JACKSONVILLE, Fla. — E. Hunter Harrison has been named the CEO of CSX Transportation, less than seven weeks after stepping down early from the top job at Canadian Pacific. The Wall Street Journal reported this afternoon that CSX and Mantle Rid...
http://trn.trains.com/news/news-wire/2017/03/06-ehh-at-csx
Brian Schmidt, Editor, Classic Trains magazine
It's been fun. But it isn't much fun anymore. Signing off for now.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any
Well CSX can say goodbye to about 2K locomotives any and all capital improvements and a lot of their customers. Right now NS is going we are going to be needing MORE of everything if possible.
CSX will be just fine.. CN and CP both survived EHH and are arguably better companies today than they were prior to his arrival.
But if there's going to be a merger, I would think NOW is the time.. with Trump in the White House, and EHH running CSX.. the time to do this is now.. not in four years when Trump and EHH are gone. I'm not sure mergers are the way to go... but if they're going to happen then now is the time.
UlrichCSX will be just fine.. CN and CP both survived EHH and are arguably better companies today than they were prior to his arrival. But if there's going to be a merger, I would think NOW is the time.. with Trump in ~snip~
But if there's going to be a merger, I would think NOW is the time.. with Trump in ~snip~
Correction to your statement, CN is now doing fine after how many years of new management? They were not "fine" right after EHH left, and they've had to spend how many billions of dollars on capital improvements because of things that EHH did the existing infrastructure? CP will take years to get to being "fine" because of the same slash and burn technique that EHH used at IC first, then CN. You DO NOT grow business by gutting your system, removing capacity(even if currently underutelized), slashing employment in operating crafts and disposing of rail equipment...all of which are hallmarks of EHH's "precision scheduled railroading"...which is really funny to say considering that back in the days of steam many freights were already scheduled and you had extras, now, almost no freight trains are scheduled. EHH didn't invent anything, he just brought back something that used to be common to the modern era of railroading. He's not and never has been interested in running a railroad, he's all about the money, both for his pocket and the investors, aka, shareholders. Owning railroad stock is not a get rich quick scheme, look at high flying industries for that, owning railroad stock is a long term(20 - 40 year investment), sort of like utilities.
Mergers will not happen now or in the future, Trump has nothing to do with them, it's still up to the STB and they aren't about to change the rules any. They make absolutely no sense and would actually be anti-competetive in todays world, though if you ever wanted to see what would happen with mandatory trackage rights all across the U.S. be my guest and merge the remaining big 6 into the big 3(then watch them fail and we have to nationalize the entire system). Besides, I highly doubt there's another carrier out there that Berkshire-Hathaway would be interested in buying and combining with the BNSF.
UlrichCSX will be just fine.. CN and CP both survived EHH and are arguably better companies today than they were prior to his arrival. But if there's going to be a merger, I would think NOW is the time.. with Trump in the White House, and EHH running CSX.. the time to do this is now.. not in four years when Trump and EHH are gone. I'm not sure mergers are the way to go... but if they're going to happen then now is the time.
Yup! Canadians wrecking US transportation.
Never too old to have a happy childhood!
We can't claim EHH as one of our own.. he's a dyed in the wool Tennesseen..
Who was fired by Greinstien for trying his crap on the old Frisco after the BN merged it into them. He has been a disaster for every railroad on the operational side he has been at. Yes the street loves him since to them it appears to them that he is finding millions of dollars in money tied up in so called UNNEEDED equipment tracks and wages for employees he thinks are unneeded. Then after a couple years of his so called sucess the works start to gum up and customers start to complain and then leave. Sorry he makes Chainsaw Al of the 80's look like a freaking genius. If I was put in charge of EHH I would not let him be in charge of cleaning my bosses grease trap in the shop. His job would be sweeping the floor in the shop or painting the post outside the door.
UlrichWe can't claim EHH as one of our own.. he's a dyed in the wool Tennesseen..
But his brain got frosted from his time up North. Sort of like a Slupee brain freeze only people lose their jobs.
