Locomotive Shutdown A Fuel Conservation Project...Locomotive shutdown may not sound like a big deal but historically locomotives were never shutdown. The utilization levels of the

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Locomotive Shutdown

A Fuel Conservation Project

Locomotive Shutdown

A Fuel Conservation Project

Notes

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A New Day Dawns for Fuel Conservation at CSXA New Day Dawns for Fuel Conservation at CSXA New Day Dawns for Fuel Conservation at CSXA New Day Dawns for Fuel Conservation at CSX

Welcome,

Over the next thirty minutes our team will be walking you through our fuel conservation project.

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Some historical information about Diesel Electric L ocomotives operations:

• locomotives were left idling when not being utilized (not moving)

• water cooled engine, not antifreeze mixture – can freeze – catastrophic damage

• if shutdown long enough gaskets would dry out causing engine leaks

• fuel usage for an idling locomotive ~4 gallons of fuel per hour

• fuel prices were much lower

• fuel was a smaller portion of operating costs

We will be discussing a project dealing with locomotive shutdown.

Locomotive shutdown may not sound like a big deal but historically locomotives were never shutdown.

The utilization levels of the equipment, the size and type of gaskets used, and the relative cost of fuel made it more economical to design an engine that was not intended to be shutdown.

As fuel costs rose, this changed, but habits are hard to break.

In addition, Locomotive diesel engines are water cooled. This prevents shutdown in cold weather because water expands as it freezes causing catastrophic engine damage.

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Team Members:Operations Process Excellence: Andy John - General Manager,

Wayne Seguin – Director

Purchasing: Bill Legant - Director of Fuel Purchasing

Locomotive Engineering: Don Robey – Director, Mike Drylie - Electrical Engineer , Tim Healey - Mechanical Engineer

Locomotive Productivity: Josh Putterman – AVP, John Kissinger – Director

System Road Foreman of Engines: Dean Menefee

Division Senior Road Foreman of Engines:Dennis Biegel – Chicago

Greg Clevenger – LouisvilleCharlie Crownover – Nashville

Bill Diamond – BaltimoreDennis Merrell – JacksonvilleRodney Saunders – Atlanta

Stan Shadrix – FlorenceSteve Skaruppa – Great Lakes

Jim Ward – HuntingtonRodney Wilson – Albany

From the start the project was managed by a broad cross-functional team because it required insight from many perspectives. This involved both labor and management, but we’ll get into that, let’s first talk about the birth of the project.

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1.A Methods Used to Choose Project

Top Down Approach

Broad StakeholderInvolvement

Waste Focused

Data Driven

Organizational Need

This project was generated by organizational needs, using a top down approach, that focused on waste elimination, based on solid data, and broad stakeholder involvement.

We will review the reasons the project was selected and the involvement of stakeholders; then address item (1 Aa) the types of data used for project selection.

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Launched a Strategic Initiative to Improve Producti vityand Reduce Operating Ratio

Early in 2004 the Fuel Initiative was launched as a PIT+ initiative

• CSX lagged other Class I RRs and had degraded from ’96-97’ levels of 78%

• CSX had success with PIT (Process Improvement Teams) in the past

• Plus (+) now added the methodology of Six Sigma (6s)

• PIT+ initiatives were developed to address efficiency and effectivenessgaps in our key processes

1.A.b Reasons why Project was Selected

NS – direct geographic competitor

CN – best in industry

Class I Operating Ratio's

5060708090

100

1996

1997

1998

1999

2000

2001

2002

2003

Exp

ense

as

a %

of R

even

ue

CSX

NS

CN

In early 2004 CSX looked at some brutal facts.

Our operating ratio – operating expense as a percentage of revenue had degraded significantly and was lagging the industry.

In the early 90’s the company had success with Performance Improvement Teams or PITs

We decided to re-launch this process adding our newest tool -Six Sigma – this launched PIT+

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PIT+ Accountability Structure

ChampionsVP

Transportation

•Crew Costs•LocomotiveProductivity

•Fuel

VPService Design

•Car Utilization•Shipment

Mgmt

VPEngineering

•Track•Train Control

VPHuman Resr.

•G&A•Non-ops

•Labor

VPLocomotives

•Loco R&M•Car R&M

1.A.c Involvement of Stakeholders

Sr. VP Mechanical / Engineering

Chief FinancialOfficer

Chief Operating Officer

PITs

Champion’sFunctionalAreas ofResponsible

•LocomotiveMaintenance

•Locomotive Service

•ShopManagement

•NetworkOperations

•CrewManagement

•Locomotive Management

•AdvancedEngineering

•Research &Planning

•ServicePlanning

•Maintainedof Way

•Design &Construction

•Fixed PlantEngineering

•CustomerAccounting

•TerminalReporting

•CustomerService

Senior Leadership Team (SLT)

PIT+ was a structured effort to look at all our business processes and major cost areas

In PIT+ functional department leaders worked across the organization

as they championed process focused teams that reported out on a scheduled basis

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PIT+ Accountability Structure

ChampionsVP

Transportation

•Crew Costs•LocomotiveProductivity

•Fuel

VPService Design

•Car Utilization•Shipment

Mgmt

VPEngineering

•Track•Train Control

VPHuman Resr.

•G&A•Non-ops

•Labor

VPLocomotives

•Loco R&M•Car R&M


Sr. VP Mechanical / Engineering

Chief FinancialOfficer

Chief Operating Officer

PITs

Champion’sFunctionalAreas ofResponsible

•LocomotiveMaintenance

•Locomotive Service

•ShopManagement

•NetworkOperations

•CrewManagement

•Locomotive Management

•AdvancedEngineering

•Research &Planning

•ServicePlanning

•Maintainedof Way

•Design &Construction

•Fixed PlantEngineering

•CustomerAccounting

•TerminalReporting

•CustomerService

Senior Leadership Team (SLT)

- Stakeholder groups involved in project design and/or implementation

The locomotive shutdown project was germinated out of the Fuel PIT but

reached across the functional organization involving a broad and diverse group of stakeholders

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Support Corporate Goals & Vision:

• Lower Operating Ratio• Emissions Reductions• Improved Productivity • Support culture change

By Reducing Diesel Fuel Consumption

1.A.b. Reasons why Project was Selected

Although consumption remained relatively level, diesel fuel prices Were anticipated to increase andwe expected total cost to climb past our 2002 cost of ~$450M

0%

5%

10%

1999 2000 2001 2002 2003

Fuel as a % of total Expense

CSX Fuel Consumption & Price/Gallon

500

550

600

650

1999 2000 2001 2002 2003

Con

sum

ptio

n

$0.50

$0.67

$0.83

$1.00

Pric

e

Gallons Price/Gallon

Fuel was almost 10% of our total operating expense

and fuel price was anticipated to increase in the coming years

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Fuel Cost is a Function of These Key Drivers:Volume, Productivity, Engine Idling, Price, and Log istics Costs

Total Fuel Costs

Gallons

Cost/Gal

Gals/KGTM

KGTM

Base Price/Gal(including taxes)

DistributionCost/Gal

NonproductiveUse (sitting)

Productive Use(pulling freight)

Gallon/Hr

Idle Time

1.A.a Types of Data Used for Selection1.A.b Reasons why Project was Selected

(KGTM = thousand gross ton miles)

The Fuel Pit developed a “driver tree” to focus in on high impact areas that could have rapid implementation

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Total Fuel Costs

Gallons

Cost/Gal

Gals/KGTM

KGTM



Largely exogenous,reflects purchasing,tax efficiency and physical facility locations



Gallon/Hr

Idle Time



We knew we were not going to be able to impact price

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Total Fuel Costs

Gallons

Cost/Gal

Gals/KGTM

KGTM



Diesel engine productivity



Gallon/Hr

Idle Time

Engine idleefficiency




In the short term we could not impact the physics of a diesel engines efficiency

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Total Fuel Costs

Gallons

Cost/Gal

Gals/KGTM

KGTM




Measure of volume



Gallon/Hr

Idle Time





And volume was a function of the market and our commercial teams efforts

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Total Fuel Costs

Gallons

Cost/Gal

Gals/KGTM

KGTM



Measure of volume



Gallon/Hr

Idle Time Waste = ~30M gals(~6% of total usage)






This led us to focus on fuel consumed in nonproductive uses

when locomotives were setting idle

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5 10 15 20 25 3035 40 45 50 55 60 65 70 75 8085 90 95100

0

1000

2000

Duration Not moving < 100 hours

Freq

uenc

y

Median time not-moving was 13 hours. This was consistent across geography and type of service, but different by day of week. Weekday median 12 hours. Weekend median 14-16 hours.

How much waste – is it worth attacking?

Initial look using readily available data (8hrs not moving report )

Histogram of “Length of Idle Time”

1.A.a Types of Data Used for Selection1.A.b Reasons why Project was Selected

But was it worth attacking?

We tapped into available data that was used for exception reporting on locomotive dwell times.

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Initial look using readily available data to capture opportunity of8hrs not moving = ~ 1.9 million gallons of opportunity

Then looked at raw data to capture opportunity of 1 or more hours not moving = ~ 30M gallons of opportunity



A quick analysis led us to a more detailed review of locomotive movement data.

The answer was that we consumed 30M gallons / year while locomotives were sitting and running

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Initial look using readily available data to capture opportunity of8hrs not moving = ~ 1.9 million gallons of opportunity

Then looked at raw data to capture opportunity of 1 or more hours not moving = ~ 30M gallons of opportunity


YES


Yes – it was worth attacking

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Potential Stakeholders and Their Perspectiveat Project Inception

Senior Leadership Team

Locomotive Mgt and shop employees

Transportation Mgt and T&E employees

Finance & Purchasing

Environmental

Communities Served

Stakeholders: Key Measures:

Effectiveness& Efficiency

Effectiveness:shop production

Effectiveness:cars processed,train originations

EfficiencyDollars

Effectiveness: regulationsEfficiency: compliance

EffectivenessQuality of life

Stake:

Benefits, financials

Willing to help,don’t delay production

Willing to help, don’t delay production

Willing to help, sees costs continue to climb

Supportive, want emissionreductions

Support noise and emission reductions

While the “fuel pit” drove the project definition

Several potential stakeholders participated in the effort to define and launch the project, each bringing valuable perspectives, insights, and tradeoff concerns.

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1.A.a Types of Data / Quality Tools Used for Selection

• Analysis of historical, current, and projected data all supportedthe opportunities and need to reduce fuel consumption

• CSX uses 6 sigma, DMAIC methodology to support our core valuesFact Based, Right, Results the Right Way

• PIT+, 6s, BPMS, and other processes were utilized in the project selection, which are consistent with corporate goals.

