STB UPDATE DECEMBER 5, 2017

Network saw a significant positive inflection in performance. ▫ Velocity, train originations ... Right Car Right Train up with improved network speed and execution. ▫ Crew and power ..... monitor through implementation period. ▫ Reliable pull and ...
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STB UPDATE

DECEMBER 5, 2017

Network saw a significant positive inflection in performance Highlights ̶

Velocity reaches new high point of 17.7 mph, 19% improved from 2016 average velocity ̶

Dwell remains healthy at 10.6 hours, and is 5% improved from 2016 average dwell ̶

Train originations and arrivals better than 2016 average levels ̶

Right Car Right Train at best level seen in reporting period

2

     

Velocity, train originations and arrivals notably improved this week Right Car Right Train up with improved network speed and execution Crew and power resource levels remain well matched to demand Hump yard performance steady, dwell levels improved Western terminals performing well Car ordering and fulfillment process updated, car orders and fulfillment settled higher following holiday

 Local pull and place performance returned to prior levels after holiday-related impacts

 Customer problem logs remained at lower levels  Interchange volumes current and gateways fluid

Velocity has fully recovered, now accelerating well above 2016 Velocity (mph) Improvement Degradation

2016

2017

20

Velocity

18

STB Listening Session

16

14

PSR Implementation

12

Height of Service Disruption

10 1

3

5

7

9

11

13

15

17

19

21

23

25

27

29

31

33

35

37

39

41

43

45

Week

2016 Full Year Average PSR Implementation Height of Service Disruption STB Listening Session Current Week 3

Velocity (mph) 14.9 13.8 13.0 15.4 17.7

Fav (Unfav) % Change vs. 2016 (7%) (13%) 3% 19%

Note: Dwell and velocity displayed according to CSX methodology; explanation of CSX methodology can be found in appendix. Week 37 & 38 velocity excludes specific trains held through Hurricane Irma.

47

Dwell at or below 2016 full year levels for 12th consecutive week Dwell Gross(hours) Dwell Degradation Improvement

16

2016

2017

Height of Service Disruption

Dwell

14

12

PSR Implementation

10

STB Listening Session

8 1

3

5

7

9

11

13

15

17

19

21

23

25

27

29

31

33

35

37

39

41

43

45

47

Week

2016 Full Year Average PSR Implementation Height of Service Disruption STB Listening Session Current Week 4

Dwell (hours) 11.2

Fav (Unfav) % Change vs. 2016

11.6 13.1 11.0 10.6

4% (17%) 2% 5%

Note: Dwell and velocity displayed according to CSX methodology; explanation of CSX methodology can be found in appendix. Week 37 & 38 dwell excludes terminals that held cars through Hurricane Irma-impacted period

Velocity, Originations and Arrivals notably improved this week

68%

60%

60%

40%

40%

20%

20%

70% 64%

60%

64% 63% 63% 67% 67% 65% 64%

76%

76%

78%

86%

78%

81%

80%

74%

77% 77% 74% 74% 74% 73% 74% 73% 71%

80%

100% 66%

84%

87%

84% 81%

82%

88%

84%

83%

Weekly Average 100%

88%

On Time Arrivals (%) 88%

On Time Originations (%)

On-Time +2 hrs On-Time

42

43

44

45

46

47

2016 Q1 Q2 Q3 40 41 42 43 44 45 46 47

Nov. 25 – Dec. 1

Weeks

2017

2017

Weeks

Dwell (hours)

Velocity (mph)

16.0 9.7

10.0

16.2

9.8

10.6

15.7 15.4

14.9 14.2

16.0

16.4 16.3

17.4

12.0

18.0 11.2

10.7 11.0 10.5 10.4 10.5 10.6 10.6 10.7

10.8

10.2

11.2 11.6

12.1

10.5

14.0

16.1

20.0

16.0

12.0

Nov. 25 – Dec. 1

14.9 14.9 14.9

14.0

14.0 12.0

8.0

10.0

6.0 2016 Q1

Q2

2017

Q3

40

41

42

43

44

Weeks

45

46

47

Nov. 25 – Dec. 1

2016 Q1 Q2 Q3

2017

40

41

42

43

44

45

46

47

Nov. 25 – Dec. 1

Weeks

Network measures reaching new threshold of positive performance 5

Note: Dwell and velocity displayed according to CSX methodology; explanation of CSX methodology can be found in appendix. Q3 dwell and velocity exclude the Hurricane Irma-impacted period for terminals that held cars and specific trains held through storm, respectively.