Some data and thoughts on mergers:
Norfolk Southern closed today at $122.93, just $2.07 below its 52 week high and $48.23 above its 52 week low. Market cap $35.72 billion.
Union Pacific closed today at $109.43, which is just $1.95 below its 52 week high and $32.14 above its 52 week low. Market cap $89.05 billion.
Kansas City Southern closed today at $89.29, which is $11.40 below its 52 week high and $10.24 above its 52 week low. Market cap $9.52 billion.
Canadian Pacific closed today at $149.19, which is $8.15 below its 52 week high and $29.69 above its 52 week low. Market cap $21.86 billion.
Canadian National closed today at $72.35, just $0.38 below its 52 week high and $16.62 above its 52 week low. Market cap $55.07 billion.
CSX closed today at $49.79, which is $0.15 below its 52 week high and $25.43 above its 52 week low (having doubled in price). Market cap $46.13 billion.
Railroad stocks for the most part are at or near their 52 week highs. Mr. Buffett tends to not buy properties at near their highest values unless he perceives there is still significant upside as when he increased his share of Apple stock to $18 billion in February 2017.
In terms of generating financing for a merger, clearly Kansas City Southern and Canadian Pacific would be the easier fish to swallow based on the size of the financing needed.
EHH has said that he does not like "the Mexico play" in past interviews. However, at CN he made many strategic acquisitions during his time there.
Given the "size of the fish to swallow" and his past patterns of acquisition at CN and attempting acquisiton at CP, it would seem that there is a future coupling of CSX and CP, which many on this forum have stated already. It would not be surprising if CSX started numbering their trains in the same manner as CP in very short order.
If EHH drops the Operating Ratio to 60 by the end of 2018 and is generating free cash flow at the same rate as at CN and CP, it would be reasonable to look for the merger to be proposed in late 2018 or early 2019 to give him time to complete the merger before his contract expires.
We might also see CSX purchase Iowa Interstate in order to effect a "de facto" bypass of Chicago for significant traffic to Kansas City, Minneapolis and points north and northwest of Minneapolis. While the former Milwaukee Road south of La Crescent is not of the highest speed, the addition of passing sidings and not having to fight through Chicago quagmire and keep rolling at 35 mph from the Quad Cities to La Crescent could easily end up being faster in overall schedule times in the long run.
How much money could CSX make selling Bensenville for additional airport capacity at O'Hare?
A merger maybe, but I doubt it will be between CSX/NS and CP.. just doesn't make any sense..kind of like scratching your back with a garden hose.. Sure it can be done, but WHY? A CSX/CP merger was briefly entertained last year because at that time EHH worked for CP, and any merger proposal involving EHH as its central player would obviously have to involve his employer. Now that he's gone from CP he likely nolonger feels beholden to push any merger with CP, a cockeyed merger that would cut across North America diagonally and would make no sense whatsoever. A merger, if one were to happen, would thus most likely involve the obvious suspects: CSX & BNSF or CSX and UP. Why? Because that would make sense..
If anything CSX under EHH will sell the old Rock Island line they run to the Iowa Interstate that line has 2 trains a day one each way serves nothing but loose car customers and is low density for the CSX. Heck Iowa Interstate runs more trains on it than CSX does that tell you anything.
Shadow the Cats owner If anything CSX under EHH will sell the old Rock Island line they run to the Iowa Interstate that line has 2 trains a day one each way serves nothing but loose car customers and is low density for the CSX. Heck Iowa Interstate runs more trains on it than CSX does that tell you anything.
No, the Iowa does not run more trains a day than CSX does on the New Rock. A busy day for the Iowa is two trains a day each way. CSX runs one freight train a day between Chicago and Ottawa, along with about 12 locals a day and several sand trains a week. Also, I really doubt the line is going anywhere. It is also one of the top earners in money per mile on the CSX system. Lots of chemical and the already mentioned sand traffic.
