STB UPDATE - CSX Transportation · PDF fileSTB UPDATE AUGUST 21, 2017. 2 ... ―Focus on road train origination and arrival metrics not primary in ... Transitioned to flat-switching

STB UPDATE

AUGUST 21, 2017

2

Executive Summary

Network metrics stable; plan adjustments implemented to enable near-term progression

― Dwell and velocity continue modest gains; fluidity meaningfully improved over last two weeks

― Focus on road train origination and arrival metrics not primary in precision scheduled railroading1

Crew and power resource levels are well matched to demand

― Additional engines brought in service to meet coal demand; coal velocity improved vs. 2016

Five hump yards, down from 12, scaling up well with efficiency and performance progression

― Avon hump re-introduced last week; smooth transition occurred

Western Network improving, with terminals fluid, and customer service on site at key field locations

― Train plan tweaked to mitigate secondary congestion; focus on empty car fulfillment processes

― Number of customer problem logs remains elevated as performance coming back into balance

Interchange volumes stable; active communication to maintain performance

1 E.g., holding a train’s origination to allow additional cars to reach a customer on time (end destination) would hinder train origination and

arrival metrics, but provide better service to the customer

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

(weeks 29-31); network recovery underway and expected to progress this week

Network measures improving modestly from height of challenges

3Note: Dwell and velocity displayed according to revised CSX methodology; explanation of CSX methodology and comparable view in AAR

methodology can be found in appendix.

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

Velocity (mph)

53

%

54

%

60

%

57

%

55

%

58

%

50

%

August 12 - 18

12

.9

13

.0

13

.6

13

.1

13

.6

12

.5

13

.1

August 12 - 18

11

.3

11

.4 13

.8

13

.5

13

12

.7

11

.6

67

% 76

%

73

%

72

%

70

%

64

%

67

%

15.6 15.5 15.0 15.0 13.5 13.3 13.0 13.2

WK25

WK26

WK27

WK28

WK29

WK30

WK31

WK32

On Time Originations (%)

Dwell (hours)

75% 76%70%

66%58% 59% 55% 57%

WK25

WK26

WK27

WK28

WK29

WK30

WK31

WK32

On Time Arrivals (%)

August 12 - 18

August 12 - 18

On-Time

+2 hrs

On-Time

+2 hrs

11.8 11.9 12.3 11.9 12.8 13.2 13.1 12.8

WK25

WK26

WK27

WK28

WK29

WK30

WK31

WK32

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

WK25

WK26

WK27

WK28

WK29

WK30

WK31

WK32

Weekly Average

74

%

65

%

70

%

69

%

76

%

71

%

75

%

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

4

Right Car Right Train1

75%

73% 73%

75%73%

72% 71%70%

WK25

WK26

WK27

WK28

WK29

WK30

WK31

WK32

August 12 - 18

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

9,223

9,391

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

WK25

WK26

WK27

WK28

WK29

WK30

WK31

WK32

WK33

5

Resourcing appropriately to meet business needs

Power and crew availability steady in third quarter at 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, down (18%) vs. 2016

Train & Engine Headcount and Re-crew Rate1Active Locomotives

3,763

3,275

2,000

2,400

2,800

3,200

3,600

4,000

Q1AVG

Q2AVG

WK25

WK26

WK27

WK28

WK29

WK30

WK31

WK32

WK33

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)

6

Hump yard performance steady through transitions; efficiency building

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

19.9

WK25

WK26

WK27

WK28

WK29

WK30

WK31

WK32

Dwell at Hump Terminals1, 2

Avon hump operations resumed last week, supporting

service and prevention of secondary congestion

Key hump productivity and efficiency measures

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

improved by 8% in the last week vs. prior

― Cars per man hour at hump yards up 4% since the start of Q3,

indicating yard productivity with higher volume at remaining humps

― Dwell time stable and compressing slightly

1 Dwell displayed according to CSX methodology; explanation of CSX methodology and comparable view in AAR

methodology can be found in appendix2 Week 33 dwell data excludes Avon due to transition from flat to hump

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

best mix of hump and flat yards for processing efficiency

Weekly Average

17

.1

17

.0

19

.7

19

.3

18

.6

18

.5

16

.7

August 12 – 18

Key terminal productivity and performance measures

significantly improved in former “trouble” spots― On-time originations improved more than 100% since period of

greatest concern, to above system levels in week 33

― Dwell down significantly, and much more in line with expectations

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

Train plan tweaked to prevent secondary congestion― Leveraging Avon as near-term offset of increased volume flow

through Russell, Columbus and Louisville; fluidity improving daily

7

Western performance improving; plan changes alleviating congestion

16.016.9 16.8 17.3

19.9

22.1

19.5

16.0

Wk 25 Wk 26 Wk 27 Wk 28 Wk 29 Wk 30 Wk 31 Wk 32

Dwell at Western Terminals1, 2

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 and comparable view in AAR

methodology can be found in appendix2 Week 33 dwell data excludes Avon due to transition from flat to hump

