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Rail News Home CSX Transportation February 2017 Rail News: CSX Transportation

— By This email address is being protected from spambots. You need JavaScript enabled to view it., Associate EditorE. Hunter Harrison last month retired early as president and chief executive officer of Canadian Pacific in an apparent bid to pursue opportunities at other Class Is — CSX's top post presumably chief among them.His departure, which took effect Jan. 31, came five months ahead of schedule.The leadership situation at CP unfolded after Harrison approached the Class I's board to discuss modifications to his employment arrangements that would allow him to explore other opportunities. A special committee then recommended that CP enter a separation agreement with him, officials from the railroad said in a press release.Making the breakThe decision followed negotiations and careful deliberations, as well as the receipt of independent legal advice, CP officials said.As part of the separation agreement, the Class I agreed to a limited waiver of Harrison’s non-competition obligations, while Harrison agreed to forfeit 118 million Canadian dollars worth of benefits and awards.In addition, Harrison agreed to sell all his CP shares by May 31."CP will have no role in Mr. Harrison’s future endeavors," officials from the Class I said in a statement.Those endeavors might include a takeover of CSX’s CEO position. Harrison has partnered with activist investor Paul Hilal’s new investment fund Mantle Ridge LP, which reportedly has raised more than $1 billion to acquire a stake in CSX, according to a Jan. 18 Reuters article.Mantle Ridge is in talks with CSX to install more than three new board members, the news agency reported.Michael Ward — CSX's current CEO — isn't expected to retire until 2019.Harrison's partnership with Mantle Ridge may improve his chances at getting the top job at CSX, according to a report by Benjamin Hartford, a senior research analyst at Robert W. Baird & Co. Inc."We had initially assigned a low probability of Harrison landing at CSX … but the reported involvement of an activist investor clearly increases this likelihood considerably," Hartford wrote in the report.Although Harrison in early 2016 pushed for a plan for CP to acquire Norfolk Southern Railway, joining CSX would be a "more logical" move, Hartford said. That's because NS CEO Jim Squires is "relatively new" in his job, while Michael Ward has been serving as CEO of CSX since January 2003, he added.A strong track recordDuring his time at CP, Harrison helped reduce operating costs and improve profitability — achievements that may be attractive to CSX shareholders, Hartford said.CSX plans to "actively evaluate" Mantle Ridge's views and discuss its earnings-growth strategy with the firm and all shareholders, spokesman Gary Sease said in a statement."CSX Corp. welcomes the views of all of our shareholders and always considers their thoughts on the company’s business and strategy," Sease said.Meanwhile, Keith Creel succeeded Harrison as CEO of CP. Under the previous arrangement, Creel wasn't slated to take the reins until July.Creel served as president and chief operating officer since February 2013. He joined the railroad’s board in May 2015.
Keywords Browse articles on E. Hunter Harrison Canadian Pacific CSX Michael Ward Class I leadership Class I execs Class I CEOs Benjamin Hartford Robert W. Baird & Co. Inc. Baird Contact Progressive Railroading editorial staff.

Rail News Home CSX Transportation 2/14/2017 Rail News: CSX Transportation
The Carolina Connector will be a major intermodal hub for CSX.Photo – ncdot.gov

2/14/2017    

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Rail News Home CSX Transportation 2/13/2017 Rail News: CSX Transportation
CSX Corp. announced late last week that its board has extended the deadline until Feb. 24 to nominate directors and to propose other business to be considered at its 2017 annual meeting.The original deadline was Feb. 10. Any director nominations or proposals of other business that comply with the company's bylaws that are received by Feb. 24 may be brought before shareholders for a vote at the annual meeting.The extended deadline move comes as CSX continues to have discussions with former Canadian Pacific Chief Executive Officer E. Hunter Harrison and activist investor Paul Hilal of Mantle Ridge LP. CSX is discussing a potential contract that would make Harrison CEO of CSX, according to reports by The Wall Street Journal. The newspaper reported that Hilal has requested six seats on CSX's board.CSX, Harrison and Hilal were scheduled to meet Feb. 10 to discuss the proposal. Contact Progressive Railroading editorial staff. More News from 2/13/2017

