Dive Brief:

• CSX still sees opportunities to consolidate its intermodal service networks, but the railroad is "holding back because we made a commitment to our customers we wouldn't make any kind of dramatic changes until after peak season," CEO Jim Foote said in an earnings call Tuesday.
• The eventual changes would include line rationalizations and internal consolidations, he said. Changes to its Northwest Ohio hub-and-spoke handling system paint a picture of possible improvements across the network. Changes to the system last year led to inefficiencies in the form of multiple handlings.
• "To be honest with you, at that point in time, we thought we had fixed the intermodal network to a large degree," Foote said. But as the team evaluated its network in 2018, he said they uncovered "many other locations on the railroad" using a hub-and-spoke system, which could be improved.

Dive Insight:

CSX's new mantra is to get rid of any and every inefficiency, in order to boost operating ratios, reliability and customer service.

The changes it made last year, however, led to the railroad taking off 7% of volume capacity — and many angry shippers. CSX pledged service would eventually improve, but the changes were necessary first. This year, the railroad appears to be waiting until after the holidays to take more volume off the network. 

"You can't be everything to everyone," Foote said. "And we're not here to win a blue ribbon for volume. We're here to win an award for being safe, customer-focused and efficient in making money."

So far, despite last year's challenges, CSX is hitting its targets on those fronts. In the third quarter, the railroad reported a 58.7% operating ratio — nearly 10 points lower than the 68.4% ratio it reported last year. Train accident rates fell 28.3% year-over-year. Meanwhile, trip plan compliance, a measure CSX began reporting this year to gauge customer service, has risen 26% over the course of 2018.

"[Trip compliance] does two things: It measures how well the railroad is running, it measures reliability because when we fail the truck is not going to get there when we said it was going to get there. It's simple as that," CFO Frank Longero said in the call.

To date, trip compliance for CSX is around 60% — far from ideal, according to Longero. "That means 30% to 35% didn't [meet their trip plans]. And 30% to 35%, we said they were going to be there by Thursday at 11:00 weren't. So that number, it's huge." 

Trip plan compliance coupled with the costs of maintaining additional locomotives, terminals and facilities is part of what's driving the planned shifts to CSX's intermodal network. Or will, in 2019.