17.9

41

18.1

40

18.2

Q3

18.5

Q2

18.0

2016 Q1

+2 hrs

Right Car Right Train up with improved network speed and execution  Right Car Right Train is no longer a measure that CSX uses to manage its operation

Right Car Right Train1 Weekly Average 90%

75%

77% 74%

73%

73%

72%

74%

72%

75% 76% 76%

73%

70%

79%

80%

82%

79%

82%

82%

85%

80%

86% 86%

― 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

65%

 Train priority is blocking integrity and departing all available, relevant cars from the yard

60% 55% 50% 2016 Q1 Q2 Q3 40

2017

1

6

41

42

43

44

Weeks

45

46

47

Nov. 25 – Dec. 1

― Blocking integrity certifies that a train is built correctly and shipments are headed to the correct location ― Managed through field supervision

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

Resourcing appropriately to meet business needs Train & Engine Headcount and Re-crew Rate1

Active Locomotives 4,000

10,000

12%

3,763 3,673

9,800

3,600 3,376

9,771

9,600 3,200 3,182 3,184 3,162 3,165 3,174 3,180 3,192 3,200 3,179

3,200

10%

9,690

9,400 9,223

9,200

2,800

8%

9,445 9,278 9,264 9,247 9,225 9,204 9,189

6% 9,081 9,049 9,028

9,000 2,400 2,000 2016 Q1



Q2 Q3 2017

40

41

42

43 44 Weeks

45

46

47

8,800

2%

8,600

0%

48

Locomotive level stable; engines to come down in concert with network velocity improvement

2016 Q1 Q2 Q3 2017



40

41

42

43 44 Weeks

45

7

46

47

48

Recent headcount reduction driven by train staffing efficiency and adjustments to extra boards

Power and crew availability steady in fourth quarter at approximately 99% and 95%, respectively 1

4%

Re-crew rate is re-crew people starts as a percent of total measured people starts, and represents incidences of replacing a crew on the same train ID (generally due to hours of service)

Hump yard performance steady, dwell levels improved CSX Hump Terminal Overview



Total hump yard volumes remain in a consistent band week-over-week, well below capacity of yards



Key hump productivity and efficiency measures performing well, four humps remaining

Transitioned to flat-switching operations Hump terminals

Selkirk, NY Toledo, OH Willard, OH Cumberland, MD Cincinnati, OH

19.8 17.2

17.7

18.8 18.7

21.5 20.6 20.8 20.1 20.1

14.0 10.0

Absolute number of humps not “good” or “bad”; goal is best mix of hump and flat yards for processing efficiency 1

8

6.0 2016 Q1 Q2 Q3 40

2017

41

42

43

44

45

46

47

Nov. 25 – Dec. 1

Weeks

Dwell displayed according to CSX methodology; explanation of CSX methodology can be found in appendix. Q3 dwell excludes the Hurricane Irma-impacted period for terminals that held cars through the storm.

16.9

18.0

19.9 20.6

15.3

Waycross, GA

22.0

16.1

Atlanta, GA

26.0

16.7

Birmingham, AL

Hamlet, NC

17.8

Nashville, TN

Weekly Average

30.0

19.3

Louisville, KY

Dwell at Hump Terminals1

18.0

Avon, IN

Western terminals performing well Western Corridor Key Terminals



Key terminal productivity and performance measures recovered in former “trouble” spots



Train plan changes at Evansville have resulted in very few cars processed, no longer a key terminal

Avon, IN

Evansville, IN

Dwell at Western Terminals1

Nashville, TN

Weekly Average

22.0

Birmingham, AL

11.4

12.3 12.5 12.4 11.9

10.0

6.0

Key Western terminals

2016 Q1 Q2 Q3 40

2017 1

9

41

42

43

44

45

46

47

Nov. 25 – Dec. 1

Weeks

Dwell displayed according to CSX methodology; explanation of CSX methodology can be found in appendix. Q3 dwell excludes the Hurricane Irma-impacted period for terminals that held cars through the storm.

