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CSX vs. NS performance
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In the fourth quarter of 2004, CSX had an operating ratio of 85.0%, an improvement of 1.7 points over the year-ago quarter, but still the worst among the Big Six except for UP, which was at 86.0%. <br /> <br />In the same period, NS had an operating ratio of 76.3%, a 4.0-point improvement over the year-ago quarter, and the second-best operating ratio in the industry (although it lagged industry-best CN by 11.3 points). <br /> <br />Question: can CSX catch up? <br /> <br />My own theory, subject to challenge by anyone who knows more about these railroads than I do, is that CSX is likely to under-perform NS for the foreseeable future, in large part because NS's physical plant is superior to CSX's, and with rail volumes growing at a rapid clip, CSX doesn't have the capacity to manage these volumes efficiently. <br /> <br />My impression of NS is that much of the former Southern Railway territory is either double-track CTC or at least has frequent passing sidings that permit fluid operation, whereas CSX's former SCL/L&N territory is mainly a single-track railroad with less frequent sidings. <br /> <br />As for N&W territory vs. Chessie, I know that CSX put a lot of money into rebuilding the west end of the B&O before the Conrail splitup, but still, I suspect that overall the former N&W is superior physically to the former C&O/B&O. <br /> <br />Here's a quote from a Don Phillips story in the Washington Post (12/16/03) that I think has some bearing on this: "CSX for years limited capital spending in part to make its finances look better. It began reducing spending in the late 1980s, shortly before Snow became chief executive. From 1991 to 1998, CSX spent less per mile of track than any other major railroad, regulatory filings show." <br /> <br />It also seemed to me that SOU and N&W had more modern classification yards than SCL/L&N and Chessie. <br /> <br />As far as the effect of the ex-Conrail territories taken over by each of these railroads, I don't see where there is much difference -- if anything, CSX might be expected to have the edge here since they took over the ex-NYC water level route, whereas NS got the ex-PRR route through the Alleghenies. <br /> <br />I know, too, that there are cultural differences between the two railroads. N&W and SOU always seemed to run very disciplined operations, in contrast to Chessie and Seaboard. Both railroads had big problems in the wake of the Conrail splitup, but NS got itself back on track a lot quicker, and I would credit that to a disciplined team that understood what had to be done to get back to being a scheduled railroad. <br /> <br />Now, would the experts step forward and tell me whether any of this has any validity and if not, what the real explanation is for the vast difference in performance between these two railroads, and what your expectations are for the future. <br /> <br />Thanks! <br /> <br />Tom Murray
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