While much attention has been focused on the efficiency of CSX Corp.’s railroad since new management came in last year, CEO James Foote is now putting more resources into safety.
Foote told shareholders at the company’s annual meeting Friday at Prime Osborn Convention Center in Jacksonville that CSX will be announcing a new chief safety officer next week and is also bringing in an outside consulting firm to help with safety issues.
“Because of the incidents earlier in the year, I thought we needed additional help,” he said.
After the meeting, Foote said the incidents included the deaths of two Amtrak employees in a collision with a CSX train in South Carolina in February.
Foote said his number one concern in running CSX is fear that “someone’s going to get killed,” so he’s taking steps to prevent it.
“Maybe we should have some fresh eyes” looking at safety, he said.
CSX reported 1.11 personal injuries per 200,000 man-hours in the first quarter, ranking third-best among the seven large North American railroads, Foote said during the meeting. But that index rose from 0.97 in the first quarter of 2017.
“That is unacceptable and we will get better,” he said.
Improving safety is one of Foote’s goals in trying to make CSX the best-run North American railroad.
“To be the best, you need to be the best in three critical areas,” he said.
Besides safety, the other two areas are service and efficiency.
CSX’s customer service was highly criticized last year when implementation of its new operating plan caused major disruptions in freight service. Foote said the company is improving and wants customers to expect deliveries on schedule.
“Our goal is to deliver freight to the hour exactly when we said we would do it,” he said.
While some metrics are improving, Foote said train velocity (average speed from origin to destination) is still 8 percent behind the rest of the industry.
“We have a lot more work to do in velocity,” he said.
The company’s main index of efficiency is its operating ratio, a metric closely watched by analysts which measures operating expenses divided by revenue.
CSX’s first-quarter operating ratio of 63.7 percent was the best among the seven major railroads, Foote said, and the company is targeting a 60 percent ratio by 2020.
“Hopefully, we will continue to lead the industry in this manner,” he said.
CSX cut 4,600 jobs last year, including consultant positions, and anticipates an additional 6,200 job cuts by the end of 2020. That would bring its total employment throughout the eastern U.S. to about 21,000.
Foote said after the meeting that reduction should not include any big layoffs.
“We should easily be able to cover this number through attrition,” he said.
Foote became chief executive of CSX in December after the death of Hunter Harrison, who had only joined the company in March 2017.
CSX Chairman Edward Kelly said Foote is continuing the work started by Harrison to improve the railroad’s operations.
“Hunter was both the architect and driving force that made these achievements possible,” Kelly said.
“James Foote, who we’re very fortunate to have, and his team are making that happen.”
Shareholders approved all measures up for vote at the meeting at the Prime Osborn Convention Center, a facility named after a former chairman of Jacksonville-based CSX.
That included a nonbinding advisory vote on the company’s executive compensation policies that were opposed by proxy advisory firm Institutional Shareholder Services.
CSX did not announce the vote totals during the meeting.
