Euclid Well if the bottom line is going to get worse because of the loss of coal traffic; and they can bolster the bottom line by preventing the loss of coal traffic by lowering the rate; doesn't that improve the bottom line? Keeping the bottom line from falling does help the bottom line, doesn't it? I think it does. If they did not lower the coal rates and just lost the coal traffic to alternative natural gas, would they not be in a worse off position? Your comment, "Yeah, that should help the old bottom line" sounds sarcastic as if you are belittling CSX for making a mistake. Yet it is the best choice they can make compared to the alternative of just losing the coal hauling business.
Well if the bottom line is going to get worse because of the loss of coal traffic; and they can bolster the bottom line by preventing the loss of coal traffic by lowering the rate; doesn't that improve the bottom line? Keeping the bottom line from falling does help the bottom line, doesn't it? I think it does. If they did not lower the coal rates and just lost the coal traffic to alternative natural gas, would they not be in a worse off position?
Your comment, "Yeah, that should help the old bottom line" sounds sarcastic as if you are belittling CSX for making a mistake. Yet it is the best choice they can make compared to the alternative of just losing the coal hauling business.
Maybe I was making a point about the rate decrease being framed as something positive. Who was the general who wasn't retreating, he was advancing in a rearward direction? Same theory. (Yes- sarcasm.)
Thanks to Chris / CopCarSS for my avatar.
Lean & Mean vs. Starving & Stupid will be resolved in the future when it all pans out. Already seeing what damage HHH did to CSX in the loss of people on the technical side along with the damage at the previous two roads plus NS (everyone forgets that fiasco). It just amazes me that finance, accounting and way-upper operating management that never gets its boots dirty or really understand how to railroad get to skate along even though they created the soon to be experienced implosion. (odd that Rob Krebs had his epiphany [a little too late] over what looks like peanuts in Mantle Ridge's cuthroat/ shortsighted world)
Murphy Siding Euclid Well if the bottom line is going to get worse because of the loss of coal traffic; and they can bolster the bottom line by preventing the loss of coal traffic by lowering the rate; doesn't that improve the bottom line? Keeping the bottom line from falling does help the bottom line, doesn't it? I think it does. If they did not lower the coal rates and just lost the coal traffic to alternative natural gas, would they not be in a worse off position? Your comment, "Yeah, that should help the old bottom line" sounds sarcastic as if you are belittling CSX for making a mistake. Yet it is the best choice they can make compared to the alternative of just losing the coal hauling business. Improving the bottom line and trying to keep it from deteriorating are certainly two different things. Thank you for recognizing sarcasm for once. Maybe I was making a point about the rate decrease being framed as something positive. Who was the general who wasn't retreating, he was advancing in a rearward direction? Same theory. (Yes- sarcasm.)
Improving the bottom line and trying to keep it from deteriorating are certainly two different things. Thank you for recognizing sarcasm for once.
They are not just framing the rate decrease as being something positive. It is positive. It brings in revenue that would be lost otherwise. Preventing revenue from being lost has the same benefit as producing new revenue.
EuclidThey are not just framing the rate decrease as being something positive. It is positive. It brings in revenue that would be lost otherwise. Preventing revenue from being lost has the same benefit as producing new revenue.
No, let's go through this again. Decreasing the rates on existing business in order to keep that business is not the same as increasing business. The net result is less $ to the bottom line, not more.
Murphy Siding Euclid They are not just framing the rate decrease as being something positive. It is positive. It brings in revenue that would be lost otherwise. Preventing revenue from being lost has the same benefit as producing new revenue. No, let's go through this again. Decreasing the rates on existing business in order to keep that business is not the same as increasing business. The net result is less $ to the bottom line, not more.
Euclid They are not just framing the rate decrease as being something positive. It is positive. It brings in revenue that would be lost otherwise. Preventing revenue from being lost has the same benefit as producing new revenue.
The net result is more $ to the bottom line in the relative terms of adding revenue to an otherwise shrinking bottom line. The shrinking bottom line is a given. The less the bottom line shrinks, the better off the company is in terms of generating revenue.
The revenue brought in by reducing coal rates is revenue that would be lost if rates were kept the same during falling demand for coal shipping. So if that revenue is saved by lowering coal rates, it adds to the bottom line. It makes no difference whether the bottom line is rising, falling, or stationary. The more revenue it gets, the better it is.
