SALfanCSX has a network that someone once described as "looking like a bowl full of cooked spaghetti", with multiple ways to get between endpoints and business widely distributed over that network. I know nothing about running a railroad, but it has to be easier to run a linear railroad like those he has run than a spiderweb-type system like CSX.
Perhaps spinning off the redundancies will be seen soon.
C&NW, CA&E, MILW, CGW and IC fan
schlimm SALfan Perhaps spinning off the redundancies will be seen soon.
SALfan
The 'redundancies' all have their own traffic sources and customer base. The lines that don't have traffic sources where shed in the 80's & 90's during the plant rationalization - either abandoned or spun off into short lines. Without alternative routings in the company a single derailment can shut down an entire service lane without recourse....of course if your desire is to run off customers anything is possible.
Never too old to have a happy childhood!
schlimm Paul_D_North_Jr 1) I've said it before, and I'll say it again: EHH gets too much credit for improvements at CN. His were marginal - most occurred before he showed up. I know, I've owned the stock since right after Paul Tellier took it public (from a Crown Corporation), still do, and plan on continuing. Paul Tellier seems to receive much praise for being CEO of CNR before EHH. Given the distaste on here for government and bureaucrats, it strikes me as odd that prior to going to CNR in 1993, he was Clerk of the Privy Council and Secretary to the Cabinet of the Government of Canada, i.e., a career government bureaucrat!!
Paul_D_North_Jr 1) I've said it before, and I'll say it again: EHH gets too much credit for improvements at CN. His were marginal - most occurred before he showed up. I know, I've owned the stock since right after Paul Tellier took it public (from a Crown Corporation), still do, and plan on continuing.
Paul Tellier seems to receive much praise for being CEO of CNR before EHH. Given the distaste on here for government and bureaucrats, it strikes me as odd that prior to going to CNR in 1993, he was Clerk of the Privy Council and Secretary to the Cabinet of the Government of Canada, i.e., a career government bureaucrat!!
Good and bad people everywhere.. some government people are quite capable and hard working just as some "entrepreneurs" need to be supervised.
CP has run off a lot of small customers in Wisconsin but I think that started before EHH arrived, he just accelerated it. CN on the other hand is working with the State and local communities to see how it can be of better service and perhaps capture more traffic. CP has not taken that step yet. UP seems to have a decent marketing force still......currently only UP and BNSF are the two being really aggressive at landing new bulk business in Wisconsin. CP is absent for the most part and CN seems to be just responding to negative publicity about lines it may want to abandon but it has not filed yet. Still amongst them all, CP is still doing the least. At least that is my perception reading the news and seeing who is getting the rail traffic in Wisconsin.
CMStPnP CP has run off a lot of small customers in Wisconsin but I think that started before EHH arrived, he just accelerated it. CN on the other hand is working with the State and local communities to see how it can be of better service and perhaps capture more traffic. CP has not taken that step yet. UP seems to have a decent marketing force still......currently only UP and BNSF are the two being really aggressive at landing new bulk business in Wisconsin. CP is absent for the most part and CN seems to be just responding to negative publicity about lines it may want to abandon but it has not filed yet. Still amongst them all, CP is still doing the least. At least that is my perception reading the news and seeing who is getting the rail traffic in Wisconsin.
Thanks to Chris / CopCarSS for my avatar.
Murphy SidingJust for clarity, because you talk about both places, do you live In Wisconsin or Texas?
Geographic location for me is hard to pin down as I used to be a traveling consultant. I guess I still am in a way.
I spend most of my annual vacation in Wisconsin and fly up there several weekends a year up there as well for various events, my extended family is predominantly located in Wisconsin. I live in Dallas, Texas. However now I work remotely for a firm in Kansas City. So at this point in time every third or fourth week I am working in downtown Kansas City for a week at a time.
Spending a lot of free time at KC Union Station and seeing a lot of BNSF and UP because there are some good restaurant eating there. They still have the mint condition yellow and gray paint Milwaukee RIVER series sleeper there but saw some kids climbing in and out of the vestibule about two weeks ago and walking on the roof......which I hope it is secured by KC Union Station but who knows.