• The project selection included:

These considerations: These measures:- Data availability and quality - locomotive idle time in hours- Projected benefits/savings - gals/hr consumed while idling- Sponsor commitment (burn rate)- Structural vs actionable gaps - shutdown performance- Internal and external % hours shutdown customer impact - historical total idle time

- Impact on existing initiatives - $/gal = cost of fuel

Recapping – project selection was done through a systematic look at existing process gaps and opportunities through CSX’s standard method of finding solutions to complicated problems, 6 sigma and DMAIC discipline.

The 6 Sigma team members and team training would allow us to select the most powerful analytic tool to apply against our data

to determine validity and potential, with the participation and involvement of a broad group of stakeholders.

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1.B Impact on Organizational Goals

Core Values:

• It Starts with the Customer – success dependent on satisfying needsof internal customers

• People Make the Difference – success from behavioral change

• Safety is a Way of Life – safe procedures for positive impact

• Fact Based – data driven

• Right Results, Right Way – process rigor

CSXT Vision:

To be the safest, most progressive North American railroad, relentless in the pursuit of customer and employee excellence.

Purpose:

To capitalize on the efficiency of rail transportation to serve America.

Organizational Goals

CSX has a clearly defined and articulated mission statement consisting of a Corporate Vision, Purpose, and Core Values.

Let’s take a look at how this project supports and aligns with our companies mission and key measures.

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1.B.a Affected Goals

Company Goals, Strategies, ObjectivesProject Impact How this project affects the objective

Company Vision: To be the safest, most progressive North American railroad, relentless in the pursuit of customer and employee excellence.

Inovative approach to measuring performance of a traditionally un-measured activity. Continuous improvement approach.

Company Purpose:To capitalize on the efficiency of rail transportation to serve America.

Increased efficiency by lowering fuel consumption and expense

Company Values:

It starts with the customer.Needs and behavior of internal customers will drive the success of the project

People make the difference.Requires engagement of broad team and locomotive user community

Safety is a way of life. Customer and data drivenFact based. Use of 6 Sigma tools

Right results, right way.Positive impact on the comunities we serve and the environment

Key Performance measuresOperating Ratio Lowering fuel consumption will reduce expense

On time departuresWill track starting issues to ensure train originations are not impacted

% of time Locomotives Out of ServiceReduced engine run times will lesson wear on locomotive components

Locomotive Fuel productivity (Gallons/KGTM) Reduced fuel consumption will reduce gallons/KGTMRight Car Right Train (RCRT) No impact on RCRTTrain Veleocity No impact on system train velocity Crew Availability Does not impact crew availablity

KEY: Positive impactPotential negative impact

White No impact

Corporate Metrics

When comparing the project objectives to our mission and key measures we found strong alignment and support.

Members of the team had concerns that as more units were shutdown we may see failures restarting them that could delay train departures – delaying train departures has customer impact and we must control this risk.

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1.B.b Type of Impact Corporate Impacts

Company Goals, Strategies, Objectives P

roje

ct

Impa

ct How this project affects the objective

Methods or Tools used to assess the types of impact the

project would have

Vision: To be the safest, most progressive North American railroad, relentless in the pursuit of customer and employee excellence.


Six sigma, PIT, periodic reviews of relevant data

Purpose: To capitalize on the efficiency of rail transportation to serve America.

Increased efficiency by lowering fuel consumption and expense PIT+ process and Driver trees

Company Values:

It starts with the customer.

Needs and behavior of internal customers will drive the success of the project

Cross-functional team, FMEA - recognize and prevent any colateral effects

People make the difference.Requires engagement of broad team and locomotive user community Change Accerleration Process (CAP) tools

Safety is a way of life. Project reduces exposure to emissionsGovernment emissions credits

Fact based. Use of 6 Sigma tools

MSA on primary measurement system / DMAIC approach


Validated measurement system that is consistant and actionable at applicable levels

Key Performance measures

Operating RatioLowering fuel consumption will reduce expense Shutdown performance


Team FMEA. Track train originations & field feedback

% of time Locomotives Out of ServiceReduced engine run times will lesson wear on locomotive components Team conclusion of "subject matter experts"

Locomotive Fuel productivity (Gallons/KGTM)Reduced fuel consumption will reduce gallons/KGTM Shutdown performance, KGTM / tracking

These three columns are carried over from the previous slide with methods

and tools added to the matrix

Multiple tools were used when we assessed the types of impact the project could have.

The tools included subjective tools such as SME input / FMEA / change acceleration process or CAP tools and Driver Trees.

and analytical tools to validate the Measurement System and review historical and ongoing performance of the project and the companies key performance measures.

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1.B.c Methods /Tools Determining Degrees of Impact

The Shutdown Performance MeasurementPercent of Locomotive Shutdown Using GPS Ping Data

for Non-moving Events

Data downloaded every 24 hrs and reports generated daily (24hr delay)for all GPS equipped locomotives. Data used by this project includesevents > or = one hour.

GPS = Global Positioning SystemPing = Data Transmission Event

GPS equipped Locomotive

(78%)

Satelliterelay

Receiving station

Data processingcenter

An example of one method used to track the degrees of impact the project would have was the development of the shutdown performance measurement.

78% of our locomotive fleet is equipped with the GE pinpoint TM system.

This system generates an automated transmission each hour that provides information about the status of the locomotive and whether it has moved since the last transmission.

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Locomotive IDTime-locationMilepost of reportingGPS message typeCity of reportingState of reportingLatitude of reportingLongitude of reportingFuel level in gallonsHours since last movementLoco running or shutdown

0 = main engine shutdown; APU ok1 = main engine running isolated; APU ok2 = main engine running with power; APU ok3 = main engine shutdown; APU failed4 = main engine running isolated; APU failed5 = main engine running with power; APU failed

GPS interface statusFuel monitor interface statusGPS antenna status

Equipment failure alarm0 = no equipment failure1 = maintenance mode2 = equipment failure

GPS Ping Data Conversion – What Does it Mean

GE Harris Data CenterGE Harris Data CenterMelbourne, FloridaMelbourne, Florida

CSX SystemsCSX Systems

The hourly message contains several pieces of information, but for this project we focused on 4 items.

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Locomotive IDTime-locationMilepost of reportingGPS message typeCity of reportingState of reportingLatitude of reportingLongitude of reportingFuel level in gallonsHours since last movementLoco running or shutdown

0 = main engine shutdown; APU ok1 = main engine running isolated; APU ok2 = main engine running with power; APU ok3 = main engine shutdown; APU failed4 = main engine running isolated; APU failed5 = main engine running with power; APU failed

GPS interface statusFuel monitor interface statusGPS antenna status

Equipment failure alarm0 = no equipment failure1 = maintenance mode2 = equipment failure

GPS Ping Data Conversion – What Does it Mean

GE Harris Data CenterGE Harris Data CenterMelbourne, FloridaMelbourne, Florida

CSX SystemsCSX Systems

Locomotive I.D. it’s location, the number of hours since last movement and whether the unit was running or shutdown.

After validating that the pinpoint equipped fleet had the same mix of engine type and service as the overall fleet.

We treated the hourly message or “ping” as an unbiased sampling of the fleet.

Looking only at the pings where the locomotive had not moved for an hour or more – we measured the percentage of these pings where the locomotive was shutdown.

This gave us an unbiased measurement to gauge our shutdown performance and to measure the projects impact and value.

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1.B.c Methods / Tools Determining Degrees of Impact

26M Gals

Cumulative % of locomotive idle time by TemperatureDrives Savings Opportunity

32º - 24.80%

40º - 37.63%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

-31

-20

-13 -5 2 9 16 22 28 34 41 47 53 60 67 73 81

28 - 19.91%

Opportunity > or = 40= ~20M Gals

Opportunity < or = 40= ~10M Gals

Opportunity in Gallons for Percent of Idle Time by Temperature

Once the measurement was defined, we used our archive of pinpoint data to establish an historical baseline.

Then tied in temperature data from the NOAA to understand our historical capability and size the projects opportunity.

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1.C Impact on Stakeholders

Potential Stakeholders

SLT and Champions



Finance and Purchasing

Environmental

Communities Served

Stakeholders: Key Measures:

EffectivenessEfficiency

Effectiveness

Effectiveness

Efficiency

Effectiveness

Effectiveness

Impact:

Savings opportunity $30M.No decrease in on-time departures

Requires behavioral change and decrease in locomotive maintenance

Requires behavioral changes and reduces fuel expense

Less fuel needed

Potential emissions reductioncredits. Stewardship of naturalresources

Reduced noise and emissions

You’ll recall from our earlier discussion of potential stakeholders that the project had received initial stakeholder support – after all they were involved in it’s germination and selection.

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Supplier(s) Inputs Process Step

Outputs Customers

Dwell event

S I P O C

Identify the need

for shutdown

Manual shutdown

and secure

1.C.a Identification of Stakeholders

Ambient temperature

Length ofdwell

Health of locomotive

Need for compressedair source

Shutdownand secure

Allow locomotiveto idle

T&Eemployee

T&EMgt.

LocoShop Mgt.

LocoShop

employee

Savingfuel

SLTChampion

Finance

Communities

Fieldmgt

Purchasing

Environment(Government)

Team Identification of Potential Stakeholders

Team final validation of potential stakeholders was conducted by using a SIPOC, with the Suppliers and Customers included as project stakeholders.

Let’s look at the stakeholders’ perspectives and how they will be impacted.

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Finance / Purchasing:•Validates savings•Current budgets•Future plan

TransportationDepartment.

LocomotiveDepartment

Communityand

EnvironmentalIssues

Team with 6σ Support

SLT / Champion:•Soften resistance•Allocate resources•Performance metrics•Air cover•Goals

1.C.a Identification of Stakeholders

= Involvement shown onfollowing pages

The Senior Leadership Team and project champion are very supportive and critical for the projects success. They will address resistance, allocate resources, and ensure project goalscascade through the organization.

The finance and purchasing stakeholders will track and validate savings, ensuring budgeting activity reflects project success –tying in the budget process will further commit functional departments to the project.

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1.C.a Identification of Stakeholders1.C.b Types of Impact on Stakeholders

Locomotive shop and service center management and employeesagree that idle reduction can and should be improved – but:

• Concerned that locomotive will not restartonce they are shutdown

• Production will suffer if a restart (jump start) isrequired of a previously shutdown locomotive

The employees that manage and work in our locomotive shops and service centers agree with the project aim – reducing fuel consumption while locomotives are non-productive is a great concept – but they have concerns.