EuclidThe net result is more $ to the bottom line in the relative terms of adding revenue to an otherwise shrinking bottom line. The shrinking bottom line is a given. The less the bottom line shrinks, the better off the company is in terms of generating revenue. The revenue brought in by reducing coal rates is revenue that would be lost if rates were kept the same during falling demand for coal shipping. So if that revenue is saved by lowering coal rates, it adds to the bottom line. It makes no difference whether the bottom line is rising, falling, or stationary. The more revenue it gets, the better it is.
If your boss says he’s going to cut your pay in lieu of firing you, does your paycheck go up or down?
We lose money on every unit sold - we'll make a profit by selling a higher number of units.
Never too old to have a happy childhood!
Murphy Siding Euclid The net result is more $ to the bottom line in the relative terms of adding revenue to an otherwise shrinking bottom line. The shrinking bottom line is a given. The less the bottom line shrinks, the better off the company is in terms of generating revenue. The revenue brought in by reducing coal rates is revenue that would be lost if rates were kept the same during falling demand for coal shipping. So if that revenue is saved by lowering coal rates, it adds to the bottom line. It makes no difference whether the bottom line is rising, falling, or stationary. The more revenue it gets, the better it is. No, let's go through this again. Decreasing the rates on existing business in order to keep that business is not the same as increasing business. The net result is less $ to the bottom line, not more. If your boss says he’s going to cut your pay in lieu of firing you, does your paycheck go up or down?
Euclid The net result is more $ to the bottom line in the relative terms of adding revenue to an otherwise shrinking bottom line. The shrinking bottom line is a given. The less the bottom line shrinks, the better off the company is in terms of generating revenue. The revenue brought in by reducing coal rates is revenue that would be lost if rates were kept the same during falling demand for coal shipping. So if that revenue is saved by lowering coal rates, it adds to the bottom line. It makes no difference whether the bottom line is rising, falling, or stationary. The more revenue it gets, the better it is.
It goes up relative to not having a job. And that is the pertinient, and current status of the the bottom line. The paycheck goes down, but the bottom line inreases from zero to half of what it was prior to the decision to choose half pay in exchange for not giving up the job.
In the case of CSX cutting rates on coal to cause shippers to not switch from coal to gas: I assume that CSX is not doing that at a loss, but just less revenue. So you seem to be saying that it would be better for CSX to just hold the rates and lose the coal business. You seem to be saying that CSX is pretending to achieve some benefit when they are not actually doings so. You act like it is a ruse perpetrated by the legacy of Harrision.
EuclidIt goes up relative to not having a job. And that is the pertinient, and current status of the the bottom line. The paycheck goes down, but the bottom line inreases from zero to half of what it was prior to the decision to choose half pay in exchange for not giving up the job. In the case of CSX cutting rates on coal to cause shippers to not switch from coal to gas: I assume that CSX is not doing that at a loss, but just less revenue. So you seem to be saying that it would be better for CSX to just hold the rates and lose the coal business. You seem to be saying that CSX is pretending to achieve some benefit when they are not actually doings so. You act like it is a ruse perpetrated by the legacy of Harrision.
Brian SchmidtJACKSONVILLE, Fla. — CSX Transportation reported record first-quarter earnings on Tuesday as a combination of cost-cutting and rate increases more than offset flat revenue and lower traffic volume. Net income nearly doubled, to $695 million, o...
Who is cutting rates?
SaturnaliaFair enough, but having already seen this flick twice, once with CN and again at CP, I'm fairly confident that 5-10 years from now CSX will be among the best-run and most profitable railroads, just like CN and CP are now. Laggards to leaders, you might not agree with the stragety but it has historically paid off in spades.
Actually CNR is now struggling in Western Canada. The congestion due to lack of forward thinking by a past leadership team is costing them some business. Fortunately if you have an effective monopoly for a lot of the business the consequences are not as severe. But the sacred operating ratio is going the wrong way, so profits are not maximized.
CPR is not struggling that much, but more because EHH shrunk the traffic base and hadn't finished shrinking the plant. They have been able to regain some of the lost traffic simply because of CN's problems.
