Dive Brief:
- CSX reported Q2 2017 net earnings of $510 million at $0.55 per share, up 18% from Q2 2016. Despite the strong results, CEO Hunter Harrison warned shippers and investors of potential future delays, as CSX implements Harrison's Precision Scheduled Railroading program.
- Harrison also stated that CSX may "change the format" of how the company announces earnings in the future, but didn't disclose further details.
- Since Harrison joined the company as CEO in March, the company's investors and clientele have expected Harrison to increase profit margins, optimize routes and streamline CSX infrastructure.
Dive Insight:
Already CSX has improved its earnings, but now shippers and investors will need to bite the bullet as Harrison implements his popular railroading strategy to grow the company. Harrison joined the company on the promise that he would optimize routes and turn a profit, but as CSX prepares to make the switch, shippers should prepare for potential cancelations, delays and even higher fees.
Harrison has already successfully reduced operating costs as previously reported by Supply Chain Dive, and according to the Q2 press release, CSX produced $90 million in efficiency gains as a result of the railway's ongoing operational restructuring.
While CSX's restructuring may pose a range of minor to major inconveniences for shippers and investors, the payoff should be worthwhile. Shippers and investors should be reassured by strong Q2 results, but keep in mind that Harrison's plan will disrupt supply chains and may cause delivery problems throughout if shippers don't implement their own strategies to adjust to CSX's reorganization.