Success means they will need to shutdown and restart locomotives more often. This is more work particularly if locomotives don’t restart and need to be assisted. Re-starting problem can hurt their facility throughput and take resources away from their primary tasks.

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Transportation management and T&E employees are fue lconscious, and want to help – but:

• Concerned that a restart of theirlocomotives may cause yard delays

• Initial start-up takes more time than having an idling locomotive waiting

• Why shutdown locomotives for a short period of time, lunch, coffee,phone call, etc.

• At outlying points they may not start, no locomotive maintenance assistance


Employees in train and engine service or T&E operate our trains and provide the value added service that is our companieseconomic engine, they are very fuel conscious.

But – they too have concerns that locomotives won’t restart easily - delaying trains, hurting production and degrading service to our customers.

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� Hanson, Massachusetts Residents Say Train Rest Stop Leaves Engine Idlingat Night, Disturbing their SleepHanson, Massachusetts residents have complained that a Railroad locomotive makes regular rest-stop breaks at night, stopping the loudly idling engine near their homes and disturbing their sleep.

� Judge Gives Railroad Another Month to Address Noise Complaints from IdlingEngines at Franklin Lakes, New Jersey; Railroad Uns ure If Adding AdditionalTracks Elsewhere Is Feasible

� Diesel Fumes Disturb Residents From Two More Commun ities in Quebec; Join Class Action Suit Against Two Canadian Railway s

Additional Benefits in the Form of Reduced Noise an d Air Pollution:

Community & Environmental Issues


Our environmental group is a project supporter. They envision fewer noise and air pollution complaints and opportunity to gain emission reduction credits.

The environmental group serves as the internal voice for the communities we serve. Increased sensitivity to noise and air pollution from idling locomotives allows this constituency to benefit from improved locomotive shutdown.

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1.C.b Types of Impact on Stakeholders

Stakeholders

SLT &Champion

LocomotiveMgt / ShopEmployees

TransportationMgt / T&EEmployees

Finance &Purchasing

Environmental

Communities

StrongAgainst

ModeratelyAgainst

X

Neutral

X

ModeratelySupportive

Y

X Y

X Y

X Y

StrongSupportive

X

Y

Stakeholder Analysis (Black belt feedback to champion)

Key:X = CurrentY = Proposed

Discussions with the cross-functional team, field visits, and interviews led to our stakeholder analysis summarized here.

The next step was an influence strategy.

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1.C.b Expected Resistance

Influence StrategyLevels of Resistance:Low = no impactMedium = project delay likelyHigh = possible project failure

Key Stakeholder

Impact Reasons for Resisting Change

Level of Resistance (High, Medium, Low)

Strategy for Dealing with Resistance

SLT and Champion

Savings opportunity $30M No decrease for on-time originations Higher priorities Low

Celebrate success and reinforce Leverage high level support

Locomotive Mgt / Shop Employees

Potential decrease in locomotive maintenance

More work Not important to locomotive Medium

Leverage high level support Track performance & reward successes

Transportation Mgt / T&E Employees

Neutral to current measures

More work Fear that units won't restart - impacting key process High

Leverage high level support. Track performance & reward successes

Finance & Purchasing Less fuel needed None None NoneEnvironmental Air pollution standards None None NoneCommunities Less noise polution None None None

To be successful we would need to maintain and leverage the support of the SLT while increasing support from two key stakeholder groups:

Locomotive shop and service center employees

and

Our train and engine or (T&E) personnel

We not only needed the support of these groups, but we needed them to change behavior.

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1.C.c Stakeholder Validation of Impact

Team concurred after reviewing X’s that Risk Priori ty Number(RPN) > 200 required action

Developed Stakeholder Concerns & Current Controls

Failure Modes and Effects Analysis (FMEA)

Process Step/Input

Potential Failure Modes (process defects)

Potential Failure

Effects (Y's)

SEV

Potential Causes of Failure (X's)

OCC

Current Process Controls

DET

RPN

Shutdown decision

Employee not permitted to shut down locomotive Wasted fuel

9 Not able to determine sit time, when will

locomotive be needed again

6

Direction by employee in charge, yardmaster, train dispatcher, or other proper authority

7 378

Shutdown decision

Employee not permitted to shut down locomotive Wasted fuel 9

Needed to maintain air pressure 6 Rule 5401

6 324Shutdown decision

Employee not permitted to shut down locomotive Wasted fuel 9

Units tagged with starting system failures 5

Educational memos

7 315

Shutdown decision


9

Lack of current and anticipated weather information, ambient

temp

6 Engineer reading file / rule 5401

5 270

Shutdown decision


9Confusion about

automated shutdown systems

4 Location specific information

6 200

Shutdown decision

Employee does not shutdown locomotive Wasted fuel 9

Rule knowledge, attitude 6

Engineer reading file / rule 5401

5 270

Our project team worked through an FMEA to understand the degree of impact the project would have on stakeholders and the causes for potential resistance.

At this point we’ve seen that the project was selected based on process gaps and opportunities, it clearly aligns and supports the companies’ mission, strategies, and measures and has broad stakeholder support and participation.

We now have a better understanding of the type and degree of impact the project will have on stakeholders and some expectations for where resistance will arise.

Now it’s time to start the work!

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2.A Potential Root Causes

• Process map of locomotive shutdown process• Ownership at all process steps• GPS Ping data by location, time of day, temperature, and length of dwell

Locomotive

Transportation

Process Approach

The team began by walking the process, understanding the decision points and the information available at those decision points, recognizing ownership at each process step, and slicing the historical data for clues as to where the process was weakest.

Let’s take a look…

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2.A.a Root Causes / Opportunities

SME Insights to Potential Root Causes from FMEA

• Employee knowledge and attitude

• Current and expected ambient temperature

• Dwell time of locomotive

• Actionable opportunities

• Applicable Rule regarding when to shut down

• Health of locomotive

The project team’s FMEA provided initial insight into potential root causes

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Questionnaire Mailed to all Locomotive Engineers Ho mes2.A.a Root Causes / Opportunities

Achieved: Affirmation of shutdown compliance and fuel saving feedback and ideas

A questionnaire was sent out to all engineers to serve as a fuelshutdown reminder and affirmation.

And to gain their feedback and ideas.

The responses generated some new ideas and affirmed the results in our FMEA.

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Shutdownand Secure

DwellEvent

YesYes

Isolate and Secure

No No

Needed to Maintain Air

Pressure

HealthyStartingSystem

AmbientTemp> 35

Not Needed

> 15 Mins

Yes

Yes

Isolate and Secure

Isolate and Secure

Isolate and Secure

No

No

CTQ: Locomotives are to be shutdown when not used for thirty (30) minutes or longer, ambient temperature is anticipated to beforty (40) degrees or higher; not required as an air supply

Who: T&ELoco Ops

T&ELoco Ops

Loco Ops T&E

Process Ownership2.A.a Root Causes / Opportunities

The process we are dealing with appears fairly simple.

To be successful we must improve the locomotive operators decision and their willingness to execute that decision as they finish use and step off the locomotive.

This is the critical decision point where they either shutdown the locomotive or allow it to idle.

To be successful we must effect the behavior of over 8,000 employees in hundreds of locations, spread over the eastern half of the country.

These operators may be locomotive operations employees working within the confines of a shop / service center,

in a major yard or outlying points.

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Shutdownand Secure

DwellEvent

YesYes

Isolate and Secure

No No

Needed to Maintain Air

Pressure

HealthyStartingSystem

AmbientTemp> 35

Not Needed

> 15 Mins

Yes

Yes

Isolate and Secure

Isolate and Secure

Isolate and Secure

No

No

Team concurred after reviewing X’s that Risk Priority Number (RPN)greater than 200 required action

Burn rate at idle = ~4 gallons/Hr45% of the time locomotive at idle = $30M

378 270 315 324RPN score:

FMEA / RPN Driven Focus

2.A.a Root Causes / Opportunities

The team looked at which steps in the process had the highest RPN scores to continue the identification of root causes.

4141414141414141

Cause & Effects Matrix

2.A b Team Analysis of Data

Team Participation in Root Cause Analysis

• Transportation – operations management, support management, and labor• Locomotive – operations management and support management and labor• Finance / Purchasing – support management • Six sigma – master black belt and black belts• Environmental – support management • Community – silent partner

Rating of Importance to Customer 10 10 10 10 9 81 2 3 4 5 6

Process Step Left

Idle

Shu

tdow

n

Aut

omat

ed S

hutd

own

Sys

tem

On-

time

Dep

artu

res T

empe

rat

ure

Rul

es

Kno

wle

dge Total

1 Dwell Period Starts Train Arrival 9 0 1 0 3 3 151" Time left to work 3 3 0 0 9 0 141

" Idle locomotive coordination9 9 9 9 9 9 513

" Train Schedule 1 9 0 9 0 3 2142 Not needed for > 15 minutes Time left to work 3 9 0 0 3 0 147

" Idle locomotive coordination9 3 0 0 3 9 219

" Train Schedule 1 1 0 0 9 0 101

" Locomotive Plan 9 9 1 0 3 0 217

3 Ambient Temp > 40 degrees FahrenheitIdle locomotive coordination

9 9 9 9 9 9 513

" Scheduled Trains 9 3 0 0 3 9 219

" Weather source 9 9 9 9 9 1 449

The FMEA was used to identify issues of critical importance to the stakeholders and to view the issues in context with all stakeholder’s involvement.

The team also worked through a C&E matrix to validate the insights from our FMEA, relate the inputs to customer requirements and prioritize potential root causes.

4242424242424242

Example of Ping Data from GPS equipped locomotives – 2003Shutdown engines by hours running and not moving by location

Team Review of Location vs Location

Region (All)Division (All)Location (All)

APU equipped vs non APU equipped - Year over Year Shutdown performance for the System% Shut down Year APU Year over Year Shutdown performance for the System

2003 2003 Total 2004 2004 Total

Week N Y N Y WeekNo APU -

20031 12.9% 61.3% 26.7% 14.9% 62.7% 36.6% 01 12.91%2 12.6% 58.0% 26.1% 15.5% 60.4% 36.3% 02 12.62%3 11.3% 55.1% 25.0% 12.6% 55.9% 33.3% 03 11.26%4 12.3% 52.9% 24.8% 13.4% 54.3% 32.4% 04 12.33%5 15.0% 55.1% 27.6% 13.3% 50.9% 30.5% 05 14.99%6 16.9% 62.2% 31.1% 14.3% 52.1% 32.1% 06 16.85%7 15.2% 61.5% 30.3% 15.4% 52.4% 32.5% 07 15.22%8 13.9% 62.3% 28.8% 15.3% 55.5% 34.0% 08 13.89%9 17.1% 63.8% 32.5% 17.4% 54.6% 34.6% 09 17.13%

The graphs will change to reflect the values selected for Location, Division or Region.

