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STB UPDATE AUGUST 28, 2017

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Page 1: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

STB UPDATE

AUGUST 28, 2017

Page 2: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

2

Slow progression underway; poised to accelerate

Dwell showing regular improvement; other network metrics stable

Right Car Right Train moving higher

Crew and power resource levels are well matched to demand

Hump yards performing at a consistent level

Western terminals fluid, secondary congestion contained

Empty car fulfillment remains in similar range over last few weeks

Local pull and place performance trending up

Customer problem logs down week-over-week, though remain elevated

Interchange volumes and performance stable; however, Hurricane Harvey impacts anticipated

CSX experienced congestion challenges at Western corridor terminals from mid-late July

(weeks 29-31); original terminals now healthy and network recovery progressing

Page 3: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

Dwell improved each of the last four weeks from height of challenges

3Note: Dwell and velocity displayed according to CSX methodology; explanation of CSX methodology can be found in appendix.

Two disruptive derailments occurred in weeks 31 and 32, detrimentally impacting network performance

Velocity (mph)

48

%

52

%

53

%

58

%

49

%

46

% 55

%

August 19 - 25

12

.8

13

.7

13

.5

12

.9

12

.9

13

.7

13

.5

August 19 - 25

11

.3

11

.6 13

.1

12

.3

11

.5

12

.2

11

65%

62%

64%

69%

66%

63%

64%

15.6 15.5 15.0 15.0 13.5 13.3 13.0 13.2 13.1

25 26 27 28 29 30 31 32 33

Weeks

On Time Originations (%)

Dwell (hours)

75%76%70%

66%58%59%

55%57%55%

25 26 27 28 29 30 31 32 33

Weeks

On Time Arrivals (%)

August 19 - 25

August 19 - 25

On-Time

+2 hrs

On-Time

+2 hrs

11.8 11.9 12.3 11.912.8 13.2 13.1 12.8 12.5

25 26 27 28 29 30 31 32 33

Weeks

86% 87% 85% 82%77% 74% 72% 72% 70%

25 26 27 28 29 30 31 32 33

Weeks

Weekly Average

Page 4: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

72%

69% 70%

74%

76%

72% 73%

Right Car Right Train holding relatively stable; less relevant in PSR

4

Right Car Right Train1

75%

73% 73%

75%

73%72% 71%

70%

72%

25 26 27 28 29 30 31 32 33

Weeks

August 19 - 25

1 ‘Right Car Right Train’ is defined as the percentage of cars that departed from a yard in accordance with their car scheduling trip plan

Right Car Right Train is no longer a measure

that CSX uses to manage its operation

― In precision scheduled railroading (PSR), if a car can

be advanced on another train to speed transit or

ensure its on-time arrival, there is not one “right train”

Car priority is to move cars quickly, on next

available train

― Asset utilization a key tenet of PSR

Train priority is blocking integrity and departing

all available, relevant cars from the yard

― Blocking integrity certifies that a train is built correctly

and shipments are headed to the correct location

― Managed through field supervision

Weekly Average

Page 5: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

9,223

9,380

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

10.0%

8,900

9,100

9,300

9,500

9,700

9,900

Q1AVG

Q2AVG

25 26 27 28 29 30 31 32 33 34

Weeks

5

Resourcing appropriately to meet business needs

Power and crew availability steady in third quarter at approximately 99% and 95%, respectively

Q3 locomotive level stable; recently added engines

in response to incremental coal demand

T&E trend tracking normal seasonality; re-crew

rates remain at historic lows and stable

Train & Engine Headcount and Re-crew Rate1Active Locomotives

3,763

3,294

2,000

2,400

2,800

3,200

3,600

4,000

Q1AVG

Q2AVG

25 26 27 28 29 30 31 32 33 34

Weeks

1 Re-crew rate is re-crew people starts as a percent of total measured people starts, and it represents incidences of replacing a crew on

the same train ID (generally due to hours of service)

Page 6: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

6

Hump yard performance steady

CSX Hump Terminal Overview

Transitioned to flat-switching operations

Hump terminals

Selkirk, NY

Cumberland, MD

Hamlet, NC

Waycross, GA

Atlanta, GABirmingham, AL

Nashville, TN

Louisville, KY

Avon, IN

Cincinnati, OH

Willard, OH

Toledo, OH

19.5 19.020.0

18.018.8 19.3 19.0

19.919.0

25 26 27 28 29 30 31 32 33

Weeks

Dwell at Hump Terminals1

Key hump productivity and efficiency measures

performing well

― Arrive-to-hump, a measure of fluidity and processing efficiency,

remains stable from prior week

― Cars per man hour at hump yards accelerating through the quarter,

indicating yard productivity with higher volume at remaining humps

― Aggregate dwell time stable, despite elevated volumes at

Cincinnati recently

1 Dwell displayed according to CSX methodology; explanation of CSX methodology can be found in appendix

Absolute number of humps not “good” or “bad”; goal is

best mix of hump and flat yards for processing efficiency

Weekly Average

19

.1 20

.8

21

.2

19

.7 21

.5

22

.0

18

.3

August 19 – 25

Page 7: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

Key terminal productivity and performance measures

largely recovered in former “trouble” spots― Dwell recovered and in line with expectations