2/13/2017    

Rail News: CSX Transportation

Rail News Home CSX Transportation February 2017 Rail News: CSX Transportation

Tony Hatch is an independent transportation analyst and consultant, and a program consultant for Progressive Railroading’s RailTrends® conference. By This email address is being protected from spambots. You need JavaScript enabled to view it.Last week, the Wall Street Journal (WSJ) broke the remarkable — and, as far as I can tell, true — story that CSX Corp. was in settlement talks with E. Hunter Harrison (EHH) and Mantle Ridge LP and thus, one expected, close to a resolution. This, just a couple weeks after various news media reported that EHH was working on an agreement with Mantle Ridge's Paul Hilal to secure a senior management position at CSX.Here's a summary of what I think is happening, what is likely to happen and what some of the corresponding issues will be along the way:• This is not about consolidation, which I think (a) would be unlikely, given the stances of most of the related stakeholder groups and (b) is ill-advised, given poor benefit/cost ratio due to the likely penalties (access) and hidden costs involved. Mergers also involve shippers, labor, other railroads, politicians, communities, regulators, etc. • Already over? There is only one stakeholder group in play here: CSX shareholders, present and future. Most in the financial community already thought that EHH would land at CSX, given his track record and the associated following he has on the Street; the WSJ has advanced that thesis. Many sell-side analysts already have published models with CSX sporting new post-EHH operating ratios (OR). • The holdup may be about the number of board seats, as the WSJ suggested, and supporters have mentioned full board support as the reason for EHH’s more rapid success at CP than in his previous “victories” at Illinois Central and CN. There is more than one reason for the success comparisons — along with that factor (a) must be considered; (b) belief — there is tangible evidence of prior success; and, lest we forget, (c) timing and/or luck as CP at EHH-entry had an artificially high OR that was in the process of self-correcting (to a still higher than EHH-like number).• CSX is — sorry, folks — different from the railroads in his past successes. This is a mixture of fact and opinion, to be sure, but there are structural differences that may not be insurmountable but at minimum should be considered:1. It is an eastern U.S. railroad with much higher densities and shorter lengths of haul.2. It is not “broken” — CSX has improved operations dramatically and made progress through strategic change with its planned "CSX of Tomorrow," which has also allowed them to both cut outright capex and still nurture the core network to an even greater degree (capex being important to me). 3. Its “failure” to reach the long-stated OR target of 65 percent is almost (but I suspect) entirely due to the loss of $2 billion in high margin coal business. This may at last provide the “teaching moment” that the OR is but one ratio by which a railway is judged, not the only one (return on invested capital, among others).4. It is not poorly managed — not only is the plan (albeit not fully defined) exciting, but CSX has a dynamic new C-Level Team (CMO/CFO/COO). That being said, most railway people believe EHH to be the superior operator who can improve just about anything. In addition, CSX — unfortunately, like most of the railroads — provided fairly tepid “color” on the quarterly call, coming the day before The Big News.5. It is also a different time. As with the secular decline in coal, the importance of increased service to merchandise and IM customers has never been more critical (and with a longer term threat of AV trucking down the road). CN has prospered in a “kindler/gentler” post-EHH environment; CP has been a huge success, of course, but in terms of marketing and customer relations, the jury is still out — after all, EHH retired there without having named a CMO!  6. Plays well with others? There's also the historical antipathy of EHH to industry organizations such as the Railway Association of Canada, Association of American Railroads, CREATE, etc., in a time of extreme political complexity and national labor negotiations.On the other hand, I believe that this, from EHH’s point of view — and I am speculating here — is about legacy: not of the man, but the idea — that Precision Railroading can work in different environments and times. And, as I have always said and written, one underestimates EHH at one’s own risk. For now, we’ll wait until the supposed deadline of Friday, Feb. 10. Tony Hatch is an independent transportation analyst and consultant, and a program consultant for Progressive Railroading’s RailTrends® conference. Email him at This email address is being protected from spambots. You need JavaScript enabled to view it..
Keywords Browse articles on Hunter Harrison CSX Mantle Ridge Wall Street Journal precision railroading Contact Progressive Railroading editorial staff.

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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