Drill-down of data from a system level to a specific location (terminal)How used: team identified differences among locations


While we developed SME insights from our C&E and FMEA, we investigated hard data sources to confirm our SME insights.

The hard data we used was the GPS Ping data on our locomotive fleet

4343434343434343

Year over Year Shutdown performance for the System - all pinpoint equipped units

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

01 04 07 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Week

2004 2003

Validated Ping Data Supports Performance Outcomes

System

Region Year over Year Shutdown performance for the Norther n Region

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

01 04 07 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Week

2004 2003

Year over Year Shutdown performance for the Albany Division

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

01 04 07 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Week

2004 2003

Division


Year over Year Shutdown performance for Buffalo, Ny

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

01 04 07 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52

Week

2004 2003Terminal

In our review of GPS data, we were able to drill down to identify shutdown practices & activities by location.

4444444444444444

2.A.c Stakeholder Involvement

Stakeholder Roles, Involvement and Impact ofContribution to Root Cause Analysis

SLT and Champion



Finance andPurchasing

Environment /Communities served

Black Belt support

Who: Role:

Secure resources

Locomotive Engineering support

Advise on issues perceived byend users

Finance / budgetanalysis

Help identify “other’occasions of shutdown opportunity

Data analysis

Responsibility:

Monthly champion reviews and oversight

Validate impropershutdownsEvaluate starting systemissues and failures

Evaluate failuresIdentify exceptions for missed opportunities

Not process ownersProvide cost per gallon

Support through ideageneration

Perception on process variationEffectiveness of current controls

Impact:

Low

High

High

Medium

Low

High

Levels of Impact:Low = support roleMedium = validationHigh = SME’s

During this process each team member contributed as his expertise provided.

Field officers contributed process steps and helped us evaluate failures and understand location differences.

The finance / purchasing representatives validated savings estimates.

The black belts developed validation of SME insights and beliefs

SLT provided timelines and expectations of success.

4545454545454545

2.B Team Analysis

Team Analysis of Root Causes

� SLT / Champions – monthly meetings – oversight, resource support

� Cross functional team - SME / FMEA / process map / C&E / benchmarking – develop issues list

� MBB / BB – ANOVA, Regression, Moods Median – provide statistically relevant data

� Project team – manage analysis, agree on root causes

� Finance – validate dollars / impact

The identification and analysis of root causes started with subjective insights followed by data collection and analysis.

Providing the facts that led to team agreement around root causes.

All team members contributed.

4646464646464646

2.B.a Methods & ToolsRoot Cause Roadmap

Why:Who:

Process map

FMEA

C&EA

Questionnaire / survey

MSA

Statistical tests (ANOVARegression, Mood Median)

Team agreementon results

Full team

Full team

Full team

Sent by sub teamFull team review

BB & team support

MBB / BB

Full team

Tool (How):

Understand process& potential failure points

Develop customer concernsPrioritize suspect key drivers

Further validate SME insights

Get operators perspective to support / refute SME insights

Validate GPS data

Validate SME insights & finetune solution set of individualtools selected based on mostpowerful test data allowed

Affirmation of results – lockIn commitment

The process involved a wide variety of tools based on the type of information and data available.

The process also created a common perspective and commitment within the team.

4747474747474747

2.B.b Team Analysis to Final Root Causes

Measurement System Analysis (MSA) of GPS Ping Data

Set up live scenarios using a GPS equipped locomotives:

• At four (4) specific locations (terminals)• Shutdown or idling for a specific period of time• Moved to various locations within the terminal• All data recorded

Validated field data with GPS Ping data:30 locomotives / 250 samplesResults = 100% agreement

Unit Date TimeObserved Running

Observed Hrs Since Movement

Ping Data Running

Ping Data Hrs Since Movement Agreement

132 20-Jun 10:30 No 0 No 0 Yes5754 24-Jun 9:00 No 1 No 1 Yes8832 15-Jul 13:30 Yes 0 Yes 0 Yes707 16-Jul 13:30 No 2 No 2 Yes202 16-Jul 16:00 Yes 1 Yes 1 Yes

" " " " " " " Yes" " " " " " " "

An MSA of the GPS data validating location and shutdown status allowed us to use this data and provide the team with detailed information on individual location’s shutdown activities.

4848484848484848

Rule 5401 - Conserving Fuel

� A. Using fuel conservation methods

— Use fuel conservation methods at all times, as follows:

� Place reverser lever in the CENTER position anytime the locomotive is stationary.

� To the extent possible, avoid using the stretch braking method of speed control.

� Avoid having more locomotives on-line than those required to maintain the maximum speed permitted.

� Empty coal train movements will use only the locomotives necessary to move the train. Trailing locomotives will be isolated and, when weather permits, shut down.

� When handling lite locomotive movements, use only the lead locomotive for power. Trailing locomotives will be isolated and, when weather permits, shut down.

� Unless instructed otherwise by train dispatcher or yardmaster, shut down diesel engines in locomotives when:

− The locomotive will not be used for (30) minutes, and

− Ambient temperature is above forty (40) degrees Fahrenheit

� Engineers must ask the train dispatcher, yardmaster, or work train employee-in-charge to determine the anticipated length of time the locomotive will not be used.

� If necessary to do so, you may allow one diesel engine to idle in order to maintain an air supply to the train.

CSXTransportation Fuel Conservation Rule (pre proje ct)


Key Issues

At CSX rules drive behavior, they are our Standard Operating Procedures or SOP’s.

We needed to look at the rule that governed fuel conservation.

We believed idle time and ambient temperature were the key variables in the rule.

4949494949494949

Benchmark – Locomotive Shutdown Temperature


Compared CSX’s Shutdown Rule 5401 to Other Class I Rail Roads

Established comfort level that thresholds of lower temperatureand shorter periods of time are attainable, but wit h additional RISK

Standards BNSF CN CP NS UP CSX

Temperature Threshold > 40 > 40 > 40 >32 > 40 >40

Idle Time Threshold

1hr. or longer

10 mins. or longer

30 mins. or longer

30 mins. or longer 1hr. or longer

30 mins. or longer

Lower Temperature Opportunities None

> 1hr. but < 8 hrs. at or above

34 None

< 12 hrs. temp not to drop below 28 None None

Shutdown Rule Comparisons

The team benchmarked other railroads shutdown practices to determine what risk levels our railroad brothers would accept.

Practices at other railroads supported lower temperature and time thresholds.

The team felt it was worth studying further.

5050505050505050

Solution Tree

Process Variation Measurement Variation

EmployeeEmployee

LocationLocation

Length ofDwell

SeasonSeason

TempTemp

Day of Week

2.B.b Team Analysis of Final Root Causes

Data Integrity

audit = 100%

P = 0.00P = 0.00 P = 0.00 P = 0.00 P = 0.00

Fuel Conservation

Rule 5401

ABTH Rule 5401 governs allconditions for manual shutdown

Regression QuestionnaireSME

ANOVA GPS /ANOVA

Mood’sMedian

ANOVA

CTQ: Locomotives are to be shutdown when not used for thirty (30) minutes or longer, ambient temperature is anticipated to beforty (40) degrees or higher; not required as an air supply

The team’s solution tree identified several factors that had statistical significance to shut down performance, most were constrained by our fuel conservation rule.

5151515151515151

OneOneOneOne----way ANOVA: Percent versus Region (Ping Data)way ANOVA: Percent versus Region (Ping Data)way ANOVA: Percent versus Region (Ping Data)way ANOVA: Percent versus Region (Ping Data)

P value = 0.00 P value = 0.00 P value = 0.00 P value = 0.00

Individual 95% CIs For MeanBased on Pooled StDev

Level N Mean StDev -------+---------+---------+---------BUS UNIT 767 7.15 22.10 (-*-) CASO 605 34.84 44.28 (-*-) CENTRAL 4032 17.98 36.21 (*) MIDWEST 2254 17.08 35.01 (*) NORTHEAS 3475 13.35 31.74 (*) OFFLINE 1310 40.96 46.66 (*-) SHOPPED 1507 19.93 34.13 (-*) SOUTHERN 5807 16.41 34.91 (* WESTERN 3978 14.06 32.08 (*)

-------+---------+---------+---------Pooled StDev = 34.89 12 24 36

Location Statistically Significant


Here is one example of the analysis that shows clear differencesin performance by location.

5252525252525252

Daily low temperature - AlbanyJan 1 - Dec 31, 2003

-20

-10

0

10

20

30

40

50

60

70

80Te

mpe

rature

Weather Affects Shutdown Performance

% of Idle time shutdown - Albany Division in 2003

0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

02 05 08 11 14 17 20 23 26 29 32 35 38 41 44 47 50

Week


It was also clear that shutdown performance was impacted by temperature.

5353535353535353

Minimum Temperature during dwell event

Shutdown Performance

806040200

1.0

0.8

0.6

0.4

0.2

0.0

S 0.138058

R-Sq 64.7%

R-Sq(adj) 64.6%

Fitted Line PlotSD Perf = 0.01828 + 0.008694 MINT

Temperature Affects Shutdown Performance


And the regression results gave us clues that individuals had different interpretation s as to what the temperature was.

There was not a steep jump in performance as temperature hit 40 degrees, but a linear increase as temperatures climbed.

5454545454545454

EmployeeEmployee

LocationLocation

Day of Week

SeasonSeason

Length of Dwell

TempTemp

2.B.c Root Causes & Validation

Manual shutdown performance declines as temperature lowers• US weather service / GPS Ping shutdown data /

Employees take the most conservative approach as temperaturevaries (avoid restart issues)• SME / employee questionnaire

Largest amount of variation (location to location)• ANOVA / GPS Ping shutdown data

Data confirms that we are not always able to know / predict dwellThe longer a unit sits at a specific location, the more likely we are to shut it down. • GPS Ping shutdown data / ANOVA

Confounded with length of dwell (Sat & Sun experience longer dwell)• GPS Ping shutdown data / ANOVA

Seasonality a key driver to Manual shutdown – confounded by temperature • US weather service / GPS Ping shutdown data / Mood’s Median

Team Analysis of Data:Validated through statistical tests and SME input

Validation involved statistical tests, questionnaire, benchmarking, and SME support.

- we learned a lot.

Location to location had the greatest variation, this and employee to employee differences validated SME insights that rule reinforcement and knowledge variation were paramount in this process.

Mood’s Median test supported seasonality, with ANOVA tests supporting temperature, length of dwell and location as key drivers.