BaltACD samfp1943 From the link as posted by Brian Schmidt: FTA:"...Minimize car dwell time in yards. Since cars spend most of their time in yards, reducing dwell time is the most effective way to improve car velocity, or the number of miles they travel per day. Minimize car classifications. Switching a car as few times as possible also reduces car cycle times, allowing the railroad to use fewer cars. Build large blocks of traffic or, in lower-density lanes, haul a block as close as possible to the destination to minimize handling at intermediate yards en route. Use multiple traffic outlets. By having more than one way to get a block of cars to its destination, a railroad can balance traffic flows, improve transit times, and reduce the need for extra trains. Run general-purpose trains. A unit train is more efficient only when loading and unloading times are 24 hours or less, the train shuttles between the same origin and destination, and operates seven days a week in each direction. Unless a train meets all three criteria, run the traffic in general-purpose trains. Balance train movements by direction. Canceling trains on low-volume weekend days can leave locomotives and crews in the wrong places, resulting in deadhead moves that increase costs. Minimize power requirements. Get the most out of every locomotive, the most expensive piece of rolling stock on the railroad. Limit hours spent idling and maximize available horsepower. Strive for steady workflow. Avoid surges and lulls by leveling out work as much as possible across every location on the railroad..." And it isn't like CSX hasn't been implementing all these ideas since John Snow parachuted out of the corporation. None of these are new concepts and all have previously been implemented in various iterations of the operating plan.
samfp1943 From the link as posted by Brian Schmidt: FTA:"...Minimize car dwell time in yards. Since cars spend most of their time in yards, reducing dwell time is the most effective way to improve car velocity, or the number of miles they travel per day. Minimize car classifications. Switching a car as few times as possible also reduces car cycle times, allowing the railroad to use fewer cars. Build large blocks of traffic or, in lower-density lanes, haul a block as close as possible to the destination to minimize handling at intermediate yards en route. Use multiple traffic outlets. By having more than one way to get a block of cars to its destination, a railroad can balance traffic flows, improve transit times, and reduce the need for extra trains. Run general-purpose trains. A unit train is more efficient only when loading and unloading times are 24 hours or less, the train shuttles between the same origin and destination, and operates seven days a week in each direction. Unless a train meets all three criteria, run the traffic in general-purpose trains. Balance train movements by direction. Canceling trains on low-volume weekend days can leave locomotives and crews in the wrong places, resulting in deadhead moves that increase costs. Minimize power requirements. Get the most out of every locomotive, the most expensive piece of rolling stock on the railroad. Limit hours spent idling and maximize available horsepower. Strive for steady workflow. Avoid surges and lulls by leveling out work as much as possible across every location on the railroad..."
From the link as posted by Brian Schmidt:
FTA:"...Minimize car dwell time in yards. Since cars spend most of their time in yards, reducing dwell time is the most effective way to improve car velocity, or the number of miles they travel per day. Minimize car classifications. Switching a car as few times as possible also reduces car cycle times, allowing the railroad to use fewer cars. Build large blocks of traffic or, in lower-density lanes, haul a block as close as possible to the destination to minimize handling at intermediate yards en route. Use multiple traffic outlets. By having more than one way to get a block of cars to its destination, a railroad can balance traffic flows, improve transit times, and reduce the need for extra trains. Run general-purpose trains. A unit train is more efficient only when loading and unloading times are 24 hours or less, the train shuttles between the same origin and destination, and operates seven days a week in each direction. Unless a train meets all three criteria, run the traffic in general-purpose trains. Balance train movements by direction. Canceling trains on low-volume weekend days can leave locomotives and crews in the wrong places, resulting in deadhead moves that increase costs. Minimize power requirements. Get the most out of every locomotive, the most expensive piece of rolling stock on the railroad. Limit hours spent idling and maximize available horsepower. Strive for steady workflow. Avoid surges and lulls by leveling out work as much as possible across every location on the railroad..."
And it isn't like CSX hasn't been implementing all these ideas since John Snow parachuted out of the corporation. None of these are new concepts and all have previously been implemented in various iterations of the operating plan.
Exactly. I have no question that CSX has a fairly efficient and executable operating plan that fits their markets. Everybody does these days, and everybody goes about it pretty much the same way with different versions of the same tools. It's not like the rest of the RR world stood still while EHH was at CN and CP.
The big question is how big is the gap between the plan and the actual and what methods are available to close the gap? Perhaps some good, solid, consistent managment could shave a few point off the OR. Most of the heavy lifting on the plan side has been done year ago.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
OK, so what about the 28 hour "day"? Any thoughts in that regard? Thanks for a great discussion, by the way.
Perhaps on a different note, it'll be interesting to see if "precision railroading" can solve some of CSX's biggest traffic knots. Toldeo and the B&O west of Garrett, in particular, are always melting down or on the verge of it. Sure, Toldeo and Chicago aren't helped by having other roads to cross, and Barr Yard is tiny compared to what the traffic demands, but it'll be interesting to see.
