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Rail News Home CSX Transportation November 2016 Rail News: CSX Transportation

Photo – CSX By This email address is being protected from spambots. You need JavaScript enabled to view it., Managing EditorCoal isn’t king for CSX anymore. The commodity now generates a small portion of the railroad’s annual revenue instead of the lion’s share.So, the Class I is in the early stages of adopting a “CSX of Tomorrow” strategy that calls for realigning its network to de-emphasize coal traffic, and optimize intermodal and merchandise business; deploying more automation; and honing service performance to boost reliability and responsiveness. To learn more about the strategy, read this cover story in Progressive Railroading’s November issue.There’s one other main component of the CSX of Tomorrow: a Team of Tomorrow (ToT). To help carry out the strategy, the Class I seeks to develop a more diverse, versatile and highly skilled workforce. Such a team will up the ante on working collaboratively, making decisions quickly, embracing new technologies and finding ways to boost productivity, says CSX Senior Vice President and Chief Administrative Officer Cressie Brown.But first, ToT developers are defining what skillsets employees need to be an integral part of the CSX of Tomorrow.Some important traits: that they be innovative, to think outside the box; flexible, to help flex CSX’s resources; and geared toward service excellence, which is vital “because of the service-sensitive markets we’ll be in,” says Brown. Ultimately, CSX aims to get beyond traditional promotion schemes and training programs to help employees develop new skills in such critical areas as emerging technologies, analytics and customer insight.CSX now is conducting "unconscious bias" seminars for its 2,500 managers and department leaders that are designed to help them better understand some preconceptions that might surface in their decision-making. CSX

Developing a ToT in part calls for establishing a talent pipeline to retain the most experienced and skilled employees who contribute at a high level, and recruit the brightest and most proficient new workers, says Brown. To get such a pipeline flowing, CSX aims to make tweaks and/or major changes to its career development, training and recruiting programs.

In terms of retention and career development, the railroad in late 2015 launched an employee valuation initiative to “get our hands around the Team of Tomorrow,” says Brown. The initiative involved employee interviews, focus groups and research to determine why people joined CSX and why they stayed at the company. The feedback will help identify ways to retain valuable and experienced workforce members.

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The 'CSX of Tomorrow' will dawn if the railroad can adopt a more intermodal-driven, less coal–centric operating strategy

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Rail News Home CSX Transportation November 2016 Rail News: CSX Transportation

Photo – CSX — By This email address is being protected from spambots. You need JavaScript enabled to view it., Managing EditorTo say sagging coal volumes have been a drag on CSX’s finances the past five years is an understatement. Coal revenue losses that have been mounting since 2011 are expected to reach a total of $2 billion by 2016’s end.The Class I’s coal fortunes aren’t expected to turn anytime soon, either. Low natural gas prices figure to keep compelling domestic utilities to favor that power-plant fuel source for the foreseeable future and tectonic shifts in the global coal market are forecast to keep abating U.S. exports. So, a change in strategic direction is necessary to deal with coal’s steep fall from its longtime perch as the railroad’s top revenue producer.Last year, the senior executive team met to develop a strategy framework that could address the changing customer base and shifting business portfolio. Ultimately, the team considered two options: continue to chase ways to help overcome the coal losses in the short term or develop a plan to change the structure and operation of the coal-dominant railroad for the long term. They opted for the latter.A 40-member cross-functional group that included leaders from each department then helped flesh out the idea and shape specific supporting initiatives, and CSX’s board reviewed and approved the chosen strategy in early 2016. Now, if it ushers the Class I into a new era as hoped, the “CSX of Tomorrow” will dawn in the not-too-distant future.Formally launched in late April, the CSX of Tomorrow (CoT) strategy calls for the company to:
• realign its network to de-emphasize coal traffic and optimize the volume-growth potential of the more promising intermodal sector and solid merchandise segment;
• deploy more high-tech equipment and information systems to forge a highly automated railroad that can support safety, service-performance and efficiency efforts;
• pursue service excellence to help prompt volume growth and better meet customers’ needs; and
• develop a workforce of the future with the right tools and skills to drive productivity and innovation.Expected to take a number of years to implement, the strategy will help spur volume growth and increase profitability in the intermodal and merchandise franchises, and yet preserve the business value of coal as it becomes a smaller part of the company’s portfolio, says CSX Chairman and Chief Executive Officer Michael Ward.“We’ve got to adapt; the world has changed. Coal has gone from one-third of our annual revenue to about 15 percent,” he says. “We have been a more cyclical company, one that was a slave to the vagaries of the general economy. Now, we can be more nimble and flexible.”CSX will benefit by controlling the things it can control: service, safety and productivity, says Ward. In addition, the strategy can help the company attain its long-term goal of a mid-60s operating ratio.CSX plans to carry out the CoT in part by operating two networks: a primary one accommodating longer and heavier trains along the “Iron Triangle” mainlines between Chicago, New York City and Jacksonville, Fla.; and a local one comprising other lines and territories that don’t require the same train speeds and resource intensity. Each network will essentially have the same route mileage, and the local network would retain the same level of safety and customer service as the primary one.CSX also aims to extend sidings or build new ones to accommodate longer trains; triple the amount spent each year on technology adoptions; and provide better quality-of-life benefits and more modern equipment to hone a stronger workforce.Operational performance a prime componentService execution is the most critical aspect of the CoT, says Ward. To win over and best serve shippers of truck-competitive freight, CSX needs to align operating capabilities to customers’ expectations and provide consistently higher levels of reliability.“If we want to grow our other businesses, the service has to be there,” says Ward.He believes the CoT initiative aligns well with the company’s vision to be the safest, most progressive North American railroad, one that relentlessly pursues customer and employee excellence. It lines up with CSX’s core values, too, says Ward. That means continually striving to be fact-based, ensuring people make the difference, stressing safety as a way of life and getting the right results the right way.“It’s how we behave and who we are. It still fits,” says Ward. “The biggest difference [with the CoT] is being more intentional in deploying technology.”CSX strategists performed a lot of modeling exercises to ensure the strategy could be carried out, and the team plans to tweak and refine it as CoT implementation continues.“The way we see it is: OK, we have a path now, and we see where we’re going,” says Ward.A new terminal under construction in Pittsburgh, which is slated to open next year, figures to help boost intermodal business. CSX

But there will be some bumps along that path. For example, to become a more efficient and productive CoT, there will be hundreds of fewer jobs at the company. Meetings have been held with rail labor unions about the job reductions, which mostly will be addressed through attrition, says Ward.

“We’re not being secretive about it. We will have less jobs available,” he says.