And our rule constrained many of these variables

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2.B.c Final Root Causes & Validation

Why are Idle Locomotives Left Running

• ABTH Rule 5401 � our SOP for manual shutdown

• Rule compliance & knowledge� supported by employee, seasonality, location and day of the week data

• Health of the locomotive� is dependent upon employees, temperature, and length of dwell

• Uncertain knowledge of current conditions� is driven by temperature and length of dwell

LocationLocation

Day of Week

EmployeeEmployee

TempTemp

EmployeeEmployee

Length of Dwell

SeasonSeason

ABTH Rule 5401 is SOP

TempTemp

Length of Dwell

The outcome of our analysis as to “why locomotives are left running” was:

Provisions of our rule.

Rule compliance and knowledge by the responsible individual

Health of the locomotive (can we ensure the locomotive will restart)

And accurate information about current conditions

5656565656565656

3.A Possible Solutions3.A.a Methods & Tools

Possible solutions:• Rule change (time & temperature variables)• Increase employee awareness & rule adherence (training,

communication and auditing)• Reduce locomotives used to maintain air• Improve starting system health (address resistance)• Standardize delivery system of temperature information

Team Identified Final Root Causes – Generated Possib le Solutions

Identified need to have rule and behavioral changes

Improve FMEA

Process Step/Input

Potential Failure Modes (process

defects)

Potential Failure

Effects (Y's)

SEV

Potential Causes

of Failure (X's)

OCC

Current Process Controls

DET

RPN

Actions Recommended

Responsible Party

Action Taken

SEV

OCC

DET

RPN

Shutdown decision


9Not able to

determine sit time, when will locomotive be needed again

6

Direction by employee in charge, yardmaster, train dispatcher, or other proper authority

7 378

Identify responsible party for consistant message

Yardmaster Train dispatcher

9 5 4 180

Shutdown decision


9Needed to

maintain air pressure

6

Rule 5401

6 324 Install additional yard airplants

Local management

Outside of project scope

9 6 6 324

Shutdown decision


9 Units tagged with starting system

failures

5

Educational memos

7 315Evaluate SOP for charging system issues

Locomotive management

Oversight team established

9 4 4 144

Shutdown decision


9

Lack of current and anticipated

weather information,

ambient temp

6

Engineer reading file / Rule 5401

5 270

Provide weather source and updates for crews

Operations center

Weather service contract in place

9 4 5 180

Shutdown decision


9

Confusion about automated shutdown systems

4Location specific

information

6 200

Now that we have causes the team brainstormed possible solutions and used an improve FMEA to begin to gauge their potential value.

Possible solutions fell into two buckets

Increasing our shutdown opportunities and

Improving shutdown performance where the opportunity existed

Let’s walk through one example of the analysis.

5757575757575757

Water Temperature Decay Recorded on Sample Shutdown LocomotivesWater Temperature Decay Recorded on Sample Shutdown LocomotivesWater Temperature Decay Recorded on Sample Shutdown LocomotivesWater Temperature Decay Recorded on Sample Shutdown Locomotives

Water temperature decay for units shutdown at vario us outside temperatures (all samples were EMD units)

0º

20º

40º

60º

80º

100º

120º

140º

160º

180º

0.0 2.0 4.0 6.0 8.0 10.0

12.0

14.0

16.0

18.0

20.0

22.0

24.0

26.0

28.0

30.0

32.0

Time in hours since shutdown

Wat

er te

mpe

ratu

re a

t the

dum

p va

lve

1º 14º-1º 19º-21º 24º-17º

28º-21º 32º-27º 54º-28º 55º-37º

34º-39º 71º-39º 39º-51º Model at 28º

Outside temperature during shutdown period

3.A.b Teams Analysis of Data

Team review of temperature options; acceptable shutdownrisk for possible rule change

We believed we could increase shutdown opportunity by adjusting the parameters of the rule, but needed to understand the risk.

We collected data from temperature gauges installed in the water return system on a sample of units in colder weather.

Each of the units had a dump valve installed so that the engine water would automatically drain when it reached 40 degrees preventing any possible freeze damage.

5858585858585858

Temperature decay for unit 2614 with outside temp dropping to 37º

0

50

100

150

200

0 2 4 6 8 10 12 14 16 18 20

Time in hours

Wat

er te

mp

at d

ump

valv

e

2614 Model Model @ 28

Regression hit 40º after 14 hours @ 28º

Locomotive Cooling System Temperature DecaySupports Lower Shutdown Threshold

The two units that

indicate a 14 hour

timeline to 40º

3.A.b Teams Analysis of Data

Temperature decay for unit 6204 with outside temp dropping to 39º

020406080

100120140160

0 2 4 6 8 10 12 14 16 18 20 22 24

Time in hours

Wat

er te

mp

at d

ump

valv

e

6204 Model Model @ 28

Regression hit 40º after 14 hours @ 28º

This data was modeled to predict behavior at different air temperatures.

5959595959595959

� A regression of the sample units indicates:

— At 28º ambient temperature, it should take 32 hours for water temperature to reach 40º

— At 28º ambient temperature, it should take 52 hours for the water temperature to reach freezing

� However, each locomotive has a different heat transfer rate

— The data on two of the units indicates they would reach 40º in as quickly as 14 hours and begin freezing at 25 hours

� While some variation in unit to unit exists, we can tolerate risk at 35ºfor shutdown without unusual risk of locomotive (engine & components) damage

� At 35º ambient temperature, locomotive cooling water will never reach freezing

What Did we Learn / What are our Concerns What Did we Learn / What are our Concerns What Did we Learn / What are our Concerns What Did we Learn / What are our Concerns

3.A.c Criteria for Final Solutions

Higher risk,would needmonitoredat 28º

Tolerablerisk at35º

The regression model from the temperature data detailed the risk exposure at different temperature levels.

6060606060606060

High

Low High

Ease of Implementation

Val

ue to

Impl

emen

tatio

nTeam Review of Final Root Causes / Solutions

3.A.c Criteria for Final Solutions

Reducelocomotives

used to maintain

air

Time &TemperatureThresholds

Healthy Locomotive

StartingSystem

Behavior &Knowledge

RuleChange

In a similar manner, the team reviewed other potential solutionsand the relationship between ease of implementation and expected value.

6161616161616161

3.B Determining Final Solutions

Relevant Issues

• 28º shutdown possible at specific shop locations

• Heat loss stable @ 35º with acceptable risk

• Manual shutdown is time and temperature sensitive

• Employee knowledge of ABTH Rule 5401 and their knowledge ofcurrent conditions drives behavior

The teams good work has identified several actionable items.

•Rule drives behavior

•Shutdown is time & temperature sensitive

•We can tolerate lower temperature shut down practices

And employees knowledge of the rule and current conditions drives the results.

We believed a rule change and increasing employee awareness would drive the results, but needed to finish the analysis and make sure we had broad support.

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Cumulative % of locomotive idle time by Temperature

35º - 30.44%

28º - 19.91% 32º - 24.80%

40º - 37.63%

0%10%

20%30%

40%50%60%

70%80%

90%100%

-31

º

-20

º

-13

º

-5º

3º

10º

17º

23º

29º

35º

42º

48º

55º

62º

69º

77º

84º

WhatWhatWhatWhat’’’’s it worth to lower our shutdown temperature from 40s it worth to lower our shutdown temperature from 40s it worth to lower our shutdown temperature from 40s it worth to lower our shutdown temperature from 40ºººº to 28to 28to 28to 28ºººº ????

Outside temperature at start of not moving period

% of to

tal not m

ovin

g time at o

r belo

w th

is temp

eratu

re

17.7% of our locomotive not moving time occurs between 28ºand 40º. This equates to an annual opportunity of ~ 4.6M gallons.

3.B.a Methods & Tools

We looked at the expected fuel savings impact of a lower shutdown temperature threshold.

6363636363636363

3.B.b Team Analysis of Data

Ris

kAt 40º dump valve can drain cooling water –operational disruption

At 32 water freezes – significant engine damage

How rapidly does the water temperature at the dump valve decay after the unit is shutdown?

Outside temperature

40º 35º 28º

40º39.5

Hours36.5

hours32.5

hours

32º never never 53 hoursHow

long

bef

ore

wat

er

tem

pera

ture

rea

ches

:

Risk

And further evaluated the risks based on water temperature decay regressions, the team developed Risk / Reward data to support the solution of lower temperature shutdown.

6464646464646464

Ris

kOutside temperature

40º 35º 28º

40º39.5

Hours36.5

hours32.5

hours

32º never never 53 hours

How

long

bef

ore

wat

er

tem

pera

ture

rea

ches

:

Add

edO

ppor

tuni

ty

Opp

ortu

nity None –

currentrule

4.6Mgallons

3Mgallons

Reward

Additional opportunities at lower shutdown temperat ures3.B.b Team Analysis of Data

Reward opportunities were developed based on our cumulative frequency chart reviewed earlier.

6565656565656565

Suggested Changes

• At selected locomotive shops / service centers that are manned 24 X 7,the shutdown temperature threshold would be decreased from 40º F to28º F

• ABTH Rule 5401 would have a temperature decrease from 40º F to 35º Fand also reduce the time element from thirty (30) minutes to fifteen (15)minutes

• Both changes are based on benchmarking and validated by temperaturedecay regressions

3.B.b Team Analysis of Data

The team supports two rule changes with savings expectations well documented

And they recognized the need to improve rule compliance through a strong communication plan.

6666666666666666

3.B.c Stakeholder Involvement

Agree to Accept and

Manage Risk @ 35º

Finance / Purchasing6σ support

LocomotiveSelect locations

28SLT / Champion

TransportationEnvironmental /

Community

YES YES

YES YES

Stakeholder involvement in final decision

Team progressed rule change recommendation to Senior Leadership Team /Champion for adoption and implementation

YESYES

º

(monitor shift in performance)

(approve rule change)

(see improvement)

(validate savings)

(specific rule application)

(education of engineers)

These solutions were selected with the involvement of all stakeholders through both individual contribution and team concurrence.

The team universally endorsed the rule changes and the risk reward analysis, and jointly presented the proposal to the SLT for adoption.

6767676767676767

3.C Team Solutions

Final Team Solutions

Solutions:

Rule change from40º to 35º and from30 to15 minutesidle time

Additional opportunityat specific locomotiveshops / service centerLocations allowing formonitored shutdown to 28º

Improve employeerule compliance

Validation:

% of locomotiveidle shutdownpost rule change



Benefits:

Gallons savedNo impact ofon-time originations

Gallons savedNew measurement established

Gallons savedImproved rules compliance

The team’s solution set, analysis, and validation virtually guaranteed benefit generation.