Certainly it seems to have paid off in spades, especially in stock price though not in dividends. It may be too soon to write the final chapter in the history books. The tech bubble was a sure thing, until the bottom fell out as the stock analysts stampeded in the opposite direction.
SaturnaliaCN and CP are industry leaders in profitability and traffic handling. Granted there are some operational issues brought out by CN's incredible traffic growth in particular right now - I'm not saying EHH's strategy was perfect in every way.
How much time did they have to spend in recovery after EHH left?
What's telling to me about CSX is that the increased profits seem to be as the results of cost cutting, not growth.
You can cut costs at home by shutting off all the lights and not doing laundry, but in the end all you end up with is stubbed toes and less friends, although you have more money in the bank (or in the case of CSX, more money for the investors).
If you want more spending money, you look for more revenue.
That's not to say that you can't be reducing expenses by turning off unnecessary lights and washing clothes in cold water, and that's certainly desirable. But if your cuts are draconian, and the only reason is to put money in someone's pocket, that's not the way to do business.
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...
BaltACD Brian Schmidt JACKSONVILLE, Fla. — CSX Transportation reported record first-quarter earnings on Tuesday as a combination of cost-cutting and rate increases more than offset flat revenue and lower traffic volume. Net income nearly doubled, to $695 million, o... Who is cutting rates?
Brian Schmidt JACKSONVILLE, Fla. — CSX Transportation reported record first-quarter earnings on Tuesday as a combination of cost-cutting and rate increases more than offset flat revenue and lower traffic volume. Net income nearly doubled, to $695 million, o...
Murphy Siding BaltACD Brian Schmidt JACKSONVILLE, Fla. — CSX Transportation reported record first-quarter earnings on Tuesday as a combination of cost-cutting and rate increases more than offset flat revenue and lower traffic volume. Net income nearly doubled, to $695 million, o... Who is cutting rates? From the linked press release article:"CSX is reducing rates for some Southern utilities if it will prevent them from converting coal-fired power plants to natural gas".as euclid points out above, this is another one of their strategies to increase profits. (<<<sarcasm, if it isn't obvious)
From the linked press release article:"CSX is reducing rates for some Southern utilities if it will prevent them from converting coal-fired power plants to natural gas".as euclid points out above, this is another one of their strategies to increase profits. (<<<sarcasm, if it isn't obvious)
It most definitely is a CSX strategy to increase profits. Yes the bottom line is falling if they lose the coal traffic, but that is not being caused by CSX. They have no control over it. That is a result of the competition between coal and natural gas. All CSX can do is control their rates and service. In this case, they are choosing to lower coal rates to prevent power plant customers from switching from to natural gas.
That may or may not work. It won't work if the natural gas incentive is too attractive for the power plants to stay with coal even if CSX lowers the shipping rate. But it most definitely is a CSX strategy to increase profits. But since you disagree, what would you say the purpose of CSX lowering coal rates is?
Euclid Murphy Siding BaltACD Brian Schmidt JACKSONVILLE, Fla. — CSX Transportation reported record first-quarter earnings on Tuesday as a combination of cost-cutting and rate increases more than offset flat revenue and lower traffic volume. Net income nearly doubled, to $695 million, o... Who is cutting rates? From the linked press release article:"CSX is reducing rates for some Southern utilities if it will prevent them from converting coal-fired power plants to natural gas".as euclid points out above, this is another one of their strategies to increase profits. (<<<sarcasm, if it isn't obvious) It most definitely is a CSX strategy to increase profits. Yes the bottom line is falling if they lose the coal traffic, but that is not being caused by CSX. They have no control over it. That is a result of the competition between coal and natural gas. All CSX can do is control their rates and service. In this case, they are choosing to lower coal rates to prevent power plant customers from switching from to natural gas. That may or may not work. It won't work if the natural gas incentive is too attractive for the power plants to stay with coal even if CSX lowers the shipping rate. But it most definitely is a CSX strategy to increase profits. But since you disagree, what would you say the purpose of CSX lowering coal rates is?
Rates are being 'decreased' because CSX is not delivering product at the agreed upon rate to sustain the higher rates. When a Power Plant decides to go the natural gas, the rates for coal transportation don't have any effect.
The CSX Spin Doctors aren't going to glorify the fact the the decreased rates are account of non-performance and are a part of the penalty clauses of the contracts.
EuclidIt most definitely is a CSX strategy to increase profits.
