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Murray Energy says CSX issues improving, but shipments are still being missed


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Murray Energy says CSX issues improving, but shipments are still being missed

A Murray Energy Corp. executive told federal commissioners that CSX Corp.'s rail service problems are improving, but the coal producer is still losing millions of dollars from missed train shipments.

"There's still a gap between what we believe is necessary and what they believe is necessary to achieve the same goal," Robert Murray, executive vice president of marketing and sales at Murray Energy, said at an Oct. 11 hearing convened by the U.S. Surface Transportation Board. The railroad's customers expressed frustration at difficulties shipping commodities ranging from chemicals and grain products to the potato flakes used in manufacturing Pringles chips.

Just last month, Murray said, CSX missed about 20 trains at its affiliate Foresight Energy LP's Sugar Camp facilities in the Illinois Basin. Each 130-car train is worth about $500,000 in coal revenue.

"When you think about 20 trains do the math. That's a lot of money," Murray said.

He said Murray Energy also ships coal via Norfolk Southern Corp. and Canadian National Railway Co., but those two railroads combined did not miss as many trains as CSX did last month, and the coal producer does not experience similar problems with other railroads.

Reliable rail service is absolutely critical to the coal producer's business, he said, and timely receipt of coal is equally important for its utility customers.

"For us it's really simple. We need to load the train on the day that it's scheduled to load. Because if we miss that loading ... we don't get the time back," he said.

CSX CEO and President Hunter Harrison acknowledged at the hearing that service has been wanting and apologized to CSX's "valued shippers."

Harrison painted a grim future for coal in the railroad's second-quarter earnings call, saying "fossil fuels are dead" and the railroad would not be investing in new infrastructure dedicated to coal even as it focused on its new precision railroad service plan, which involves changes in shipping logistics.

An industry analyst recently said the plan would likely benefit CSX more than coal producers and power generators since regular shipments do not mesh very well with the increasingly variable nature of the coal industry.

Surface Transportation Board Commissioner Deb Miller asked Harrison at the hearing whether precision railroad service would benefit customers. He said he disagreed that shippers would get the short end of the deal and the new model is not to blame for service shortcomings.

"It wasn't the system, it wasn't the architecture, it wasn't the model, it was the execution," he said.

Murray Energy requested the help of the board in July and later sued CSX Transportation Inc. for alleged service failures. Arch Coal Inc. and CNX Coal Resources LP also criticized the railroad for delays.

While Murray said some problems have gotten worse since CSX's focus on precision railroading, he listed service deficiencies he said have been going on for three years: failing to participate in regular coordination calls with Murray Energy and its customers, failing to provide trains and crews and to pull loaded trains according to schedule, arbitrarily delaying coal trains en route to customers, prioritizing other goods over the transportation of coal, and failing to provide the company with basic information on shipments.