CSX’s Turnaround Strategy Faces Challenges

The emergence of the industrial internet of things (IIoT) in last few years has set the stage for a digital disruption of rail freight. The rail industry faces many challenges.  In the US, rail’s market share is shrinking. According to CSCMP’s State of Logistics Report, parcel has replaced rail as the second largest freight transportation segment. Revenues decreased seven percent at Class 1 railroads while volumes dropped by 5 percent.  The biggest factor was the decline of coal, which is largely carried by rail. Further, many rail companies have not made sufficient investments to upgrade their aging infrastructure. Rail must also meet enhanced safety requirements to prevent accidents.

Train Management Systems and Precision Railroading

To help meet these challenges, the rail industry is beginning to replace the legacy infrastructure with IIoT and Big Data enabled train management systems (TMS). CSX is leading the charge. Their new CEO introduced his “precision railroading” operating philosophy. This philosophy combines improved service through schedule adherence, better asset utilization, and improved operating efficiencies. Operating efficiencies will be improved with longer trains and faster yard throughput. Hunter Harrison, the new CEO, is seeking to turnaround his fourth railroad. IIoT will  have a large role to play in the transformation.

Hunter Harrison, CEO of CSX

With rail IIoT, sensors are built into the trains to provide real time monitoring, analysis, control and maintenance. Trains will be interconnected through communication hubs, and data and instructions will flow among trains and the network control rooms. IIoT technologies will appear in real-time machine-to-machine (M2M) communication, signaling, train radios, lineside communication, level-crossings, station information and security at the end points. The downstream data will be stored and analyzed in IIoT Platforms, primarily in cloud or servers. This information will not only enable operators to utilize equipment, tracks and stations more efficiently, but also reduce safety risks and operational expenses.

On-board train location and detection systems help trains to be aware of the positions of other trains. This reduces the risk of collisions and allows trains to operate safely in closer proximity to one another. Systems are in place that display train speeds for drivers and report it back to central control systems. Through IIoT, the on-board monitoring systems are interconnected with outdoor signaling systems, which regulate train speeds based on track conditions, the positions of switches, or the presence of other trains on the track.

IIoT can further improve integration with the signaling systems, where wireless connectivity to ground signaling is getting more and more common. By installing camera and sensors, IIoT can assist in decreasing the deaths at crossings and in yards.

And digitization is a boon to asset utilization. It can address the issues of diagnostics and predictive maintenance through the monitoring and analysis of data collected by train and track sensors. Potential service interruptions can be detected by continuously monitoring tracks and crossings, which will enable efficient maintenance, superior reliability, and reduced mean time to repair.

But there are challenges. Deploying widespread infrastructure, platforms, and applications to support IIoT for railways requires railway operators to steer through a complex technology landscape with diverse wireless connectivity technologies for different performance parameters. Suppliers must work out the most economical way to connect all the deployed sensors and securely collect the data that is generated.

Traveling through tunnels and extreme weather conditions imposes real constraints when it comes to deploying IIoT systems. The safety-critical nature of IIoT for trains makes it important for a supplier to work closely with the customer to rigorously test and certify its products.

Freight trains are seeking to travel faster outside of urban areas. In rural areas, wired fiber-optic communication must be deployed as there can be issues with wireless connectivity.  Wireless connectivity presents its own issues including the risk of data loss, data breach, and denial of service attacks. Prevention of hacking and cyber-attacks must be considered, and security patches and firmware updates in an IIoT system should be kept current.

CSX’s Turnaround Strategy Challenges

These challenges are not insignificant.  Certainly, in the early days of this transformation CSX is struggling. The Surface Transportation Board wrote a letter on July 27th, listing a litany of complaint’s about CSX’s service.

In short, recent technological advances in IIoT have made Smart Trains a real possibility; IIoT driven advances contribute to the kinds of benefits that CSX is seeking to achieve. But this new technology is not yet fully mature, these are not the only improvements CSX needs to make, and the CSX network on the congested East Coast presents challenges Mr. Harrison did not face at his other railroads. Consequently, there is still much work to be done at CSX.


  1. Overall a very useful article, but nothing here about the potential for serious predictable public safety issues with key aspects of the Smart Train strategies. If these Hunter Harrison strategies rely heavily on longer trains and faster speeds, these were of course some key factors at the root of the derailment crisis of the crude oil mile-long unit trains in the last few years, as the trains are harder to handle and impart more damage to the tracks.

    Longer trains also block crossings for longer periods, including delaying emergency vehicles seeking to cross to reach accident victims or hospitals. Will the railroad insurers be happy until ambulances/hospitals are included in the train’ sensor/computer network so they know when to drive miles to the next clear rail crossing?

    From a March 2 2015 interview with then-Canadian Pacific CEO Harrison in the Toronto Globe and Mail:

    “Some cities, including Toronto, have called for Ottawa and the railways to end the movement of dangerous goods through their centres. The railways are also facing calls to make public the list of dangerous goods they haul. Mr. Harrison said he would prefer to avoid congested, heavily populated areas like Chicago, but the regions that would see higher traffic of dangerous goods would not be happy with the move.”

    Notice: As Canadian Pacific CEO, Hunter Harrison alone got to decide whether to endanger Chicago or not! And now, in his CSX route decisions, to endanger Washington DC, Baltimore, Philadelphia, and the New York City metro area, and the great majority of Eastern cities where alternative routes are available [often on competitor
    railroads like Norfolk Southern which he no doubt “would prefer” not to use].

    The mounting economic woes of railroads of course puts ever-increasing pressure on corporate cost-cutting at the expense of safety margins. Would be interesting to see [but it would be a secret, of course] what algorithm the corporate smart train systems use to weigh and factor in public safety to balance the desired increases in speed and efficiency. Don’t even think about whether either the weak Canadian or US government agencies have any significant role, or even any expertise, in assuring that these systems will protect public safety. Ain’t “democracy” grand?