Let me get this straight. I'm paying you to mow my lawn. I'm threatening to hire someone else. So you cut your rate. How does this increase your bottom line from what you are currently getting?
And never mind that BS about the decreased amount you're getting paid being more than what you'll get paid if I don't keep you on.
So, let's take a look at it:
I pay you $20 a week to mow my lawn.
Figure a couple of bucks for gas.
Subtract a couple more for depreciation (saving to buy a new mower)
$20 - $4 = $16 net profit.
Now you cut your rate so I'll continue using your service. Now it'll be $19 per week.
Gas still costs you $2.00
You still put away $2.00 for a new mower.
$19 - $4 = $15.
Of course, if you want to maintain that net profit at $16, you can cut back saving for a new mower to $1.00.
Or you can cut back on your savings for the new mower entirely, and now your net will be $17.00. Voila! You've increased your profit! Of course, when your current mower goes belly up, you won't have any savings to buy a new one, but who cares? By then you'll have moved on to another project...
This is coming from the other side of the fence so to speak in the transportation industry. If my boss ran his company like CSX CN and CP had been run while EHH was at their helms he would be out of business. We are still scrambling for trailers even with a ratio of close to 3 to 1 for every tractor in the fleet. EHH was a 70's railroader that thought cutting your way to profits was possible. He forgot that the railroads had been deregulated and that customer service mattered. Hell we picked up 2 former CSX customers over the winter due to their service Issues. Thanks CSX for the extra 2 million in revenue we are getting this year. I know of several carriers that gained new customers all over the place in the SE and Mid Atlantic due to EHH and his PSR models. Even with our higher overall costs they know we will get there as long as the roads are open.
tree68 Euclid It most definitely is a CSX strategy to increase profits. Let me get this straight. I'm paying you to mow my lawn. I'm threatening to hire someone else. So you cut your rate. How does this increase your bottom line from what you are currently getting?
Euclid It most definitely is a CSX strategy to increase profits.
It doesn't. Who ever claimed that it did? But at the point of my decision to cut the lawn rate in half, that is my strategy to make money even if it is less money than before. That is all CSX said. That is all I am saying. What is wrong with the strategy? There are plenty of business managers that, when faced with declining demand, choose to raise their rates. They are clueless about economics 101.
CSX never said they were cutting coal rates to boost revenue higher than it is while the power plants are presently burning coal. How did we ever get to that premise?
It is also not a forgone conclusion that any rate cut results in a failure to meet overhead expenses, as you have suggested earlier. Most business people are smart enough to recognize that simple peril. I am sure that if CSX would lose money on half their coal rate, they would not offer it.
All CSX is talking about is their management strategy to hold on to the coal buisiness. They are making exactly the right move. Not every company would when faced with the same dilema.
Euclid tree68 Euclid It most definitely is a CSX strategy to increase profits. Let me get this straight. I'm paying you to mow my lawn. I'm threatening to hire someone else. So you cut your rate. How does this increase your bottom line from what you are currently getting? It doesn't. Who ever claimed that it did?
It doesn't. Who ever claimed that it did?
tree68What's telling to me about CSX is that the increased profits seem to be as the results of cost cutting, not growth.
This part from the article looks pretty ominous, but hey- record earnings. Even though CSX eliminated 11% of their employees,the number of accidents and injuries held steady. "CSX’s safety figures continued to deteriorate in the quarter, continuing a trend that has concerned the Federal Railroad Administration. CSX’s FRA personal injury frequency index rose 14 percent, while the train accident rate increased 19 percent. While the number of accidents and injuries held steady, the rates rose because CSX employs fewer people and is running fewer trains."
The current CSX method of raising profits is to loot its own infrastructure. The same as starving humans - starve them and their own body becomes it's own food source unitl death happens.
Murphy Siding Euclid tree68 Euclid It most definitely is a CSX strategy to increase profits. Let me get this straight. I'm paying you to mow my lawn. I'm threatening to hire someone else. So you cut your rate. How does this increase your bottom line from what you are currently getting? It doesn't. Who ever claimed that it did? Uh....you did! In your post 5 posts above posted at 1:46 PM. Euclid It most definitely is a CSX strategy to increase profits.
Uh....you did! In your post 5 posts above posted at 1:46 PM.