Whether EHH is evil or not, I don't really think so. Corporate raiders aside, some companies just need pruning: and CSX is a perfect candidate. Top-heavy, not the best-run company. It takes somebody with no allegiances but money and efficiency, like Harrison, to cut the deadwood and figure out what really makes the company function. Now like any pruned bush, it'll look odd, and too much will be cut off in places. But then the company can grow, just like the metaphorical bush, unhindered by uneven growth and decay.
Just look at CN, and even CP. Yeah, it wasn't all happy-happy over at those two orgs, but he dropped CP's woefully underperforming operations from 80 to 60 in terms of operating ratio - that's pretty incredible for only a few years. Sure there were losses, but now the road can focus on the future without much baggage. I know they're starting to sprout new foliage already, based on what I've heard.
CN is an undisputed industry leader, which took the best of Harrision and has done well in the years since. If Harrison hates marginal lines, then why didn't he cut all these branch lines in northern Michigan? Train still runs to L'anse daily, and is rarely over a half dozen cars. Not shortlined!
So that's my assessment. Now to leave a tidbit for discussion. CSX + CP gives you majority control of the IHB...and at the least, a closer relationship between CSX and CP seems likely.
kgbw49 OK, so what about the 28 hour "day"? Any thoughts in that regard? Thanks for a great discussion, by the way.
It is gone. Back to the 24 hour day.
An "expensive model collector"
kgbw49OK, so what about the 28 hour "day"? Any thoughts in that regard? Thanks for a great discussion, by the way.
Back in the early days of the ConRail acquisition and ConRail senior managers were given control of operations their plan was 'fewer, bigger trains'. As they implemented those plans the entire CSX system ground into gridlock. A 'big train' could not be yard in a terminal until a 'big train' left the terminal so as to provide space to yard the inbound 'big grain', the bigger problem was that the outbound big train needed the power from the inbound big train. Trains were bigger than the terminals could handle on a 24 hour basis.
I don't have facts and figures on the volume in car loads that were being handled in this grid lock condition. I do know that the 'cars on line' metric was excessive - approaching double what fluidity had shown to be the norm. The metric was bad enough that the FRA ordered both CSX and NS to file service level reports on either a weekly or monthly basis (Oldtimers...)
At the time I retired, the 28 hour day seemed to be keeping the network fluid, without undue congestion entering termnals and without undue power delays on departing trains, despite having trains as large as 14K feet. There again I do not have car load statistics to know just how 'busy' the merchandise network was at the time.
Precision Schedules in reality only apply to repeatable intermodal, automotive and merchandise traffic. When you get into bulk commodity traffic - coal, grain, ore, ethanol, oil and all the other commodities that are handled, scheduling is at the mercy of when the shipper releases the train to the carrier. As shippers, they want empties to load when they want them, they want loads pulled when they want them - once the loads are pulled it is in the carriers best interests to keep them moving consistant with the avilability of manpower, motive power and inspection requirements (1000 mile inspections) and likewise when consignees release empties the same movement expectations and realities apply.
The normal heirarchy of priority is - Premire Intermodal (UPS & FedEx), Regular Intermodal, Automotive (both loads and empties), Merchandise, Local Freight (crews that actually service customers), Bulk Commodity - sprinkle in Amtrak and Commuter Rail as seasoning and you have the CSX Operating stew.
n012944 kgbw49 OK, so what about the 28 hour "day"? Any thoughts in that regard? Thanks for a great discussion, by the way. It is gone. Back to the 24 hour day.
Since I have been retired for almost 3 months - in going to a 24 hour day - are all schedules operating on a 7 day basis, or a 5 day basis or a every other day basis or a 3 day basis and maybe only on a weekly basis? There are many ways to implement a 24 hour clock that isn't really 24 hours.
BaltACD n012944 kgbw49 OK, so what about the 28 hour "day"? Any thoughts in that regard? Thanks for a great discussion, by the way. It is gone. Back to the 24 hour day. Since I have been retired for almost 3 months - in going to a 24 hour day - are all schedules operating on a 7 day basis, or a 5 day basis or a every other day basis or a 3 day basis and maybe only on a weekly basis? There are many ways to implement a 24 hour clock that isn't really 24 hours.
It depends on the train. Many of the trains are going back to a 7 day a week schedule. Some will be on a 5 day a week schedule. It really depends on the market.
There's so many EHH themed threads, I'm not sure sometimes where to post something.
