For CSX, a Delay That Is Finally Good News

By Paul Ziobro Features Dow Jones Newswires

CSX Corp. executives this week will be facing shippers who were criticizing the railroad over the summer for widespread congestion and disruptions as its new chief executive put his operational strategy in place.

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The Surface Transportation Board hearing, scheduled for Wednesday in Washington, D.C., was postponed a month due to Hurricane Irma, and in an unexpected twist, several shippers are now citing signs of a turnaround.

CSX says it has gotten its tracks in order over the past few weeks. Transit times have improved, and congestion in parts of the Midwest and Southeast has cleared since the company reopened one of the so-called hump yards that are used to sort railcars.

Chief executive Hunter Harrison, who is scheduled to participate in the hearing, said in a statement last week that "the previous transitional issues are resolved."

It isn't just CSX saying it has turned a corner. Over the past two weeks, eight of its customers filed upbeat letters with the Surface Transportation Board, a federal body that oversees rail service and called for the hearing, saying that they too have seen improvements.

Randy Willingham, who runs two companies in Georgia that use CSX to deliver concrete sand, said he was exasperated by the problems this summer, when cars were sent on circuitous routes that added days to transit times. "I thought there was no hope for us," he said in an interview.

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But cars are now being shipped and returned more frequently, giving him an opportunity to sell more sand to customers. "It's hard to believe because in 30 years, I've never seen it as good as this," Mr. Willingham said.

CSX solicited at least some of the complimentary letters, people familiar with the matter said, and a spokesman for the Jacksonville, Fla.-based company said it "is very appreciative of the effort extended by customers to share their recent service experiences."

CSX has apologized for the service delays, which began in May and worsened over the summer. In September, it lowered its financial outlook for the year, in part because of the problems.

Other submissions to the board still contain some of the delays and communication issues that had been raised by shippers.

Plastics company ISOFlex Packaging Corp. said it ran out of resin several times and had to idle some production lines at a Nashville plant, sending some workers home without pay. "The problem continues," said L.J. Edwards, who manages the site.

CSX's problems also weighed on J.M. Smucker Co., maker of Jif peanut butter, which incurred $3 million in additional freight charges because of CSX service failures, according to Bryan Tolar, president of the Georgia Agribusiness Council.

With CSX, "what we're trying to recover from is an issue of trust" Mr. Tolar said. "It's just unacceptable." J.M. Smucker didn't respond to a request for comment.

Some of the letters led to prompt action. Furman Brodie, vice president of the Charles Ingram Lumber Co. in Effingham, S.C., says the sawmill started getting more railcars for lumber shipments shortly after filing a letter on Sept. 26. For weeks before that, subpar service meant it had to scramble to find trucks or storage space, delaying some orders.

"Once that letter hit, they increased our allocation like we requested," Mr. Brodie said Friday. "They seem to have fixed it, at least for now."

Write to Paul Ziobro at Paul.Ziobro@wsj.com

(END) Dow Jones Newswires

October 07, 2017 08:14 ET (12:14 GMT)