Dive Brief:
- CSX has lowered its financial expectations after a tumultuous July and August, the Wall Street Journal reported. The embattled rail line expects its operating ratio to land “around the high end of the mid-60s” instead of the middle 60s.
- The company also reduced its profit growth per share down to 20% to 25% in 2017. Stock is currently trading just north of $51 per share, down from its high of $55 in July, but up from the pre-Harrison era of $35.
- A company executive believes the line will soon recover freight volume lost to trucks or other railroads as a result of the changes implemented throughout the summer. A pending meeting with the Surface Transportation Board (STB) has been delayed due to concerns over Hurricane Irma.
Dive Insight:
The path to Precision Railroading at CSX has been bumpy, but company executives believe the roughest portion is past.
Disruption resulting from CSX's transition to Precision Railroading has been great enough to draw the interest of the Surface Transportation Board, which acted on complaints from 40 trade groups regarding chronic service failures. After an exchange of several unsatisfactory and argumentive letters with the Board and with complainants, the Board planned a public listening session for September 12, which has now been postponed due to concerns over Hurricane Irma. On September 4, the STB released the requested CSX operating plan, which includes the line's new operating metrics.
The degree of upheaval resulting in chaos at CSX has been extreme. From alleged "disgruntled workers" to yard closings and firings to long dwell times, it's not just those associated with the line who've suffered. And while shareholders eagerly embraced Hunter Harrison despite his costly price tag, it's unclear whether they anticipated quite so much attention and discord while changes were implemented. Now, executives at CSX are saying the roughest battles have been fought and improvements are nigh. The results should be visible in coming weeks. Many will be watching.
