CSX Is Shedding Assets Even as Union Pacific Does the Opposite
The two rail giants employ different approaches to increasing operating efficiency.
Last week, CSX Corporation announced that it's soliciting bids for six non-contiguous rail segments located in North Carolina, West Virginia, Kentucky, and New York. Selling the non-core assets, which comprise approximately 650 miles of track, is part of a "broader initiative to drive asset utilization, enhance network efficiency and create long-term value for the company," according to CSX’s.
That broader initiative is, of course, the transformation of CSX into a scheduled railroad, i.e., one that optimizes assets while implementing a strict service plan and precision train scheduling. This project was set into motion by railroad legend and former CSX CEO Hunter Harrison, who passed away last year. It's now being carried forward aggressively by CEO Jim Foote and the company's management team.
Taking the opposite route............
Even as CSX whittles down non-core assets to drive operating ratio even lower, competitor Union Pacific  is pouring massive amounts of capital in a new facility, albeit with similar long-term efency goals.
As recently discussed, Union Pacific is investing $550 million in a new classification (sorting) yard in Brazos, Texas. It's the largest capital expenditure in a single facility in Union Pacific's history, and management hopes that the asset will help relieve some of the congestion the company is experiencing in its southern region. Network congestion issues tracing back to 2017 have caused Union Pacific's management to back off a goal of decreasing the company's own operating ratio -- currently at roughly 64.5% -- to 60% by next year.
Like CSX, Union Pacific believes in matching resources with demand and avoiding excess labor or keeping an unnecessary overage of cars in service. However, Union Pacific is presently throwing resources at its network by adding employees and cars to speed up its lines in a temporary sacrifice of operating ratio inputs. The investment in the Brazos yard is a longer-term solution to network fluidity and efficiency.
Thanks: Rusty for sharing the Boston & Albany Photo, do you have any more prewar diesel images.
Source: AP - Financial News: New York, New York / The city with two names.