An "expensive model collector"
Balt ACD- "Yup! Canadians wrecking US transportation"
Well I was going to defend my country but then I thought of Justin Bieber and Celine Dion, even Alex Trebek so now I'm thinking you may have something there.
Regardless...we do not want any of the mentioned back...all your's...enjoy.
Reasons to eventually go after a merger with CP if you are EHH:
1. It is a lot easier to come up with $30 billion to purchase CP than for UP or BNSF to come up with $60 billion to buy CSX.
2. It theoretically does not "mess" with UP and BNSF in the western US.
3. There is a lot of money to be made hauling intermodal filled with consumer goods from the Port of Vancouver, BC all the way to New York, Charlotte, Atlanta, etc. and backhaul the containers with export grain. It would be a more voluminous market than CN's service from Vancouver or Prince Rupert, BC to Memphis and would utilize two thirds of the CSX iron triangle.
4. Ethanol for the east coast from CP territory could take the most expeditious route to eastern markets on a single line rather than going over the top of Lake Ontario.
5. Frac sand for the Marcellus and Utica shales could come single line from Wisconsin.
6. The Ports of Miami and Savannah could serve as an embarkation point for single line service for containers coming from South America or through the Panama Canal to Toronto and Montreal.
7. If I have four years to build one of, if not the, biggest railroad in the history of railroading at about 34,000 miles, CP might be the easiest lift to get it done.
Just some thoughts for discussion.
n012944 Shadow the Cats owner If anything CSX under EHH will sell the old Rock Island line they run to the Iowa Interstate that line has 2 trains a day one each way serves nothing but loose car customers and is low density for the CSX. Heck Iowa Interstate runs more trains on it than CSX does that tell you anything. No, the Iowa does not run more trains a day than CSX does on the New Rock. A busy day for the Iowa is two trains a day each way. CSX runs one freight train a day between Chicago and Ottawa, along with about 12 locals a day and several sand trains a week. Also, I really doubt the line is going anywhere. It is also one of the top earners in money per mile on the CSX system. Lots of chemical and the already mentioned sand traffic.
Did CSX actually ever buy the exRI or is it still leased? As I recall, it was a 50 year lease with options to extend. Seems like I heard something about it, besides handing over operation on parts of it to IAIS. I just don't remember.
Jeff
kbgw49- Brilliant. Spot on genius. Count on it. EHH should get you on board.
RME's suggested name of Super C's is pretty good but I'm sure the Santa Fe part of BNSF would put a kibosh on that, just because they could.
The only way to make it palatable to you fellow's ( Americans) is to ditch the "Canadian" part, how about Seaboard Pacific, suggesting both coasts or CBoardPacific,..naw that sucks,....International Pacific...mmm, better, still sucks....National Pacific... cheese off CN and satisfies both countries.
Have to somehow incorporate the Eastern seaboard with the very railroad-y "Pacific".
Canadian Pacific is sacred up here, but we are nice folks and can take it..it won't matter because everyone up here will still call it Canadian Pacific or CP or CPR anyway.
I don't understand why anyone thinks he would want CP. He's already wrung out all he can out of them. That was why it was speculated he wanted CSX in the first place. Might as well say he'll want to merge NS with CSX since he went after them once too.
His slash and burn strategy reminds me of what John Kneilling once said on how the railroads should conduct themselves in a dying industry. Use up the physical plant/equipment and get all the money you can before it bites the dust.
How about Atlantic, Plains & Pacific. They would have a built in tag line:
Have something to ship? We've got an APP for that.
CPX? Only have to change one letter...
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...
Reuters CSX said its board would also seek a shareholder vote at the 2017 annual meeting on the payment of $84 million in compensation and benefits forfeited by Harrison as a result of his separation from Canadian Pacific. "Harrison has indicated that he will resign after the meeting if the reimbursement and tax indemnity are not provided," CSX said.
CSX said its board would also seek a shareholder vote at the 2017 annual meeting on the payment of $84 million in compensation and benefits forfeited by Harrison as a result of his separation from Canadian Pacific.