I read in the pro-EHH articles about his methods on how he turns around companies that one is he drives away unprofitable customers. I think that is misleading. It probably should be that he drives away customers that aren't profitable enough.
Some railroads view service to some customers along the lines of "It's my way or the highway." Then one day they wonder where all their business went to.
Jeff
Another modern version of what John Kneiling called - back in the 1960's and 70's - the "We have a boxcar and you can figure out a way to use it" attitude.
- PDN.
That was laughable. Clained they were saving crews by holding and combining two trains into one. Then very consistently, the originating crew would get the power out of the roundhouse and to the train, double, triple and maybe even quadruple the cuts together, remove the shops from the train, pump air, pump air, and then finally do the brake test and their 12 hours expire still inside the terminal. The recrews would take the train to its destination.
jeffhergert . . . Some railroads view service to some customers along the lines of "It's my way or the highway." Then one day they wonder where all their business went to.
BOB WITHORN40+ years in the sale/service business, we sold then delivered stuff. I've read and listened to presentations about 'divorcing' your company from marginal customers. Simple version is that by walking away from those that are break even or very small margin/small volume customers, you free up capacity to better serve you profitable customers or seek additional customers. It works, found out the hard way. We, (I), could never get myself to follow through on it, always afraid to take the chance. I went broke and sold out to a competitor that has no problem cutting. Both companies were about the same size in the mid 80's, they grew to 6 or 7 times our size as we started losing market to them are others. Same basic market both delivered on company trucks. By not being afraid to charge more and use common carriers or just walk away, they had the capacity to expand without harming service, we didn't. There is more to it then that, but I lived it. Doesn't make EHH a positive but, some where in there is the point that not all business is good business and you need to divorce a few. Just a thought, Bob
Right on Bob.. we have no problem saying astalavista baby to customers who are beyond hard to deal with or who don't respect our terms. For some time we were weighted down with these deadbeats until I reached my tipping point.. sent out letters to all of them and our sales dipped by 30% that year.. On the plus side.. our net profit went up by almost the same amount!.. blood pressure down throughout the office.. Too many companies and sales people walk hat in hand, feeling lucky to have any customers at all.. so they settle for pandering to the deadbeats.. We look at all the factors in our business.. all deadbeats and hard to deal with influences (customers, employees, contractors, others..) are dismissed promptly and without hesitation! Looks like EHH operates the same way..
EHH will find in coming to CSX he is dealing with a company whose business practices mirror the companies he left at CN & CP. The small and minimal margin rail car customers were shed decades ago. The industrial park where my final office was located in the past handled over 100 cars a day and supplied work for yard crews stationed there around the clock in the 70's & 80's - most all of this traffic was short haul and marginal in revenues to the company. In the 21st Century the entire area gets 2 or 3 cars a week and is serviced by a yard crew from another yard once a week - how much longer this customer will exist is open to question. This location is not unique and has been replicated at many locations around the property.
The economics are different are different in a high fixed-cost/ overhead business like railroading. Any traffic that covers its direct variable costs should be at least considered (though not necessarily accepted). That's because it can contribute towards that overhead; and if there's capacity available - even if created by shedding less profitable traffic - then it should be solicited. Even traffic with an incremental Operating Ratio (all things considered) of 99 will contribute $1 of every $100 to the overhead. (This is John Kneiling 101.)
The fallacy with EHH's approach is that is leaves on the table all the potential earnings from traffic that has an incremental OR of from 70 to 99. OR measures operating expenses only, and doesn't include any contribution towards the high fixed costs of the financing of the business, MOW, signals, etc. It's possible to have a great OR and still go bankrupt because even the aggregate profits from the low OR business are still insufficient to cover the fixed costs. But adding in the contributions from the business with incremental ORs from 70 to 99 might have enough volume to cover those fixed costs, and only then return profits to the shareholders.
If there are surplus crews, locomotives, cars, and track, and business available that has a incremental OR of less than 100, then EHH is doing a disservice to the shareholders by ignoring it.
Skinny margins are fine until something goes wrong, and then one is faced with the absurdity of dealing with a 40K claim and maybe a lawsuit instead of realizing a profit of $150.00.. No way.. truck/rail /other/..always make sure there's enough juice in it.. if all goes well then that's great.. but if things go sideways as they so often do then at least we can look at ourselves in the mirror honestly and say we had a lot to gain had things worked out. In my industry it amazes me how many people will accept huge risks for a potential profit of only $150.00 or less!! The risks are no less on the rail side..either way the upside has to justify the risk which is always the unspoken elephant in the room.
