Capacity Management at CSX Transportation

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Capacity Management at CSX Transportation
13 November 2005 San Francisco, CA
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The CSX rail network

• Serves all majoreastern markets
• Covers 22,000 milesin 23 states and two Canadian
  provinces
• Serves more than 70 ports

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The network is a key competitive advantage
Coal
Miami
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Traffic growth on the CSX networkis expected to
accelerate
2006- 2010 Traffic Growth
lt2 CAGR
2-5 CAGR
gt5 CAGR
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Positioning the CSX network for growth

• Network capacity determined by
• Single track, double track, siding length,
  spacing, signals
• Theoretical versus practical
• Implications
• Growth
• Economic
• Service reliability
• Recoverability

Optimal Range of Operation
Service Level
Volume (trains per day)
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CSX will pursue two courses of action to address
capacity constraints

• Near term Capacity Management
• Establish a cross-functional management process
• Balance capacity and demand
• Longer term Strategic Capital Investments
• Improve line-of-road and terminal capacity
• Position the company for long term growth

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Capacity Management Team Goals

• Address current choke points
• Avoid new choke points
• Balance trade-offs between efficiency and volume
• Improve profitability
• Improve service reliability
• Team Mission
• Create an integrated commercial and operational
  decision process around key network chokepoints
  that improves bottom-line impact by balancing
  tradeoffs between productivity, volume and price.

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Capacity Management - Process Overview
Capacity Management
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Capacity Management - Process Map
Other Stakeholders
Financial targets Commercial strat
Service requirements
Periodic New business ops Capy target change
Op Plan change Periodic
Capy change Periodic
Daily
Real time
Ops feedback Resource providers New business
ops Field input Capy constraints Target capy
number
ID Capy
Manage Capy
Opportun Mngmt
Execute
OPS (field, Wjax)
Op Plan Field Parameters
New Corridor Op Plan New business ops
sched/unsched slots
Train Ops
72-hr rolling plan
Prioritized train list slots
RTC Corr Analyser OR tools
Forecast tools Commercial levers Strategic
evaluation criteria
Reservation system Pipeline visibility Crew, loco
resources
Train mgnt sys ONE PLAN tools Op lever matrix
Commercial Forecast
Periodic
Capy Mgnmt
Choke point forecast Communication
plan Scorecard
sched/unsched slots Target capy number Train
operations
Measurements
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Capacity Management
Objective The primary objective of the the
Capacity Management group is to maximize the
operating income over line segments which are
defined as chokepoints. It does this by
coordinating the efforts and providing oversight
to the four functional process steps. Definition
of Chokepoint Location or territory where
demand (in number of trains) exceeds physical
infrastructure capacity given existing
operations.

• Key Metrics
• Operating income over a chokepoint
• Service reliability over chokepoint

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Identify Capacity
Objective Serve as the established resource
within CSX for determining the line capacity of
certain segments of the railroad.

• Primary Responsibilities
• Serve as the capacity experts
• Furnish a target number of trains that can be run
  efficiently
• Use models to test the impact of operating and
  commercial initiatives on line capacity
• Measure modeled performance with actual and
  identify variations
• Develop simplified views to communicate model
  outputs

• Key Metrics
• Operating income over a chokepoint
• Model turnaround time and accuracy
• Measured throughput
• Service reliability over chokepoint

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Plan Capacity
Objective Ensure that the operating plan most
efficiently utilizes all available capacity over
the constrained segment.

• Primary Responsibilities
• Identify and evaluate potential operating
  initiatives to increase slot utilization
• Develop and implement action plans and
  communicate to field operations
• Implement operating plan changes to reflect
  operating improvements
• Communicate and work closely with other process
  owners

• Key Metrics
• Capacity utilization (slots used, train size
  etc.)
• Operating income over a chokepoint
• Service reliability over chokepoint

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Manage Opportunities
Objective To maximize the contribution of
business moving over chokepoints. Perform a
cross functional gate keeping and management
process for evaluating existing and prospective
business opportunities.

• Primary Responsibilities
• Establish and communicate business quality
  rankings that incorporate strategic and
  contribution criteria
• Conduct regular reviews and set priorities for
  the unscheduled unit trains
• Execute commercial initiatives to optimize the
  value of all traffic on the segment
• Develop action plans to support operating plan
  improvements

• Key Metrics
• Operating income over a chokepoint
• Contribution per train slot used

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Execute
Objective To maximize train slot utilization by
coordinating all non-scheduled train operations
under one integrated management

• Primary Responsibilities
• Execute the non-scheduled train operation
  according to priorities established by
  Opportunity Management
• Create a 5-7 day plan for trains expected to
  operate over the chokepoint
• Work with the unit train desks to ensure the
  pipeline is primed to utilize each available slot
  on the chokepoint
• Work with the other resource providers to insure
  the pipeline is protected
• Communicate with the other process owners on an
  ongoing basis
• Identify failures and take corrective action

• Key Metrics
• Train slot utilization
• Service reliability over the chokepoint
• Operating income over the chokepoint

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Summary

• Develop a management process that has
• Goals, Measures, Financial returns
• Develop technology to support the management
  process
• Develop technology that can communicate
  recommendations and results
• Plan for the future
• Service improvement
• Growth
• Establish common metrics and measurements of
  success
• Operating income over the chokepoint
• Incorporates variable, fixed and capital costs
• its all about the money