and they can only fluidly handle 40, they're going to raise their pricing until only 40 show up. Not every carload "lost" is a bad one, but merely the choice to take the higher-margin traffic, at least generally. So yes, there may be more competition at the fringes of railroad marketshare, particularly when it comes to boxcar shipments. But this is why the railroads are making great money without any real traffic growth. They've stabilized their traffic volumes, more or less, to the point where adding new customers isn't necessarily required. Now I'm not arguing that railroads should close down their marketing departments (if they even actually try to get new customers at all), but everybody has to realize that in many cases, that new customer might not be worth it once you expense the capital through switching them out, routing the cars, and of course lost track capacity if they're located out online. The goal is not to move the most traffic. It is to make the most money. Railroading has always been a business. Sure, you need traffic to move, but if you have too much, and lose fulidity, then that does you absolutely no good. So this is what I feel has given rise to EHH's model. I don't think it would have worked back in the 70s and 80s, but it is well suited to the optimization necessary today. It isn't a silver bullet and honestly some people probably give him too much praise, while others wail despite clear long-term benefits, often realized after he departs. But to a large extent, EHH fits the time, in the same way another EHH, EH Harriman, owned his time on the UP and SP back in the first days of the 20th Century. I'm never going to claim Harrison would best Harriman, but there's no way the Harriman model - as it existed - would work today.
daveklepper Saturnalia: Your analysis makes sense, when applied to CN and CP. But it does not apply to CSX. Because CSX already had cut out most of the dead wood. Because CSX doesn't have a simple route structure, like CN and CP do. Because CSX exists in a much more competitive freight environment, not only vs NS, but also vs trucks and even water transportation. Because average frieght haul is not as long as it is on CN and CP. I predicted that if HH would focus on growing the buesiness, he would be a success. But if he tried to just duplicate what he did at CN and CP, he would fail. And he has tried to just duplicate what he did at CN and CP. And I put my predictions into postings on these forums.
Saturnalia: Your analysis makes sense, when applied to CN and CP. But it does not apply to CSX. Because CSX already had cut out most of the dead wood. Because CSX doesn't have a simple route structure, like CN and CP do. Because CSX exists in a much more competitive freight environment, not only vs NS, but also vs trucks and even water transportation. Because average frieght haul is not as long as it is on CN and CP.
I predicted that if HH would focus on growing the buesiness, he would be a success. But if he tried to just duplicate what he did at CN and CP, he would fail. And he has tried to just duplicate what he did at CN and CP. And I put my predictions into postings on these forums.
Alright, let's play with this, I like it, we're getting somewhere :)
Point #1: CSX had already cut much of the dead wood.
To that, I'd suggest that while they did cut a lot, they were cutting to cut. At least EHH is trying to make sense of it all - failing in many ways yes, but at CSX previously it was clearly more about cutting based on cost, not need. Harrison's cutting Hump Yards, but he intends to replace that work with flat switching. Previously, CSX just tried that 28-hour schedule, and said "whelp" whenever that hurt anything. They cut trains, forcing the remaining ones to just run huge barges.
At least Harrison is a promoter of blocking: clearly he always creates his greatest effencies, and lowers the need for hump yards considerably, by blocking all new traffic. The end-goal is clearly to have most traffic move in two blocks throughout their time on CSX: Origin to middle, and middle to destination. At your origin and destination, you're still probably on another local train, bringing your total train count to four. But, you're not humping cars each time the enter your yards. There's a lot to be gained there, and previous management wasn't doing much to go after it.
The biggest cut however, is management. CSX was very top-heavy and not very streamlined. Not that I like seeing people lose their jobs, but businesses have no obligation to keep more people than necessary. There are definite arguments to be made that less is more in management in many ways, including trying to cut down the fiefdom mentality prevailing amongst railroaders. One of Harrison's goals, and it shows with dispatching, is to create one network, not many divisions. If the dispatchers are in Jacksonville, then the whole network flows together, instead of "well it isn't on my division anymore" once the Dispatcher codes up the signals.
Harrison cuts with a blunt weapon sometimes, but you have to admit that at least he tries to be somewhat targeted, aiming for "cost control" over "cost cutting". Accurate it isn't always, but at least it happens fairly often and many of the mistakes are eventually undone: see Avon.