So I would like to know exactly what is "precise" with EHH version of railroading. I don't think we have many examples in this country of JIT delivery with a railroad involved.
Paul_D_North_JrIt's possible to have a great OR and still go bankrupt because even the aggregate profits from the low OR business are still insufficient to cover the fixed costs.
Theoretically true, yes. But can you name ONE railroad that had that occur? However, there are many whose ORs were high who did declare bankruptcy.
schlimm - Off the top of my head, no. I'd have to look for one that's been characterized as "overcapitalized" and/ or too much fixed-cost for the traffic base (perhaps shrinking), which is nevertheless still profitable on an out-of-pocket basis; then look for one with a low OR to support my point.
The basic problem - profitable operations but not enough to support the fixed costs - is common enough in railroad (and corporate/ Chapter 11) reorganizations; the challenge would be to find the best example of it. The key would be to start with the overcapitalized / high overhead designation; that would weed out the ones with the high ORs, as you point out.
Ulrich - Good point, but I said "all things considered", which includes allowances / reserves for contingencies of the risks such as the ones you mention. A claim can occur to a very profitable shipment as well as a small one; the risks out on the road don't know which is which (there's a statistical term for this).
CMStPnPI don't think we have many examples in this country of JIT delivery with a railroad involved.
Seems as though I've read stories of auto plants shutting down due to cars not getting to a plant on time. If the auto industry didn't run JIT, they came close, particularly as major portions of the cars started to come from different plants.
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...
tree68 CMStPnP I don't think we have many examples in this country of JIT delivery with a railroad involved. Seems as though I've read stories of auto plants shutting down due to cars not getting to a plant on time. If the auto industry didn't run JIT, they came close, particularly as major portions of the cars started to come from different plants.
CMStPnP I don't think we have many examples in this country of JIT delivery with a railroad involved.
I have been told that some railroad deliveries were "JIT" and specific to certain GM plants. Of course, they were give much more time to make those deliveries, and meet production schedules.
I had some co-workers that were responsible for shutting down a couple of GM (Canada) plants; weather was a factor, but was not excused. Our company, always, got the 'bill' for costs related to 'our' late 'JIT'. deliveries.
Did have a co-worker who had 'to fly a load' from a truck breakdown. Large cargo aircraft charters do not come cheap.
tree68 CMStPnP Seems as though I've read stories of auto plants shutting down due to cars not getting to a plant on time. If the auto industry didn't run JIT, they came close, particularly as major portions of the cars started to come from different plants.
CMStPnP
Back in the day when GM had assembly plants at Baltimore and Wilmington, train 396 originated a Saginaw operated through Flint and Detroit picking up additional parts cars and operated through to Wilmington. Train operated with a caboose marking the cut between Wilmington cars on the head end and Baltimore cars on the rear end of the train. There were JIT cars for both destinations in the trains as well as cars for 2nd and 3rd days production. Not all parts were JIT, but those that were, were critical. In some cases GM would send personnel and a truck to unload a number of units from a rail car before the car could be switched out of the train and delivered to the plant - this was not a frequent happening, but it did happen. During that period of time GM Traffic Dept. had a much better handle on the cars on the railroad than the railroad did.
When GM closed the plants, obviously JIT died with them. The closest to JIT, in my areas of responsibility, that still exist are in trash operations. The lack of empties can shut down municipal trash transloading operations - they can't take in more trash if they can't get rid of the trash they have. A second area of JIT is in Export Coal - coal needs to arrive to be matched with the correct vessel - delay to coal trains delay the vessel and incur the costs of delay. A third area is with coal fired power plants - not all the time - but when the plants coal supply is drawn down it can be to the point where receipt of the next coal train is needed to keep the plant producing power.
[quote user="tree68"]Seems as though I've read stories of auto plants shutting down due to cars not getting to a plant on time. If the auto industry didn't run JIT, they came close, particularly as major portions of the cars started to come from different plants./quote]
It's been several years ago and when Harrison was CEO of CN that there was a huge dust-up between them and General Motors. GM told CN what to do with their railroad and began trucking their production to a CSX facility. It cost them more to ship their cars but they had simply had enoughof Harrison's BS. That wound is still festering ad nowhere near healed. A yard sits empty because of that dispute and everyone is wondering what the final outcoe will be.
My comment is not meant to debase Harrison, but there have been times his methods have left a very acrid taste in shipper's mouths. CN has changed under new management and is still sruggling to get that contract back.
Norm
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