6868686868686868

Cumulative % of locomotive idle time by Temperature

35º - 30.44%

28º - 19.91% 32º - 24.80%

40º - 37.63%

0%10%

20%30%

40%50%60%

70%80%

90%100%

-31

º

-20

º

-13

º

-5º

3º

10

º

17

º

23

º

29

º

35

º

42

º

48

º

55

º

62

º

69

º

77

º

84

º

Outside temperature at start of not moving period

% of to

tal not m

ovin

g time at o

r belo

w th

is temp

eratu

re

3.C.a Final Solution Validation

Final Solution Opportunities

3,800 locomotives subjectto temperature variation

The cumulative frequency chart validated the opportunity expectations that would come by lowering the temperature threshold in the fuel conservation rule.

6969696969696969

5401. CONSERVING FUEL

A. USING FUEL CONSERVATION METHODS

USE FUEL CONSERVATION METHODS AT ALL TIMES, AS FOLLOWS:

UNLESS INSTRUCTED OTHERWISE BY A TRAIN DISPATCHER, YARDMASTER, OR OTHER PROPER AUTHORITY, SHUT DOWN A LOCOMOTIVE'S DIESEL ENGINE WHEN

* THE LOCOMOTIVE WILL NOT BE USED FOR FIFTEEN (15) MINUTES.

* WHEN CURRENT AND EXPECTED TEMPERATURE DURING THE SHUTDOWNPERIOD IS ABOVE THIRTY FIVE (35) DEGREES FAHRENHEIT.

* IN COMPLYING WITH THIS RULE, PERFORM A MANUAL SHUTDOWN ON ALLLOCOMOTIVES CONSISTENT WITH ABTH RULE 5352 B, EXCLUDING THOSELOCOMOTIVES EQUIPPED WITH AN AUTOMATIC ENGINE START AND STOP(AESS) SYSTEM. AESS EQUIPPED LOCOMOTIVE/S NEED ONLY BE ISOLATED FOR COMPLIANCE.

* THIS INSTRUCTION APPLIES TO ALL ASSIGNMENTS INCLUDING YARDPOWER TYING UP FOR LUNCH AND AT THE COMPLETION OF THEIR SHIFT.

1. IF NECESSARY TO DO SO, YOU MAY ALLOW ONE DIESEL ENGINE TO IDLEIN ORDER TO MAINTAIN AN AIR SUPPLY TO THE TRAIN.

Key ABTH Rule 5401 changes September 2004Time and Temperature Thresholds

Key Changes:Time and TemperatureThresholds

3.C.a Final Solution Validation

The key elements of the rule change where:

1. Changing the temperature threshold from 40 degrees to 35 degrees.

and

2. Changing the expected shutdown time from 30 minutes to 15 minutes

7070707070707070

2. WHEN A TRAIN OR LOCOMOTIVE(S) ARE STOPPED, THE ENGINEER MUST CENTER THE REVERSER HANDLE TO ACTIVATE THE LOW IDLE FEATURE AND ALLOW THE AUXILIARYPOWER UNIT (APU) OR AUTOMATIC ENGINE START STOP (AESS) SYSTEM TO OPERATE ON EQUIPPED UNITS.

3. AVOID HAVING MORE LOCOMOTIVES ON-LINE THAN THOSE REQUIRED TO MAINTAIN THEMAXIMUM SPEED PERMITTED. HANDLE THE TRAIN IN A SAFE AND FUEL-EFFICIENTMANNER. USE DYNAMIC BRAKING AND THROTTLE MODULATION AS THE PREFERRED METHOD FOR SPEED CONTROL. AVOID USING THE STRETCH BRAKING METHOD WHEREVER POSSIBLE. NOTE: EMPTY COAL TRAIN MOVEMENTS WILL USE ONLY THE LOCOMOTIVES NECESSARY TO MOVE THE TRAIN.

4. WHEN HANDLING LITE LOCOMOTIVE MOVEMENTS, USE ONLY THE LEAD LOCOMOTIVEFOR POWER. NOTE: HELPER ENGINES MUST SHUT DOWN OR ISOLATE LOCOMOTIVES AT THE FIRSTSTOP, AFTER DETERMINING POWER IS NOT NEEDED.

5. WHEN ADVISED BY THE TRAIN DISPATCHER THAT THERE WILL BE A DELAY OF 30 MINUTES OR MORE FOR A LINE-OF-ROAD TRAIN, ALL LOCOMOTIVES EXCEPT THE CONTROLLING LOCOMOTIVE WILL BE SHUT DOWN OR ISOLATED. LOCOMOTIVES WILLBE RESTARTED PRIOR TO THE END OF THE DELAY TO ENSURE THE TRAIN IS READY TO PROCEED WHEN AUTHORIZED. (5 MINUTES PER LOCOMOTIVE WILL BE USEDAS A GUIDELINE FOR CALCULATING THE TIME NEEDED TO RESTART THE LOCOMOTIVES IN THE CONSIST).

6. WHEN A TRANSFER TRAIN, WORK TRAIN, YARD ASSIGNMENT, OR PUSHER LOCOMOTIVE WILL BE DELAYEDIN EXCESS OF 30 MINUTES, ALL LOCOMOTIVES WILL BE SHUT DOWN, OR ISOLATED. TRAIN AND LOCOMOTIVESMUST BE PROPERLY SECURED.

7. AFTER YARDING A TRAIN, ALL WORKING LOCOMOTIVES EXCEPT THE CONTROLLING UNIT WILL BE SHUT DOWN,OR ISOLATED. UPON ARRIVAL AT A LOCOMOTIVE SERVICING TRACK WHERE MECHANICAL DEPARTMENT PERSONNEL CANNOT TAKE IMMEDIATE CHARGE OF THE LOCOMOTIVES, ALL LOCOMOTIVES WILL BE SHUT DOWN, OR ISOLATED AND PROPERLY SECURED.

Key ABTH Rule 5401 changes September 2004 (continue d) 3.C.a Final Solution Validation

But this is just one element of the larger rule.

While we anticipate a significant impact, this is a relatively small change and could go un-noticed.

We will need to consider the communications plan as we implement.

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3.C.b Intangible & Tangible Benefits

Benefits Expected:

• Reduced noise and air pollution

• 3M gallons of fuel saved from Rule adherence of lower temperature thresholdand shorter time till shutdown given historic locomotive fuel consumption

• Track impact of fuel change to percentage of shutdown with GPS Ping dataand financial expense data

Savings = 4gallons/hour x idle locomotive shutdown hours x cost per gallon

Done with the locomotive?Temperature > = 35ºNot needed > 15 minutesShut It Down! Save Fuel!

Our intangible benefits, noise and emissions reductions

are a direct result of locomotives being shutdown.

The tangible benefits are clear and easily tracked with our GPSdata and financial reports.

We can measure the number of shutdown hours we gain and multiply by the burn rate and the price of fuel.

The burn rate of interest is the gallons of fuel consumed per hour when the locomotive throttle is in idle.

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MODEL LOW DYN

TYPE IDLE BRAKE

GP15 87.9 75.1 61.9 48.3 35.8 24.1 13.6 5.8 3.8 N/AGP15T 79.6 69.1 52.9 41.8 31.4 23.1 12.5 6.4 1.9 6.4MP15 87.9 75.1 61.9 48.3 35.8 24.1 13.6 5.8 3.8 3

MP15AC 87.9 75.1 61.9 48.3 35.8 24.1 13.6 5.8 3.8 3MP15T 79.6 69.1 52.9 41.8 31.4 23.1 12.5 6.4 1.9 6.4SD38 122 102 83 63 46 31 16 7 5 15

SD38-2 122 102 83 63 46 31 16 7 5 15SD40 167 145 108 79 57 41 24 7 5.5 21

SD40-2 167 145 108 79 57 41 24 7 5.5 21SD45-2 194 171 127 91 67 47 28 9 6 25SW1500 93 75 59 45 33 23 14 6 3.5 15B30-7 149 122 96 72 49 31 17 9 5 26

GP38-2 122 102 83 63 46 31 16 7 5 15GP39 128.8 107.5 78.5 59.3 44.8 32.2 19 6 4 16

GP39-2 128.8 107.5 78.5 59.3 44.8 32.2 19 6 4 16GP40 167 145 108 79 57 41 24 7 5.5 21

GP40-2 167 145 108 79 57 41 24 7 5.5 21B36-7 189 157.3 125.7 97.3 68.9 45.4 20.7 10.1 3.6 12.4B40-8 193 162 129.5 99.8 72 47.3 22.7 16.1 3.4 3.9SD50 178.2 162.5 125.7 96.2 79.3 51.9 23.9 15.1 2.9 4.3

4 3 2 18 7 6 5

Gallons of Fuel Consumed per Hour / Throttle Positi on

Fuel Burn Rate Table by Locomotive Class

Some differences among Locomotive types – fleet weighted average is 4 gal/hr in idle

3.C.b Intangible & Tangible Benefits

Not all locomotives have the same burn rate.

Our fleet weighted average was 4 gal/hr

The data indicated that model type was not a factor in shutdown performance so we used the fleet average fuel consumption rate to simplify tracking of benefits.

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3.C.c Solution Justification

Fuel Price:

2003 ~ $0.9562004 ~ $1.0952005 ~ $1.3132006 ~ $2.036

Gal Used:

591,400604,390595,491603,740

KGTM:

445,206459,144463,665473,642

Fuel Efficiency:

1.331.321.281.27

Benefits Tracked Monthly / Quarterly / Annually(snapshot of annual plan)

SLT – expecting results converted to dollars saved

Finance / Purchasing – tracks results and adjusts budgets

Transportation – individual goals tied to fuel efficiency

Locomotive – individual goals tied to fuel efficiency

Environmental Stewardship – reduced emissions

We would track improvements in the shutdown performance measure to validate savings and gage location performance.

At the same time we would ensure these benefits were linked to and fell through to the bottom line by tracking overall fuel efficiency.

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Opportunity Costs Opportunity Savings� Risk of service failure- Low based on data� Cost of educationand compliance- Low ; change in existingSOP (rule)

� $3M per year- High chance for successchange in existing SOP� Environmental Stewardship- High chance for success:Shutdowns reduce noise and emissions

3.C.c Solution Justification

Team Developed Cost / Benefit Analysisfor Senior Leadership Team

Presentation delivered to SLT:SLT approves proposed solutions - “savings” outweighs “costs”

Team prepared a presentation to the SLT providing a risk / benefit analysis.

With risk low and opportunities great,

SLT said go!!!!