So consider us in partial agreement. Yes CSX cut some dead wood, but there was so much more to go. And in many cases, there is a huge amount of cost-benefit analysis going on...the actual outcome of which isn't always readily apparent.
Point #2: Route Structure
Here too there is definitely a case to be made for that. CP is pretty linear, while CN was a giant T. CSX is a triangulated spaghetti bowl. But that doesn't mean you can't optimize a network. I think this is where blocking really comes into play. Consider that Grand Rapids, MI now blocks for Cincinatti, Columbus, Willard, Chicago, the BRC and more. It used to just cut traffic into a "for Barr" and "for Stanley" pile and shove it out the door.
This means that the system can definitely be optimized. Now I agree that it'll be more difficult to achieve, given the structure. But why would non-linear systems be disqualified from the principles of "keep 'er movin" and blocked traffic? In theory CSX is still a system with three legs of a triangle, so there is some framework there. What it's going to take is a lot of tinkering and probably some computer modelling.
That's where EHH ran into trouble: he clearly knew many of the problems at CSX, but it's too much too quickly. The road requires changes at a slower pace, to allow floes to adjust. We're seeing that now, I think.
Will it work as well? I think the jury is still out. But there's a lot more to be said before it is over.
Point #3: CSX is tied to the short haul
Again, I agree. But here as well I don't think this makes it more difficult. The hauls are shorter but the traffic is more dense. In theory, PSR should get you better results than the existing "system", so in theory competition would still work itself out. The way intermodal traffic isn't changing, and that's the primary competitive edge with trucking. Loose carloads are sometimes ripe for poaching, but not all traffic there is necessarily worth having, either.
As for shorter hauls, it's something CSX and NS have to figure out how to deal with. Being honest, it's actually part of the case for transcontinenal mergers, since it would remove this Mississippi divide that largely sinks lanes such as Texas-Ohio for intermodal, since more than one carrier handles it. It's clearly time for more cooperation on intercarrier intermodal, but again railroad's long-standing fiefdom model isn't helping. That's a weakness on most roads.
So I guess on all three points, we partially agree, but I think on these three particular issues, the topics run significantly deeper than a single sentence, and as far as Harrison's changes at CSX goes, the jury is still out, operationally.
Before I wrap this up, a few points on railroading in general I'd like to make.
The first is that railroads now have reached capacity on many routes - think the Southern Transcon, the Chicago Line, and the B&O. Unlike anything the industry has seen since WWII, there is now more traffic which could move by rail profitably than the railroads can handle. This is where the railroads have gained considerable pricing power since the 1990s, and is why overall traffic growth has become lackluster.
The simple truth is that railroad capacity is finite and we've reach that point in a lot of lanes. So naturally, the law of supply and demand is kicking in. If railroads have 50 cars that show up, and they can only fluidly handle 40, they're going to raise their pricing until only 40 show up. Not every carload "lost" is a bad one, but merely the choice to take the higher-margin traffic, at least generally.
So yes, there may be more competition at the fringes of railroad marketshare, particularly when it comes to boxcar shipments.
But this is why the railroads are making great money without any real traffic growth. They've stabilized their traffic volumes, more or less, to the point where adding new customers isn't necessarily required. Now I'm not arguing that railroads should close down their marketing departments (if they even actually try to get new customers at all), but everybody has to realize that in many cases, that new customer might not be worth it once you expense the capital through switching them out, routing the cars, and of course lost track capacity if they're located out online.
The goal is not to move the most traffic. It is to make the most money. Railroading has always been a business. Sure, you need traffic to move, but if you have too much, and lose fulidity, then that does you absolutely no good.
So this is what I feel has given rise to EHH's model. I don't think it would have worked back in the 70s and 80s, but it is well suited to the optimization necessary today. It isn't a silver bullet and honestly some people probably give him too much praise, while others wail despite clear long-term benefits, often realized after he departs. But to a large extent, EHH fits the time, in the same way another EHH, EH Harriman, owned his time on the UP and SP back in the first days of the 20th Century. I'm never going to claim Harrison would best Harriman, but there's no way the Harriman model - as it existed - would work today.