Well yes it is a strategy to increase profits. Any strategy intended to add revenue to the bottom line stands a chance of increasing profits. But that is not the premise that I was questioning when I asked Larry, "Who ever claimed that it did?"
I was referring to his premise, as indicated in your quote of him, that the premise was a plan intended to "increase your bottom line from what you are currently getting." That part is an objective that you and Larry have added on your own in order to try and discredit the CSX strategy, and by extension, EHH.
All I or CSX said is that it is a plan to add more to the bottom line. I have no idea whether that turns into profit or fails to be cost-effective. But clearly, that is the CSX strategy. I said it, and they said it. You are trying to add new conditions to what they and I said. Nice try.
EuclidAll I or CSX said is that it is a plan to add more to the bottom line. I have no idea whether that turns into profit or fails
Murphy Siding Euclid All I or CSX said is that it is a plan to add more to the bottom line. I have no idea whether that turns into profit or fails forgive me, I thought you understood how business and math work a little better than you seem to. Here is the definition of bottom line: The bottom line is a company's net income figure on a company's income statement.
Euclid All I or CSX said is that it is a plan to add more to the bottom line. I have no idea whether that turns into profit or fails
forgive me, I thought you understood how business and math work a little better than you seem to. Here is the definition of bottom line: The bottom line is a company's net income figure on a company's income statement.
EuclidI was referring to his premise, as indicated in your quote of him, that the premise was a plan intended to "increase your bottom line from what you are currently getting."
You have some wonderful logic going on here. F'rinstance, Murph asked you:
MurphIf your boss says he’s going to cut your pay in lieu of firing you, does your paycheck go up or down?
You replied:
EuclidIt goes up relative to not having a job.
I do believe most people would agree that your paycheck is going to be less as a result of the cut. If you get fired, it will be a great deal less, of course. But you aren't going to bring home more money from your job as a result.
This is why I qualified the statement.
You seem to be arguing that cutting the rates for hauling coal in a diminishing market in which the possibility of not hauling coal exists somehow will result in a larger profit.
Perhaps you'd care to go back and explain why my admittedly non-railroad example involving mowing lawns is incorrect. Because the direct analogy to mowing lawns is hauling coal.
Murphy Siding "CSX’s safety figures continued to deteriorate in the quarter, continuing a trend that has concerned the Federal Railroad Administration. CSX’s FRA personal injury frequency index rose 14 percent, while the train accident rate increased 19 percent. While the number of accidents and injuries held steady, the rates rose because CSX employs fewer people and is running fewer trains."
Even the coal mine bosses knew you couldn't beat the mules.
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
tree68 You seem to be arguing that cutting the rates for hauling coal in a diminishing market in which the possibility of not hauling coal exists somehow will result in a larger profit.
It seems that I am being accused of aruging that, but I am not arguing that at all. CSX is not arguing that either. Perhaps the confusion arrises from the fact that they have been accused of arguing that.
CSX said this:
“The focus is on ensuring adequate rates and methodical, rational growth, he says. But CSX is reducing rates for some Southern utilities if it will prevent them from converting coal-fired power plants to natural gas. As natural gas prices remain low, CSX is doing what it can to keep coal flowing, Foote says. BNSF Railway has successfully used the same strategy for Powder River Basin coal it hauls to power plants in Texas.”
Railway Age article.
https://www.railwayage.com/freight/class-i/csx-1q18-financials-records-broken-but-where-is-volume-growth/
CSX on April 17 posted record earnings and an all-time low operating ratio—based almost entirely on cost-cutting measures, headcount reductions, rate increases and stock buybacks, not volume growth.
Jeff
EuclidI took him to mean that he believes it will not help the bottom line. So I said I thought it would help the bottom line. His answer to me at that point seems extremely illogical, and sounds as if he perceives CSX as presenting this coal hauling pricing as something representing their new miracle of precision railroading while Murphy sees right through it as being a lot of smoke and mirrors.
Once again, I think you'll find that many here feel that CSX's accounting is, indeed, a lot of smoke and mirrors.
The only way that reducing rates in this case "helps" the bottom line is because it keeps that line item from going to zero. This has nothing to do with increasing revenue.
And, as Balt points out, CSX to some extent brought this on themselves due to the decreased efficiency with which the railroad is being run.
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