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Manual ShutdownConfirm rule/procedure

Get management & laborcommitment

Inform and track

Yard location maps(Concentration

diagrams)

Performancerecognition

Targeting specific

terminals

Specific terminal reports

Daily performanceBy location

Daily detail performance

Bi-Weekly graphs

4.A Implementation Buy-in

Team Recognized Need for Culture Shift and Developed Strategy to Impact

We had solid stakeholder support of the team recommendations – implementation success would require buy-in from our 6,000 plus operators;

we needed a solid communication plan to drive a cultural shift to support appropriate shutdown.

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4.A.a Stakeholder Involvement

Stakeholders:

SLT / Champion

TransportationManagement

LocomotiveManagement

Finance / Purchasing

Six SigmaBlack Belt

Involvement:

Support culturechange

Drive ruleCompliance

Monitor & correctlocomotive health(starting issues)

Provide financial expectations &guidance

Establishperformancemetrics

Solutions:

Establish Performance Managementgoals for managersSchedule metric reviewsEducation of workforce

Operational testing (rules compliance)Communications: educate & coach

Mechanical Help Desk 24/7 tracking & reacting to engine startup issues

Monthly budget report

Measure culture shiftControl charts: GPS & rule complianceAssist with education of workforce

Implementation Support

Again the team looked at where support was needed, who could influence, and how they could drive a culture change.

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4.A.b Addressing Resistance

Identified Resistance and Team ResponseTeam Brainstorming Exercise – Major Issue:

Transportation Resistance:“I don’t want to shut down the locomotive if there is a possibility of restartdelay leading to production loss and/or missed on time origination”.

Team Response: • Mechanical desk to monitor and react to locomotive restart failures• Measure shut down compliance at all locations • Hold area managers accountable through performance evaluation

and bonus opportunity

Transportation team members were concerned if engines did not restart after shutdown train performance would be impacted.

Particularly - on-time originations.

The mechanical team members agreed to aggressively addressed re-start issues, and did so.

We established a go-team for fixes and enlisted support of field managers.

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Validated Ping Data Supports Performance OutcomesDrilldown Allows Identification of Performance by L ocation

System

Division

Region

Terminal

4.A.b Addressing Resistance4.B.c

The team developed “drill down” capabilities to allow individual managers to monitor performance.

These reports also allowed mid level managers to set goals and measure individual terminals

– cascading accountability through the organization.

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4.A.b Addressing Resistance4.A.c Assuring Stakeholder Buy-in

Team recognized rule change alone not adequateto cause shift in locomotive shutdown percentages

Educational campaign developed and implemented

Target Audience:

Transportation and mechanical officers

Transportation contract &non-contract employees

Locomotive contract &non-contract employeesengineer

Mechanical trouble desk

How:

Staff meeting presentations

Pay stub message

Automated voice response

Intranet dedicatedemail address

Local performancemetrics via emails

Employee bulletins

Engineer reading files

When (revised):

Quarterly

Quarterly

Quarterly

As needed

Bi-weekly

Monthly

As needed

The team had knew that rule changes, if not supported by educational efforts, did not always have the intended impact.

So we developed and delivered a comprehensive communications and education campaign to increase awareness of the rule changes .

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Work Orders

Identified Manual Shutdown Improvement ApproachIdentified Manual Shutdown Improvement ApproachIdentified Manual Shutdown Improvement ApproachIdentified Manual Shutdown Improvement Approach

• Improvement efforts focus on reminding and increasing compliance to fuel conservation rule

• Shutdown communication campaign

- E-mail address FuelConservation @ CSX.com to enlist ideas

- Reminders and progress will be communicated in multiple ways:

Inform and Involve

System notice

Crew Management interactive

Voice response system

Employee G

ateway

Payroll

earni

ngs s

tatem

ent sc

reen

Pay check stub

Engineer’s reading file

This week @ CSX

You can help by making fuel conservation part of: • daily job briefings • safety observations• efficiency tests • staff meetings• other contacts with operating personnel

(crews, yardmasters, mechanical etc.)Help motivate your employees to shutdown idle locomotives !

4.A.b Addressing Resistance4.A.c Assuring Stakeholder Buy-in

While the rule changes were communicated through traditional means – bulletins and employee reading files

The broader communications campaign was designed with multiple delivery mechanisms to increase awareness.

Everything from pay stubs, our corporate web site, our crew management interactive voice response system, daily job briefings, employees’ earnings statements and the crews daily work orders contained reminders of the rule change and of the need for fuel conservation.

Multiple messages delivered multiple ways!

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4.A.c Assuring Stakeholder Buy-in

Gain Buy-in for Locomotive Shutdown – Why?

Target audience are employees whophysically performs locomotive shutdownand those whodirectly supervise them

DAILY MESSAGEII NNFFOORRMM && II NNVVOOLL VVEE It Starts with the CustomerPeople Make the DifferenceSafety is a Way of LifeFact BasedRight Results, Right Way

Core Values

CSX Fuel Conservation

When the locomotive is not being used, it is not important to stop the diesel engine from unnecessary idling. FALSE

IF CSXT employees stopped the diesel engine on each of our

3,600 locomotives from unnecessary idling for:

1 hour per day X 4 gallons per hour X 3,600 locomotives =

CSXT savings of 14,400 gallons

of fuel/day or $16,704.00 per day

This could be a newGE ES44DC locomotive

every 100 days!

CSXT must consume diesel fuel to provide service to our customers.Your job is to use it wisely. Practice fuel conser vation at all times.

The communications plan targeted the employees who are responsible for locomotive shutdown, the locomotive engineers and locomotive shop and service track employees

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4.B Implement Solutions / Ensure Results

Plans to Achieve:

• System rollout of rule change

• Shops identified for 28º shutdown opportunities

• Educate workforce including supervisors

• Supervisor expectations formalized in performance management

• Financial savings realized in budget preparations and monthly reviews

• MBB / BB prepare actionable list to first line supervision

The team engaged different approaches based on different change requirements to ensure success.

A system wide approach for the rule changes and employee education with local reinforcement, measurement and emphasis on rule compliance.

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4.B.a Implementation Plan

Team Strategy for Implementation

Team:

SLT and Champion


Transportation MgtAnd T&E employees


Six Sigma support

Action:

Empower rule change

Ongoing education /coachingSpecific shops, specific rules

Ongoing education /Coaching across CSX

Track savings & fuelreductions built into budgets

Develop metrics for accountability by location

Impact:

Set system expectations / targetsAccountability model

Rule compliance (35º shutdown)additional opportunity @ 28ºfor select shop locations

Rule compliance (35º shutdown)

Measurable result

Shutdown shift measurableby location and performance

The team recognized each stakeholder could contribute in the implementation.

The SLT would agree to rule changes and set clear expectations.

Locomotive management and shops would support improvements and educate their locations on a 28 degree threshold at 14 select shop locations.

Transportation management and T&E employees would support system wide rule compliance for shutdown at 35 degrees

Finance would ensure that the savings were captured.

And Six Sigma support would measure the shift, terminal by terminal.

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4.B.b Implementation / Deployment

Gain Buy-in for Locomotive Shutdown

Gain employee involvement:

Rule enforcement &education through multipleoutlets

Target audience:

Employees – successor failure point

Managers – significance ofInvolvement reinforced

Through Continuing Education

While the rule change is permanent,

the team understood the need for continuing education to ensure the message was clear,

“shut them down”.

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HELP CONSERVE FUEL

28º OR HIGHER SHUTLOCO’S DOWN

27º OR LOWERLET LOCO’S RUN

Unique Reminder at Shop / Service Locations


Large obvious indicators were built at locomotive shops to reinforce when to shutdown and when to leave the locomotive running.

This eliminated performance variation that resulting from workers making individual judgment calls on temperature.

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Gain Buy-in for Locomotive Shutdown

Corporate-widecommunicationsof Annual FuelConservationkickoff!


Core Values


When the locomotive is not being used, it is not important to stop the diesel engine from unnecessary idling. FALSE

IF CSXT employees stopped the diesel engine on each of our

3,600 locomotives from unnecessary idling for:


CSXT savings of 14,400 gallons

of fuel/day or $16,704.00 per day

This could be a newGE ES44DC locomotive

every 100 days!

CSXT must consume diesel fuel to provide service to our customers.Your job is to use it wisely. Practice fuel conser vation at all times.

II NNFFOORRMM && II NNVVOOLL VVEE DAILY

Right Results, Right Way


When the locomotive is notbeing used, it is notimportant to stop the dieselengine from unnecessaryidling. FALSE

IF CSXT employees stopped the diesel engine on each of

our 3,800 locomotives from unnecessary idling for:


CSXT savings of15,200 gallons of fuel/day

or $31,160.00 per day

This could be a new GE ES44DC locomotive every

100 days!

CSXT must consume diesel fuel to provide

service to our customers.

Your job is to use it wisely.

PracticePracticePracticePractice

fuel conservationfuel conservationfuel conservationfuel conservation

at all times.at all times.at all times.at all times.


Core Values


Fuel Waste to Go Under the GunRecord-setting 2005 fuel prices are hitting pocketbooks at home and on the job. That’s why wasted fuel through idling locomotives will be the target of a CSX fuel conservation initiative that kicks off April 1.

CSX’s fuel conservation policies are outlined clearly in the Air Brake And Train Handling (ABTH) rule book. The biggest source of waste: idling locomotives. In 2004 idling locomotives used 30 million gallons of fuel.

operate a EMD SD-40-2 class locomotive at full throttle for 20.7 years or

operate a GE CW44AC class locomotive at full throttle for 16.4 years or

operate a GE CW60AC class locomotive at full throttle for 12.3 years or

purchase 20 new GE ES44 DC locomotives

A Process Improvement Team will be working with field

employees to help reinforce our fuel conservation policies, and to

monitor locomotive shutdown performance using Event

Recorder downloads, GPS data and Efficiency testing.

CSX is calling upon employees to act aggressively.

Take the opportunity to refresh your understanding of ABTH Rule 5401-A revised and published as item 8-2 in System Bulletin 001, effective 0001 hours January 1, 2005.

Totaled up for 2003, the gallons going up in smoke had the potential to:

CSX is looking for your help to reduce that waste.

Apply fuel conservation

principles at every opportunity during

2005.

Top story from theCSX Employee Gateway

Again multiple education venues were used.

Communications was targeted to hit where and when it would have the greatest impact.

As weather warmed, fuel conservation reminders increased.

