CSX breaks records for operating ratio, trip compliance

Dive Brief:

CSX reached its lowest operating ratio to date, 56.8%, in the third quarter of 2019. The figure, in which a lower number indicates greater profitability for the railroad, is down 1.9% year-over-year, executives noted in the company's third quarter earnings release.
Trip plan compliance, which CSX began reporting last year as a gauge of customer service, rose to 94.2% for intermodal and 74.6% for carloads. Both are quarterly records, CEO Jim Foote said on the earnings call.
CSX began sharing trip plan compliance data with intermodal shippers at the beginning of the month and will do so with merchandise customers starting Dec. 1. "They will see every car that they ship on CSX in every lane in our performance against the trip plans," Mark Wallace, executive vice president of sales and marketing, said on the call. "I can tell you customers are excited."

Dive Insight:

Trip plan compliance has a dual benefit for railroads and their customers. On-time deliveries are beneficial (if not critical) for shippers, and railroads can improve reliability from higher compliance with scheduled times. "As we focus on running a better railroad, we are creating better service for our customers," Foote said on the third quarter earnings call.

Not only has CSX significantly improved trip plan compliance, but it's sharing real-time data on compliance with shippers. "These new tools again differentiate CSX from other rails," Foote said.

CSX has channeled its focus on serving the customer after continued outcry from rail shippers about poor customer service among railroads.

In January, Wallace acknowledged the service changes and interruptions CSX made in its transition to precision scheduled railroading (PSR) created "some unintended collateral damage and disruption," adding, "we apologize for that."

Despite some customer service hiccups, the PSR model continues to be CSX's mantra due to its promises of efficiency. In addition, the model is gaining traction among Class I railroads, with all but BNSF in some stage of transformation to PSR. "CSX is proving ... scheduled railroading is well entrenched in the North American Rail industry," Ken Turner, managing member of KTT Rail Consulting Services, told Supply Chain Dive in an email.

While CSX continues to tout its efficiency and high levels of customer service, its revenue fell 5% year-over-year in the third quarter, with coal and intermodal posting some of the greatest losses. In the second quarter, the railroad adjusted revenue projections down from 1% to 2% as volumes drop and the economy softens.

"It's still very, very difficult to gauge where the overall economy is going," Foote said. He described CSX's viewpoint on the economy as realistic rather than cautious.