Saturnalia
It is nice to hear your ideas about the constructive intentions of Harrison, particularly how flat switching is basically a response to the anticipation of less need for switching. In that light, it seems like a legitimate reduction of unnecessary costs rather than a cynical conspiracy to rob the company of cash. Maybe the Harrison team should offer more explanation of what they are doing and how it will improve the company.
jeffhergertTo me, it's a strategy of a dying industry. Reminds me somewhat of what John Kneilling once wrote in a column many years ago. Something along the lines of don't invest in the business and pull out as much money as you can before it collapses completely. Maybe railroads are again on a downward trajectory. If so, it's mostly their own fault as they convince themselves that more and more business isn't worth having. Jeff
Jeff,
I don't see that happening on the well managed roads. I would buy stock in most of them in a heart beat but would be tenuous regarding CSX stock until I see an upturn. Given the path of destruction Harrison left at CN and CP I have my doubts he is the saviour of CSX. Harrison has a history of slash and burn and leaving the rubble for others to clean up.
In the end what will happen is anyone's guess at this point.
Norm
Growth? While EHH seems to be an extreme example, most of the other class ones are kind of on the same path. They aren't really looking to grow their business, that might require spending money to handle it. It might make the OR go up and the stock price go down. They seem rather to try to squeeze out every penny out of the dollars they already bring in, rather than try to bring in more dollars overall.
To me, it's a strategy of a dying industry. Reminds me somewhat of what John Kneilling once wrote in a column many years ago. Something along the lines of don't invest in the business and pull out as much money as you can before it collapses completely. Maybe railroads are again on a downward trajectory. If so, it's mostly their own fault as they convince themselves that more and more business isn't worth having.
Jeff
Los Angeles Rams GuyHonestly, the people who portray this guy as some sort of hero or messiah is seriously misguided.
Or being paid.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.
Saturnalia BaltACD EHH's view has become fuzzy from repeated oxygen shortages. He may have been a railroader in the past. His illness and physical condition have sapped the faculties he once had - the downhill slide stops at six feet below ground. Nice strawman you've got there. Let's stick to the actual points of railroading, please. I'd much rather read about the particulars of flat yard switching operations versus humping, instead of the constant "Evil EHH" montra railfans have gotten so great at. Go ahead and argue against Hunter Harrison, but do it with facts, not loathful comments which do nothing but fill up space and tack onto your post count. ------- As for the idea of the network "cushion", I'd love to see more dicsussion about that, because I do think it is one of the underappreciated flaws of PSR. Harrison has proven that he can clearly cut dead wood, and figure out the best *overall* layout for the network, but he seems to have a weak history when it comes to leaving enough capacity. I personally think that a case study of CP and CN reveal that he did indeed cut too much, but that I also think that this in the long-term has the benefit of ensuring the dead wood is cut away. Harrison has never been around long enough to see his model implemented beyond a few years. But I think one should not underestimate the EHH cycle, which I'll term it. The cycle seems to be: 1. Underperforming railroad exists 2. Uses some form of leverage to enter the railroad 3. Implements a wide array of changes, focused on cutting excess capacity and costs. If it doesn't have a definite purpose, get rid of it. Get down to the bare bones of the operation, increase car velocity, decrease dwell, etc 4. Fumble around a bit in the process of implementing #3, as many people get disguntled through layoffs and changes (or even eliminations) to their segment of the railroad fiefdom system. 5. (Some) metrics improved, after a few years EHH is squeezed out, or leaves, once his doings no longer help the bottom line, since the deadweight is gone. 6. The next generation now has a *very* lean footprint, which they can rebuild upon. Figure out where there needs to be more capacity. You're going to undo some of EHH's changes, but this is going to happen now that you know for sure that you actually do need that capacity or whatever it is. 7. Railroad sees traffic and revenue increases, while performance metrics remain about the same as the railroad resumes running, still leaner and better off than when EHH started. Now I'll be very interested to see what everybody else thinks of my analysis here. I liken it to pruning bushes: in getting it "into shape", you're going to cut off some healthy bits, along with the dead weight. This might be painful and hurt growth in the short-term, but in the long-term it tends to come back stronger. I don't think this is Harrison's intention, but it seems to have held true throughout his managerial history. Look at CN, which is now unrivaled in just about every operating category and reaches all three ends of the continent, or CP, which was a complete disaster. Did EHH leave these two railroads in perfect shape? Absolutely not! But I don't see where, beyond a few small areas in each case, places where EHH did tangible long-term "damage" to either CP or CN. On the whole, you have to consider his time in each case to be a net-positive. Thusly, I see it that EHH is following more or less the same formula at CSX. Yes, there will be short-term brew-ha-ha, without a doubt - we are seeing loads of it, and perhaps he's making more mistakes with the more complex CSX network. And the Wall St cats will get their Benjamins in the short-term. But I think what many forget is that CSX of yore was definitely the weaker of the two eastern giants, despite most analysts agreeing that CSX has the better network. So there is room for improvement, and we'll see how much of it EHH finds, and what his eventual sucessor finds. Remember, without a doubt railfans were flinging poo at CSX for years and years in a sort of sport, before EHH ever came around. I feel that perhaps even a majority of railfans are following the bandwagon on this one.
