A typical carload customer — be it plastics, chemicals, paper, or lumber — might send only 60 percent of its business via rail, while the rest goes by truck, Foote says.
“The reason they ship it in a truck is because they don’t trust the railroad to get it there on time,” Foote told an investor conference on Wednesday.
Shippers would rather send more business the railroad’s way, Foote says, because it’s 10 to 15 percent less expensive than truck.
Before adopting Precision Scheduled Railroading, carload transit time might vary between five and nine days and a car might arrive as scheduled only 50 percent of the time, Foote says. No shipper in their right mind would send all their freight via a railroad with that kind of performance, he says.
The reason to improve efficiency and reliability under Precision Scheduled Railroading, Foote says, is to get a higher share of the billions of dollars of revenue from freight that’s moving via highway but should be in freight cars.
The way to get there, Foote says, is to improve carload trip-plan compliance, which now stands in the high 60-percent range, up from 50 percent when CSX rolled out trip plans last year.
“We need to get that to 90 percent or so,” Foote says. “So there’s a tremendous amount of potential there for improvement.”
CSX is already regaining some merchandise traffic lost to truck over the years, Foote says, adding that this is not business the railroad lost from widespread service disruptions in 2017.
Service suffered in the second half of 2017 as former CEO E. Hunter Harrison made rapid operational changes that gummed up the railroad and drew shipper complaints and the scrutiny of federal regulators.
CSX continues to work on reducing the number of times a car is handled en route, which shaves costs and improves service reliability, Foote says.
“It’s an evolution. As I said, as we improve efficiency, what we’re doing is improving the quality of the service product that we have for our customers. And that takes time. It takes time to get traction and it takes time to improve,” Foote says.
He spoke at the J.P. Morgan Aviation, Transportation & Industrials Conference.