Weekly Average

11

.0

12

.2

16

.9

16

.4 18

.3

11

.7

11

.3

August 12 – 18

8

Car order fill to improve with reduced dwell

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

Week

Weekly Orders Normalized Order Fill %

Weekly Car Orders and Normalized Fill Rate

Q1 Avg. Weekly Car Orders

Customer car orders up ~40% in Q3

vs. Q1 2017― Merchandise carload expectations down slightly in

comparable timeframe

― Order levels have disconnected with demand

Absolute orders filled are down with

network challenges ― Network improvement to drive additional orders

filled as empty dwell, and overall dwell, are reduced

― Car storage paused to address; CSX fleet sized to

capture demand in a recovering environment

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

9

Last mile performance stable

Local Service Measurement1

95%90%

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

83%

Q1AVG

Q2AVG

WK 25 WK 26 WK 27 WK 28 WK 29 WK 30 WK 31 WK 32 WK 33

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

10

Customer inquiries, problem logs elevated; action plans being executed

354368

286

374

458

570 563537 567

WK 25 WK 26 WK 27 WK 28 WK 29 WK 30 WK 31 WK 32 WK 33

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

― Overall dwell falling and enhanced focus on long-dwell

cars to ensure 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, Memphis

Nearly 90% of problem logs have been

addressed and closed to-date

― Managing pipeline of customer concerns to full resolution

Interchange volume up slightly at gateway locations

0

200

400

600

800W

K 2

5

WK

26

WK

27

WK

28

WK

29

WK

30

WK

31

WK

32

WK

33

East St. LouisDaily Average Interchange Volume

From To

0

200

400

600

WK

25

WK

26

WK

27

WK

28

WK

29

WK

30

WK

31

WK

32

WK

33

New OrleansDaily Average Interchange Volume

0

400

800

1,200

1,600

WK

25

WK

26

WK

27

WK

28

WK

29

WK

30

WK

31

WK

32

WK

33

Chicago Daily Average Interchange Volume

0

100

200

300

WK

25

WK

26

WK

27

WK

28

WK

29

WK

30

WK

31

WK

32

WK

33

MemphisDaily Average Interchange Volume

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

APPENDIX

14

Velocity

Former Line of road miles per hour

Future

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

Future

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 to be available on csx.com

Cars Online

FormerAll cars on CSX, as determined

by RailInc

Future

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

15

While absolute value of metrics has changed, trend remains consistent

6

8

10

12

14

16

18

Q1 Q2 Q3-to-date

2017 Velocity 2016 Velocity

6

8

10

12

14

16

18

Q1 Q2 Q3-to-date

2017 Dwell 2016 Dwell

Average Velocity (mph) Average Dwell (hours)

Restated historical data in new methodology to be available on csx.com

The following pages include applicable presentation material using prior

methodology for comparability during metrics methodology cutover

16

Velocity (mph)

Network measures improving modestly from height of challenges

17

19

.3

18

.9

18

.7

19

.1

18

.7

17

.9

17

.4

August 12 - 18

67

% 76

%

73

%

72

%

70

%

64

%

67

%

21.2 21.3 20.6 20.4

19.2 18.7 18.7 18.4

WK25

WK26

WK27

WK28

WK29

WK30

WK31

WK32

On Time Originations (%)

Dwell (hours)

August 12 - 18

August 12 - 18

26.3 26.627.7

26.428.0

29.2 29.4 29.3

WK25

WK26

WK27

WK28

WK29

WK30

WK31

WK32

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

WK25

WK26

WK27

WK28

WK29

WK30

WK31

WK32

27

.7

28

.2 31

29

.2

28

.8

28

.2

27

.3

Note: Dwell and velocity displayed according to AAR methodology

On Time Arrivals (%)

53

%

54

%

60

%

57

%

55

%

58

%

50

%

August 12 - 18

75%76%70%66%

58%59%55%57%

WK25

WK26

WK27

WK28

WK29

WK30

WK31

WK32

On-Time

+2 hrs

On-Time

+2 hrs

Weekly Average

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

18

Hump yard performance steady through transitions; efficiency building

1 Dwell displayed according to AAR methodology2 Week 33 dwell data excludes Avon due to transition from flat to hump

CSX Hump Terminals

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

25

.6 27

.1

31

.3

30

.4

28

.7

29

.5

27

.9

August 12 – 18

30.0 30.0 30.2

27.6 27.528.6

29.631.5

WK 25WK 26WK 27WK 28WK 29WK 30WK 31WK 32

Dwell1,2

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

rather, a different configuration of handling traffic

Weekly Average

Avon hump operations resumed last week, supporting

service and prevention of secondary congestion

Key hump productivity and efficiency measures

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

improved by 8% in the last week vs. prior

― Cars per man hour at hump yards up 4% since the start of Q3,

indicating yard productivity with higher volume at remaining humps

― Dwell time stable and compressing slightly

19

Western performance improving; plan changes alleviating congestion

31

.2

33

.4 37

.5

33

.7 37

.4

26

.4 32

.0

August 12 - 18

36.0 37.4 36.9 38.0

45.651.7 52.6

41.4

Wk 25Wk 26Wk 27Wk 28Wk 29Wk 30Wk 31Wk 32

Dwell1,2

Western Corridor Key Terminals

Birmingham, AL

Nashville, TN

Avon, IN

Evansville, IN

Montgomery, AL

Mobile, AL

Western terminals

1 Dwell displayed according to AAR methodology2 Week 33 dwell data excludes Avon due to transition from flat to hump

Weekly Average

Key terminal productivity and performance measures

significantly improved in former “trouble” spots― On-time originations improved more than 100% since period of

greatest concern, to above system levels in week 33

― Dwell down significantly, and much more in line with expectations

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

Train plan tweaked to prevent secondary congestion― Leveraging Avon as near-term offset of increased volume flow

through Russell, Columbus and Louisville; fluidity improving daily