August 1, 2017 / 3:24 PM / 17 days ago

CSX top executive blames employee push-back on service disruptions

SEATTLE, Aug 1 (Reuters) - CSX Corp Chief Executive Hunter Harrison has apologized to customers for service disruptions that he blamed on resistance from some of the railroad's employees, according to an email seen by Reuters, as a shipper survey found the No. 3 U.S. railroad losing business to rivals.

Harrison's email, addressed to "our valued customer," was sent on Monday and acknowledged customer complaints with the railroad's service since he took control in March amid high expectations from investors and analysts.

On Tuesday, Cowen & Co analysts said more than 80 percent of shippers they surveyed have experienced problems with CSX and nearly 40 percent have switched to rival Norfolk Southern .

One shipper said the transition under Harrison "has been a complete disaster" in regard to operational service.

"Car velocity has drastically declined, putting our ability to serve our customers and maintain empty supply to our plants in serious jeopardy," the shipper told Cowen.

Harrison, who led turnarounds at Canadian Pacific Railway Ltd and Canadian National Railway Co, told customers he is facing resistance as he works to implement aggressive cost-cutting measures he promised for CSX.

"The pace of change at CSX has been extremely rapid, and while most people at the company have embraced the new plan, unfortunately, a few have pushed back and continue to do so," Harrison wrote on Monday in the email to customers seen by Reuters.

"This resistance to change has resulted in some service disruptions. To those customers that have experienced such issues, we sincerely apologize," he said.

Harrison vowed in his memo to continue to address the "internal personnel matters" and said the company was recommitted to finding affected customers and resolving service issues.

Last week, the Surface Transportation Board, the main U.S. rail regulator, sent a letter to Harrison citing a litany of complaints about CSX's service, including unpredictable or lengthier transit times and circuitous and inefficient rail car routing times.

CSX spokeswoman Lauren Rueger did not immediately respond to a request for comment. Shares of CSX were down slightly to $48.97 in morning trading on the Nasdaq. (Reporting by Eric M. Johnson in Seattle; Editing by Bill Trott)

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