CSX CEO Harrison apologizes to rail customers, defends strategy


CSX Corp's chief executive apologized to customers for months of service disruptions at the No. 3 U.S. railroad but passionately defended his operating strategy, at a hearing on Wednesday called by the top U.S. rail regulator.

Seated before two regulators at the U.S. Surface Transportation Board (STB) in Washington, CSX Chief Executive Hunter Harrison defended his vision for streamlining efficiency, which he calls "precision scheduled railroading."

The STB announced the public hearing in August after customers complained of service issues, including longer transit times, unreliable switching operations, inefficient car routings and poor communications with CSX customer service.

Harrison, appointed to the job amid investor fanfare in March, said his strategy was critical to his turnarounds of two Canadian railroads - Canadian Pacific Railway Ltd and Canadian National Railway Co.

Since he took over, Harrison has rapidly closed CSX rail yards, lengthened trains, mothballed locomotives, and slashed overtime pay and hundreds of jobs. He changed the way rail cars are sorted in yards and replaced "unit" trains carrying a single commodity like coal or grain to carry diverse freight.

"If I don't accomplish anything else today, I want to apologize to our valued shippers," Harrison said on Wednesday. "Whatever problems we've had, we've had internally, we've made some mistakes, this is not a failure of precision scheduled railroading."

Harrison spoke before Cargill Inc, Dow Chemical Co and seven other major rail customers were due to testify about their experiences with CSX's network.

CSX's service disruptions have created logistical headaches for companies ranging from chemical and agricultural to automotive and steel producers whose supply chains, plants and distribution channels rely on CSX's rail network across the eastern United States.

The STB's "listening session" was the first public forum for customers to air grievances and give Harrison the chance to defend his strategy. The agency has been reviewing CSX's performance weekly and talking to senior management for months.

At least three companies have withdrawn requests to testify as service has improved. Other companies due to testify on Wednesday included The Chemours Company, Kellogg Company and Murray Energy Corp, the largest private U.S. coal mining company.

An assortment of trade groups including automotive, grain, and paper lobbyists expected to speak on Wednesday have called on Congress to make it easier for shippers to file complaints and to allow other operators to use CSX track during service disruptions.

Other stakeholders have filed comments with the STB.

(Reporting by Eric M. Johnson in Seattle; Editing by Leslie Adler and Frances Kerry)