BaltACD EHH's view has become fuzzy from repeated oxygen shortages. He may have been a railroader in the past. His illness and physical condition have sapped the faculties he once had - the downhill slide stops at six feet below ground.
EHH's view has become fuzzy from repeated oxygen shortages. He may have been a railroader in the past. His illness and physical condition have sapped the faculties he once had - the downhill slide stops at six feet below ground.
Nice strawman you've got there.
Let's stick to the actual points of railroading, please. I'd much rather read about the particulars of flat yard switching operations versus humping, instead of the constant "Evil EHH" montra railfans have gotten so great at.
Go ahead and argue against Hunter Harrison, but do it with facts, not loathful comments which do nothing but fill up space and tack onto your post count.
-------
As for the idea of the network "cushion", I'd love to see more dicsussion about that, because I do think it is one of the underappreciated flaws of PSR. Harrison has proven that he can clearly cut dead wood, and figure out the best *overall* layout for the network, but he seems to have a weak history when it comes to leaving enough capacity.
I personally think that a case study of CP and CN reveal that he did indeed cut too much, but that I also think that this in the long-term has the benefit of ensuring the dead wood is cut away. Harrison has never been around long enough to see his model implemented beyond a few years. But I think one should not underestimate the EHH cycle, which I'll term it. The cycle seems to be:
1. Underperforming railroad exists
2. Uses some form of leverage to enter the railroad
3. Implements a wide array of changes, focused on cutting excess capacity and costs. If it doesn't have a definite purpose, get rid of it. Get down to the bare bones of the operation, increase car velocity, decrease dwell, etc
4. Fumble around a bit in the process of implementing #3, as many people get disguntled through layoffs and changes (or even eliminations) to their segment of the railroad fiefdom system.
5. (Some) metrics improved, after a few years EHH is squeezed out, or leaves, once his doings no longer help the bottom line, since the deadweight is gone.
6. The next generation now has a *very* lean footprint, which they can rebuild upon. Figure out where there needs to be more capacity. You're going to undo some of EHH's changes, but this is going to happen now that you know for sure that you actually do need that capacity or whatever it is.
7. Railroad sees traffic and revenue increases, while performance metrics remain about the same as the railroad resumes running, still leaner and better off than when EHH started.
Now I'll be very interested to see what everybody else thinks of my analysis here. I liken it to pruning bushes: in getting it "into shape", you're going to cut off some healthy bits, along with the dead weight. This might be painful and hurt growth in the short-term, but in the long-term it tends to come back stronger. I don't think this is Harrison's intention, but it seems to have held true throughout his managerial history.
Look at CN, which is now unrivaled in just about every operating category and reaches all three ends of the continent, or CP, which was a complete disaster. Did EHH leave these two railroads in perfect shape? Absolutely not! But I don't see where, beyond a few small areas in each case, places where EHH did tangible long-term "damage" to either CP or CN. On the whole, you have to consider his time in each case to be a net-positive.
Thusly, I see it that EHH is following more or less the same formula at CSX. Yes, there will be short-term brew-ha-ha, without a doubt - we are seeing loads of it, and perhaps he's making more mistakes with the more complex CSX network. And the Wall St cats will get their Benjamins in the short-term. But I think what many forget is that CSX of yore was definitely the weaker of the two eastern giants, despite most analysts agreeing that CSX has the better network. So there is room for improvement, and we'll see how much of it EHH finds, and what his eventual sucessor finds.