― Greater yard productivity evident in cars per man-hour processed

Train plan addressed secondary concerns― Leveraging Avon as near-term offset of increased volume flow

through Russell, Columbus and Louisville

― Dwell at these three locations down 13% week-over-week

7

Western performance improved; plan changes alleviating congestion

16.016.9 16.8 17.3

19.9

22.1

19.5

16.0

14.0

25 26 27 28 29 30 31 32 33Weeks

Dwell at Western Terminals1

Western Corridor Key Terminals

Birmingham, AL

Nashville, TN

Avon, IN

Evansville, IN

Montgomery, AL

Mobile, AL

Western terminals

1 Dwell displayed according to CSX methodology; explanation of CSX methodology can be found in appendix

Weekly Average

12

.1

12

.2

15

.9

13

.8 15

.8

14

.2

12

.4

August 19 – 25

Page 8: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

8

Car order fill to improve with reduced dwell

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

90%

2,000

3,000

4,000

5,000

6,000

7,000

25 26 27 28 29 30 31 32 33 34

Weeks

Weekly Orders Normalized Order Fill %

Weekly Car Orders and Normalized Fill Rate

Q1 Avg. Weekly Car Orders

Orders remain detached from demand

― Car orders up ~40% in Q3 vs. Q1 2017

― Merchandise carload expectations down

slightly in comparable timeframe

Empty car dwell increasing modestly

at customer locations; down on CSX

― Return of empty customer dwell indicates

reducing urgency of need; prevention of

shutdown situations

― Reduction of empty railroad dwell indicates

improving network flow of empty cars

Normalized fill rate1 ranging 70-85%

― Process evaluation underway to realign order

level with demand and improve fulfillment

accountability

Cars

Ordered

Normalized

Fill Rate

1 Normalized fill rate is a proxy of demand fulfillment against historical/expected order levels, as current order levels have disconnected with demand

Page 9: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

9

Last mile performance stable and improving

Local Service Measurement1

95%90%

84% 83%80% 81% 81% 80% 79% 78%

82%85%

Q1AVG

Q2AVG

25 26 27 28 29 30 31 32 33 34

Weeks

1 ‘Local Service Measurement’ is defined as the percentage of cars that were pulled or placed at a customer location based upon daily customer

request, the local service plan and available inventory at the local serving yard

Local Service Measurement (LSM) is no longer

a metric that CSX uses to manage its operation

― In precision scheduled railroading (PSR), focus on end-

to-end transit and customer expectations

― Last mile performance must be in combination with, not

independent of, overall performance

Accordingly, LSM as a reported metric was

discontinued upon start of PSR implementation

― At request of STB, last mile tracking reinstated to

monitor through implementation period

― Data reflects passive information flow, lacking prior

focus on field reporting to ensure LSM capture

Reliable pull and place expected as part of

service to customers

Page 10: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

10

Customer problem logs beginning to recede

354 368

286

374

458

570 563537

567

499

25 26 27 28 29 30 31 32 33 34

Weeks

Delayed Cars Bad Order Switching Issues

Customer InquiriesDaily Average Log Volume

Delayed cars have been most frequent concern

― Trend in problem logs mirrors timeframe of network

challenges and recovery

― Enhanced focus on long-dwell cars ensures all cars

benefit from fluidity gains

Customer service and commercial presence at

key field location has aided communication and

problem resolution

― New location assignments this week include: Columbus,

Russell, Avon, Evansville

Nearly 90% of problem logs have been

addressed and closed to-date

― Managing pipeline of customer concerns to full resolution

Page 11: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

Interchange volume at gateway locations similar to prior weeks

0

200

400

600

800

25 26 27 28 29 30 31 32 33 34

Weeks

East St. LouisDaily Average Interchange Volume

From To

0

200

400

600

25 26 27 28 29 30 31 32 33 34

Weeks

New OrleansDaily Average Interchange Volume

0

400

800

1,200

1,600

2,000

25 26 27 28 29 30 31 32 33 34

Weeks

Chicago Daily Average Interchange Volume

0

100

200

300

25 26 27 28 29 30 31 32 33 34

Weeks

MemphisDaily Average Interchange Volume

11

Page 12: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

12

Precision scheduled railroading to produce service improvement

Improve

Service

Operate

Safely

Control

Costs

Drive Asset

Utilization

Develop

People

Operational Focus

Terminal

Fluidity

Balanced

Train Plan

Service Improvements

Rolling Stock

UtilizationPeople

Efficiency

Fuel

OptimizationTrain

Density

Improved

FrequencyBetter

Reliability

Faster

TransitQuicker

Turnaround

Productivity Improvements&

Realigned service frequency in second quarter

Set the groundwork of a balanced train plan in early July

Currently balancing between terminals’ improving efficiency and modest adjustments in traffic

flows to recover near-term service

Improved execution on this foundation to drive long-term service and productivity improvements

Page 13: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

APPENDIX

Page 14: STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 28, 2017. 2 Slow ... Right Car Right Train moving higher ... Transitioned to flat-switching operations Hump terminals Selkirk,

14

Velocity

Former Line of road miles per hour

Current

Total miles traveled per hour,

including intermediate dwell of

the train

Change

Reason

Includes full trip of a train and

ability to diagnose overall speed

profile (in support of

improvement in asset cycle)

Effect on

MetricReported velocity will be lower

CSX has changed methodology on some metrics reported publicly

Dwell

FormerCar time at terminal, excluding

cars on the same train ID

Current

All car time with a terminal work

event, including through cars on

same train ID (e.g. crew change)

Change

Reason

Includes all dwell with ability to

diagnose all events impacting car

movement (in support of

improvement in asset cycle)

Effect on

MetricReported dwell will be lower

Restated historical data in new methodology available on csx.com/servicemetrics

Cars Online

FormerAll cars on CSX, as determined

by RailInc

Current

RailInc cars on CSX, excluding

cars stored, under repair, sold,

and private cars ex online

inventory

Change

Reason

More accurate measurement of

active cars on line, i.e. cars for

which CSX is focused on real-

time, efficient movement

Effect on

Metric

Reported cars online will be

lower