9.6

12.1

12.2

12.6

Mobile, AL

10.6

14.4

11.0

13.6 13.4

12.8

14.0

13.0

12.3

15.6

Montgomery, AL

14.1

18.0

Car orders and fulfillment settled higher following holiday Weekly Car Orders, Customer Empty Idles, and Fill Rate1 Order Fill Rates

Cars Ordered/Idle 7,000

100%

6,000

90%

5,000

80%

4,000 70% 3,000 60%

2,000 1,000

50%

0

40% 2016 Q1

Q2 2017

40

41

42

43

44

45

46

47

48

Weeks

Weekly Orders

Customer Empty Idles (> 24 hours)

Order Fill %

Order Fill % ex. Customer Empty Idles

1

10

Q3

 Car ordering and fulfillment process updated as of Week 45 ― Car orders now remain open for 2 weeks for fulfillment; order fill will settle over a 2-week period ― Accordingly, the current week fill rate will be adjusted in the following week for orders filled

 Week 48 added nearly 240 orders filled to week 47, adjusted fill increased to 88% ― Week 48 will further improve into week 49

 Empty car dwell remains elevated at customer locations, impacts order fill ― Empty idle cars at a given customer held >24 hours considered available to fill that customer’s orders

2017 fill rate has been normalized through Week 44 against historical/expected order levels (Q1 2017), as order levels disconnected with demand beginning in Q2 2017; 2016 orders and fulfillment and 2017 Week 45 and beyond do not warrant normalizing

Last mile performance measure recovered after holiday week  Local Service Measurement (LSM) is no longer a metric that CSX uses to manage its operation

Local Service Measurement1 100%

94% 95%

90%

90% 81%

86%

84% 83% 85% 85% 85% 84% 85% 77%

80%

― In precision scheduled railroading (PSR), focus on endto-end transit and customer expectations

 Accordingly, LSM as a reported metric was discontinued upon start of PSR implementation

70% 60%

― At request of STB, last mile tracking reinstated to monitor through implementation period

50% 40% 30%

 Reliable pull and place expected as part of service to customers

20% 10% 0%

2016 Q1

1

11

Q2 Q3 2017

40

41

42

43

44 45 Weeks

46

47

48

‘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

Customer problem logs remained at lower levels  Customer logs largely back in normal range after network challenges as fluidity has returned

Customer Inquiries Daily Average Log Volume

570 Total Logs in Week 30 at height of service challenges

 Lower level of logs, improved communication allowing faster, more comprehensive resolution

416 318 269

265

278

247

253

42

43

254

266

258 213

201

Q1

Q2

Q3

40

41

2017

45

46

Weeks

Delayed Cars

12

44

Bad Order

Switching Issues

47

48

― Accountability for resolution of customer issues resides with field responsibility ― Escalating and resolving critical issues with senior leadership

Interchanges current and performing to expectations From

East St. Louis 800

Daily Average Interchange Volume

Chicago

To

2,000

Daily Average Interchange Volume

1,600

600

1,200

400

800 200

400

0

0 2016 Q1

Q2

Q3

40

41

42

2017

43

44

45

46

47

48

2016 Q1

Q2

Q3

40

43

44

45

46

47

48

47

48

Weeks

Memphis

Daily Average Interchange Volume

300

400

200

200

100

0

Daily Average Interchange Volume

0 2016 Q1

Q2

2017

13

42

2017

Weeks

New Orleans 600

41

Q3

40

41

42

43

44

Weeks

45

46

47

48

2016 Q1

Q2

2017

Q3

40

41

42

43

44

Weeks

45

46

Precision scheduled railroading producing service improvement Service Improvements & Productivity Improvements

Operational Focus Balanced Train Plan

Improved Frequency

Better Reliability

Rolling Stock Utilization

People Efficiency

Terminal Fluidity

Faster Transit

Quicker Turnaround

Fuel Optimization

Train Density

Improve Service

    14

Operate Safely

Control Costs

Drive Asset Utilization

Develop People

Realigned service frequency in second quarter Set the groundwork of a balanced train plan in early July Terminals’ improved efficiency and traffic flow adjustments have recovered service Improved execution on this foundation to drive long-term service and productivity improvements

APPENDIX

CSX has changed methodology on some metrics reported publicly Velocity

Dwell Former

Car 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 full trip of a train and ability to diagnose overall speed profile (in support of improvement in asset cycle)

Effect on Metric

Reported velocity will be lower

Former

Line of road miles per hour

Current

Total miles traveled per hour, including intermediate dwell of the train

Cars Online Former

All 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

Includes all dwell with ability to diagnose all events impacting car movement (in support of improvement in asset cycle)

Change Reason

More accurate measurement of active cars on line, i.e. cars for which CSX is focused on realtime, efficient movement

Effect on Metric

Reported dwell will be lower

Effect on Metric

Reported cars online will be lower

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

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