Remember, without a doubt railfans were flinging poo at CSX for years and years in a sort of sport, before EHH ever came around. I feel that perhaps even a majority of railfans are following the bandwagon on this one.
Wow. Am so glad yet another EHH apologist has come on here. Makes me feel warm and fuzzy all over that a functioning lunatic like EHH actually has fans such as yourself.
I don't know....Maybe it's just me but considering the nearly 5,000 jobs he cut at CPRS (including mine) and the nearly 3,000 jobs he's already cut in the nearly six months he's been at CSXT, not to mention customers who have been pretty much left high and dry by his tactics, doesn't exactly prod me to nominate this guy for Railroader of the Year. And his culture of fear that he created at CN and CPRS and now CSXT has morale at an all-time low. Having worked for CPRS for 20+ years, I know for a fact that there are MANY customers who will NEVER do business with CPRS (and perhaps with rail altogether) again.
Honestly, the people who portray this guy as some sort of hero or messiah is seriously misguided.
Euclid tree68 Saturnalia - One of your metaphors is an example of what many feel EHH and his handlers are doing - pruning. To slightly modify your metaphor, however, what if the pruner is getting paid by the pound for what he removes from the bush? Do you think he really cares if the bush recovers? Especially if this is a contract job and he won't be around next year to see the results of his efforts? So how do we determine whether that modified metaphor is actually happening?
tree68 Saturnalia - One of your metaphors is an example of what many feel EHH and his handlers are doing - pruning. To slightly modify your metaphor, however, what if the pruner is getting paid by the pound for what he removes from the bush? Do you think he really cares if the bush recovers? Especially if this is a contract job and he won't be around next year to see the results of his efforts?
Saturnalia - One of your metaphors is an example of what many feel EHH and his handlers are doing - pruning.
To slightly modify your metaphor, however, what if the pruner is getting paid by the pound for what he removes from the bush? Do you think he really cares if the bush recovers? Especially if this is a contract job and he won't be around next year to see the results of his efforts?
So how do we determine whether that modified metaphor is actually happening?
Ahh, great point! I think there is room in there for that model, certainly. He's definitely paid for what he removes in the form of performance bonuses tied to Operating Ratio (a clause almost certainly in his contract), among whatever earnings he's going to get from being a major stockholder, as the share price goes up as the OR falls, in theory.
So maybe paid by the pound, but he's still gotta be careful not to kill the bush. Cut as much as possible, though, certainly.
I don't know if EHH thinks about the long-term of the companies he controls, but I think part of the whole game, intentional or not, is like I said, that ultimately his sucessors get a very, very lean base upon which to build the company's long term future. We're still waiting to see how CP turns out, but CN is an absolute sucess, can't argue there. So I think EHH is just a catalyst for change - but you absolutely need people to come in after he's chopped off all of these branches to figure out where to go next.
Finally someone I can 100% agree with. I have been thinking this but you were able to put it to words. Thank you!
Saturnalia - One of your metaphors is an example of what many feel EHH and his handlers are doing - pruning. As you note, some deadwood is removed, but some useful stuff is necessarily removed as well. Yes, presumably the bush will recover.
Larry Resident Microferroequinologist (at least at my house) Everyone goes home; Safety begins with you My Opinion. Standard Disclaimers Apply. No Expiration Date Come ride the rails with me! There's one thing about humility - the moment you think you've got it, you've lost it...
Having viewed, 1st hand, what is taking place in the CSX workplace of today I know what is and isn't taking place operationally and who is and isn't in place to get the job done.
Financial ledger de maine is not my strong point beyond knowing figures can be manipulated, under 'generally accepted accounting principles' to prove any point some one wants emphasized.
Generating fake news and spin is what companies and the government are all about these days.
BaltACD Bare bones does not make a functional person. Bare bones is death after the vultures have picked everything nourishing from the corpse!
Bare bones does not make a functional person. Bare bones is death after the vultures have picked everything nourishing from the corpse!
Whatever...you're just spinning my metaphor.
You clearly have no intention of a rational discussion on the merits of actual railroad operations and finance. Shame, since it seems as though you could probably bring a lot of good stuff to such a discussion.
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