CSX’s latest chief operating officer intends to interrupt down internal information silos and support the railway’s role in a broader industry effort to work collaboratively to achieve market share away from trucks.
An emphasis on cross-departmental information sharing can even profit CSX (NASDAQ: CSX) in discovering any additional ways to chop costs and improve efficiency, COO Mike Cory said during CSX’s Thursday’s earnings call to debate third-quarter 2023 financial results.
Cory, who assumed the role in early September after the surprise departure of Jamie Boychuk, is a 40-plus-year veteran of the rail industry and served as COO at Canadian railway CN (NYSE: CNI) from 2016 to 2019.
“[I look at the] visibility of waste and getting it and collating that information. … What I do is I attempt to teach and learn, learn and teach. That’s really what it’s about. We’ve a great group of individuals, — lots of them younger — who haven’t been experienced within the positions they’re in,” Cory said through the earnings call. “That’s really where I’ve been focusing: to begin with, to get a temperature read, but [also] really to start out to share with them how one can go about getting at that waste. And it’s tough in a network like this. And it’s something that we’ll do as a team.”
By going “through the waste exercise,” he said, “it starts to let you get into understanding how one can devise the network … and keep and even get well service.”
President CEO Joe Hinrichs added that Cory’s appointment was good timing for CSX, which he said has been steadily improving its rail service and can be able to tackle additional business. CSX’s emphasis on improving company culture, a program called ONE CSX, can even support Cory’s efforts, in keeping with Hinrichs.
“I believe the timing of Mike joining us is ideal because we’ve had a yr of benefiting from the operating model that we have now, engaging with our employees and doing a number of things around culture and our ONE CSX,” Hinrichs said. “We’ve made tremendous progress, especially on the service metrics … and we have now close industry-leading metrics across the board on the operating side.
“Now we have now Mike coming in along with his experience, a fresh set of eyes and all of the opportunities that may now allow us to now step back and say, ‘OK, we’ve come this far, great work, pleased with the team’s work. Now here’s the chance that we have now to advance even further,’” Hinrichs continued.
Cory said: “What I’m attempting to share with them is the provision of knowledge and how one can use it. I don’t see that they’ve had enough time. They’ve passed through a fairly tough period here during the last couple of years. They’ve rebounded extremely nicely. And to Joe’s point, that is to get to the subsequent level where they’re self-sufficient. And I do know they may be, they know they may be, but I’m here to indicate them that way.”
This effort to interrupt down internal silos comes at a time when CSX and the broader freight rail industry are seeing more collaboration amongst Class I railroads to offer latest or expanded service offerings.
Announcements this yr include CSX’s plans to partner with Canadian Pacific Kansas City (NYSE: CP) to develop a corridor between the U.S. Southeast and Mexico and Texas; an expanded intermodal service amongst CN, Union Pacific (NYSE: UNP) and Mexican company Grupo México (GMXT); and CN’s partnership with Norfolk Southern (NYSE: NSC) to supply a domestic intermodal service connecting businesses in Canada and the Upper Midwest with the U.S. Southeast.
A lot of these announcements occurred after CP and Kansas City Southern formally merged this past spring.
“You might have Western Class Goes after the Mexico business. We are able to take part in that. We’re really completely satisfied to work with them. … [There is] a number of momentum just around us all working together to create opportunities for ourselves, where I believe for a long time we’ve been pushing volume — quite frankly, off the railroad — onto truck. And now we’re all going to work collectively to essentially change that trend. And that’s exciting,” said CSX Chief Industrial Officer Kevin Boone.
Hinrichs reiterated that “to ensure that this industry to see significant growth, we have now to work higher together to be motivated to serve customers in latest and higher ways. And we’re beginning to have a few of those good conversations with other Class I railroads to have the opportunity to speak and think in another way about how can we serve the client and the way can we get enthusiastic about that chance.
“So, there are plenty of incremental steps we are able to take to grow the business beyond just convalescing and all of the work that we’re doing and the cynical nature of our business, which can be some things that ought to help us going into ’24,” Hinrichs continued.
Q3 2023 financial results
A decline in operating revenues put pressure on CSX’s net profit for the third quarter of 2023, CSX reported late Thursday.
Net earnings for the Eastern U.S. Class I railroad were $1.3 billion, or 42 cents per diluted share, for the third quarter of 2023, compared with $1.1 billion, or 52 cents per diluted share, for the third quarter of 2022.
Revenue totaled $3.57 billion within the third quarter, down 8% yr over yr (y/y). But expenses fell 2% to $2.28 billion on lower fuel expenses and lower costs for equipment and rents.
Operating income was $1.3 billion, down 18% y/y, while operating ratio — a metric that investors sometimes use to gauge the financial health of an organization — rose to 63.8% from 59.5%.
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Related links:
- Third-quarter net earnings slip 24% at CSX
- CSX hires ‘profession railroader’ Cory as chief operating officer
- CSX and Georgia Ports Authority offering latest intermodal service
- Cross-border traffic, West Coast port activity profit Eastern railroads
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