"Harrison has indicated that he will resign after the meeting if the reimbursement and tax indemnity are not provided," CSX said.
I know what my shareholder vote will be!
BaltACD Reuters CSX said its board would also seek a shareholder vote at the 2017 annual meeting on the payment of $84 million in compensation and benefits forfeited by Harrison as a result of his separation from Canadian Pacific. "Harrison has indicated that he will resign after the meeting if the reimbursement and tax indemnity are not provided," CSX said. I know what my shareholder vote will be!
Thanks to Chris / CopCarSS for my avatar.
Yes ...that is the $ penalty from CP's non-competition clause ..if he goes to work for a competitor he has to pony up that much. If CSX wants him those are his terms...he sure as heck isn't going to pay the penalty. Wonder what this guys expense account terms are...strawberries and peeled grapes each morning served bedside?
I'm not sure what the current market rate on railroad CEO's is, but couldn't you buy half a dozen pretty good ones for $84 million?
MiningmanYes ...that is the $ penalty from CP's non-competition clause ..if he goes to work for a competitor he has to pony up that much. If CSX wants him those are his terms...he sure as heck isn't going to pay the penalty. Wonder what this guys expense account terms are...strawberries and peeled grapes each morning served bedside?
Since he is Mantle Ridges choice - Mantle Ridge should be on the hook for any penalties - Not CSX and its shareholders. And since when does 4.9% ownership control the company?
For such a terrible CEO (according to all on here) he sure knows how to get the OR down to record lows, in the 3 1/2 years he has been the CEO. "OR fell to a record 58.6 percent for 2016."
Meanwhile, CSX improved its OR to 71.6%. It is ironic that those who put profitability über alles, are very inconsistent in their judgment of EHH.
BTW, from a non-corporatist perspective, EHH has been a horrible leader, going back to his IC days as I heard many times from an IC friend who worked there for years.
C&NW, CA&E, MILW, CGW and IC fan
I've read about lots of railroads that got their numbers to look better by cutting everything to the bone and deferring maintenance. Usually that was in the realm of trying to sell the property and making it look really pretty to whoever was kicking the tires. Now it seems the same thing happens in the name of making the stock look good to those that don’t kick the tires too hard, in order for some group of investors to make some quick short term profits. It’s certainly not restricted to the railroad business.
schlimm For such a terrible CEO (according to all on here) he sure knows how to get the OR down to record lows, in the 3 1/2 years he has been the CEO. "OR fell to a record 58.6 percent for 2016." Meanwhile, CSX improved its OR to 71.6%. It is ironic that those who put profitability über alles, are very inconsistent in their judgment of EHH. BTW, from a non-corporatist perspective, EHH has been a horrible leader, going back to his IC days as I heard many times from an IC friend who worked there for years.
It is easy to make the OR look good if you don't care about anything else in the operation or the maintenance of the operation.
The operating ratio is a useful measure, but the best measure is profitability, and that is not quite the same thing. AB&C has a 60% OR with $100Million revenue, which brings $40M of "profit". XY&Z superficially seems worse with an OR of 65%, but by providing better service gets more customers and now has $120M revenue and $42M "profit".
When EHH was at CN he was able to slash and burn without a massive loss of business simply because CPR was so mismanaged it would not chase after or even accept unhappy shippers that wanted to switch. The new regime at CN is quite different, and eagerly welcomes the shipper refugees from CPR. CPR may, for the moment, still seem good but it has lost a lot of volume where it does not hold a monopoly on the traffic. In the long term volume is absolutely necessary for sustainable financial results.
The challenge now for CPR is how to regain shippers that left "mad" and are quite content with their new service provider. It will not be easy.
Page 4 of 32 of this presentation may be of interest.
http://cn.ca/-/media/Files/Investors/Presentations/CN-Investor-Presentation-en.pdf?la=en
Actually the whole presentation is informative.
The only odd thing is the photo of a weed-choked (grain sprouts, perhaps) section of track on the last page.
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