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LOCOMOTIVE SHUTDOWN PERFORMANCE YESTERDAY - 11/15/06

ONGOING NOT NOT

NEW NOT NOT NOT MOVING MOVING

MOVING MOVING MOVING TIME - TIME - % SHUT

REGN DIVN EVENTS EVENTS TIME RUNNING SHUTDOWN DOWN

---- ---- ------- ------- ------ ------- -------- ------

NORTHERN ALBANY 338 77 1813.2 932.3 880.9 48.58

BALTIMORE 416 88 2459.5 588.8 1870.7 76.06

CHICAGO 353 87 2101.1 1233.6 867.5 41.29

GREAT LAKES 275 60 1495.9 660.1 835.8 55.87

LOUISVILLE 202 38 886.5 381.7 504.8 56.94

*TOTAL NORTHERN 1584 350 8756.1 3796.5 4959.7 56.64

Daily Scorecard of Previous 24 HoursPercent Shutdown Report

4.B.c Measuring & Sustaining Results

Daily score cards for each location and division were and continue to be issued

to provide responsible field officers with current, relevant actionable data.

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Rolling 12 Month Average of Shutdown

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Manual Shutdown

New Fuel ConservationRule 5401 effective 9/04

Positive Shift in Percentage of Shutdown FollowingABTH Rule Change & Education Campaign

Continuing Education


Impact was tracked using a rolling 12 month shutdown performance.

This graphical perspective eliminated the seasonality impact and made it easier to share the success with the broader workforce,

It became clear improvements were being attained.

Each 1% change in shutdown performance generates over a half of a million gallons of fuel annually

- equating to over a million dollars in savings for each percent.

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Tracking Fuel Dollars / Monthly Budget Report-out

Values inMillions

DataScenario Initiative 1 2 3 4 5

Actual Savings ALL OTH FUEL EFFICIENCY 1.6$ (1.2)$ 1.0$ 1.5$ (0.2)$ SHUTDOWN 0.3$ 0.4$ 0.8$ 0.3$ 0.4$ ERAD 0.4$ 0.4$ 0.9$ 0.5$ 0.6$ FLANGE LUBE 0.5$ 0.5$ 0.7$ 0.3$ 0.3$ NEW UNITS 0.3$ 0.3$ 0.4$ 0.4$ 0.5$

Actual Savings Total 3.0$ 0.5$ 3.8$ 2.9$ 1.6$ PLAN SAVINGS ALL OTH FUEL EFFICIENCY -$ -$ -$ -$ -$

SHUTDOWN 0.3$ 0.3$ 0.5$ 0.0$ 0.0$ ERAD -$ -$ -$ 0.2$ 0.2$ FLANGE LUBE 0.5$ 0.5$ 0.7$ 0.3$ 0.3$ NEW UNITS 0.3$ 0.3$ 0.4$ 0.4$ 0.5$

PLAN SAVINGS Total 1.1$ 1.2$ 1.6$ 0.9$ 1.0$ VARIANCE TO PLANNED SAVINGS ALL OTH FUEL EFFICIENCY 1.6$ (1.2)$ 1.0$ 1.5$ (0.2)$

SHUTDOWN (0.0)$ 0.0$ 0.3$ 0.3$ 0.3$ ERAD 0.4$ 0.4$ 0.9$ 0.3$ 0.4$ FLANGE LUBE -$ -$ -$ -$ -$ NEW UNITS -$ -$ -$ -$ -$


The success in fuel expense reduction was institutionalized through the monthly budget process.

With annual year over year targets included in the following year’s productivity plan and budget.

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Validated Ping Data Supports Performance OutcomesDrilldown Allows Identification of Performance by L ocation

System

Division

Region

Terminal

4.B.c Measure/Sustain results

A drilldown, by location, measuring performance over time is sent weekly to our operating officers and these measurements are used for annual employee performance evaluations.

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4.C Results Achieved

Team:

SLT and Champion


Transportation MgtAnd T&E employees


Environment / Community

Effort:

Set and drive expectationsAssumption of locomotive damage risk with rule change

Shutdown enforced to 28º

Educate / coach 8,000 T&E employees

Track history & savingsassociated with project

Collect community complaintsContribute to general welfare& support governmentemissions standards

Results:

$3.6M in benefits 2004No significant freezedamage to locomotiveReplicated project model

Additional savings atspecific shop locations

Manager meets formalincentive goals Train originations notnegatively impacted

Track & document savingsImproved plan for following years

Corporate citizenship& recognition

Manual Locomotive Shutdown Project Impacts

The project has had significant results felt throughout the organization.

The SLT was key in supporting the project, shouldering the risk, sharing and celebrating project success.

They have placed an ever increasing number of productivity efforts into the same accountability model used by this project.

Operations management, both mechanical and transportation have seen the improvements in their shutdown performance numbers without any collateral damage.

Our workforce has taken pride in improved fuel efficiency at a time when fuel costs were escalating.

And CSX was the first class 1 railroad in the United States to join the EPA’s Greenhouse Gas Initiative.

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4.C.a Tangible / Intangible Results

Savings From Project: Annual Plan and Actual with C umulative Total

Year over Year improvement Cumulative Plan Actual Project benefits

2004 $2.5M $3.6M $ 3.6M 2005 $4.0M $7.2M $14.4M2006 $1.5M $3.4M $28.8M

14.4M Gallons and $28.8M saved over 3 years

Tangible – Fuel Savings:

Intangible – Blue Skies & Happy Neighbors:

Tangible savings exceeded expectations with more than 14M gallons and over $28M dollars in cumulative savings over the three year span of the project!

Intangible savings included – better stewardship of our natural resources by reducing emissions and noise that has led to happy neighbors and recognition of our achievements.

9393939393939393

March 2 Press release - CSXT Joins Call for Cleaner Air

At the invitation of the U.S. Environmental Protection Agency, CSX Transportation (CSXT) today joined EPA Administrator Stephen Johnson and other stakeholders at Port Newark, N.J., to support the agency's overall goal of reducing diesel locomotive emissions. CSXT's Chief Operating Officer Tony Ingram spoke as part of the U.S. Environmental Protection Agency announcement to support reduction of diesel locomotive emissions.

Shown in the photo with EPA Administrator Stephen Johnson (at left) and other stakeholders (at right).

CSXT is the first class 1 railroad in the United States to join the EPA’s Greenhouse Gas Initiative.

4.C.a Tangible / Intangible Results

External Stakeholder Buy-in and Benefits

One indication of the intangible results, is that the US EPA invited one railroad (CSX) to host their public announcement on diesel locomotive emission reduction efforts.

Intangible results, but clearly in support of the CSX vision.

9494949494949494

4.C.b Project Linked to Goals

CSXT Vision:To be the safest, most progressive North American railroad,

relentless in the pursuit of customer and employee excellence.Employee excellence drove project success through

continued education and rule compliance

Purpose:To capitalize on the efficiency of rail transportation to serve America.

Saved 14.4 M Gallons of Diesel Fuel

Corporate Goals and Values

Starts Withthe Customer

Successful Project

People Makethe Difference

Safety is a Way of Life Fact Based

Right ResultsRight Way

(Team)(Extensive internal customerParticipation- no externalCustomer impact)

(Accurate Data)

(Engaged Employees)

(Rule Compliance)

Core Values:

As we reviewed earlier the team used our corporate goals, vision, and values to guide our success.

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Company Goals, Strategies, ObjectivesProject Impact How this project affects the objective

Company Vision: To be the safest, most progressive North American railroad, relentless in the pursuit of customer and employee excellence.


Company Purpose:To capitalize on the efficiency of rail transportation to serve America.

Increased efficiency by lowering fuel consumption and expense

Company Values:

It starts with the customer.Needs and behavior of internal customers will drive the success of the project

People make the difference.Requires engagement of broad team and locomotive user community

Safety is a way of life. Customer and data drivenFact based. Use of 6 Sigma tools


Key Performance measuresOperating Ratio Lowering fuel consumption will reduce expense


% of time Locomotives Out of ServiceReduced engine run times will lesson wear on locomotive components

Locomotive Fuel productivity (Gallons/KGTM) Reduced fuel consumption will reduce gallons/KGTMRight Car Right Train (RCRT) No impact on RCRTTrain Veleocity No impact on system train velocity Crew Availability Does not impact crew availablity

KEY: Positive impactPotential negative impact

White No impact

4.C.b Results Shared

Corporate Metrics – Post Implementation

The team tracked key performance measures to ensure there was no impact to railroad operations.

If you recall we had a yellow in our initial matrix in on time departures.

Careful attention to the restart issue eliminated this concern.

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4.C.c Results Shared

Share Victory With Stakeholders

Stakeholders:

SLT and Champion


Transportation Mgtand T&E employees


Environment / Community

Project Results:

Fuel savingsEPA credits

Financial results

Financial results

Fuel savings info

Less emissionsLess noise

How:

Financial results Annual budget

Performance bonusRegular communications

Performance bonusRegular communications

Greater savingsthan expected

Governmentrecognition

StakeholderFeedback:

Corporate success

Spot awardsto team membersMet or exceededbonus target

Spot awardsto team membersMet or exceededbonus target

Budget room

Good stewardship

The team recognized that sharing success would reinforce future desired behavior as much as it rewards past behavior.

So...

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4.C. c. Results Achieved Communicated

Manual Locomotive Shutdown Results Communication Pl an

MediaMessage Stakeholders Who When / Where

Impact of shutdownin Fuel Savings

Locomotive Engrs(T&E)

Letters to Home Addresses

Sr. Road Foreman Annual Results

Location Impactof shutdownSavings

Locomotive Engrs(T&E) Management

Cash Award in Person Sr. LeadershipAfter Success atLocation

Fuelconsumption

Finance/Budgets Financial Reporting Purchasing Monthly

Success of Project

Senior LeadershipChampions

Presentation TeamQuarterly Checkpoints

Improved SDPerformance;Less Noise; Emissions

Communities(individuals)

Telephone Call T&E Manager When Received

Success/ImpactOf Project

EnvironmentGovernment

MeetingsSenior OperatingStaff

As opportunity presents

The team developed and implemented a comprehensive communication plan

to ensure our Stakeholders understood our success and our appreciation

Including;

Letters to individual engineers

Spot or Cash awards to line managers

Promotion opportunities for team members

Setting up a toll free number, “877 Tell CSX” to better address community concerns

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Results Communicated / Employees Commended

In addition to the many internal communications we looked at earlier; appreciation letters were sent to over 5,000 locomotiveoperators homes.

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Results Communicated / Employees Commended

2006 Spot award winners were selected from the most improved Divisions versus same period 2005

And cash spot awards were granted to the Managers that led their division to success with locomotive shutdown

In addition, four original team members progressed to assignments of greater responsibility within the company.

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This Week's Message:

Hello, this is Michael Ward.

Today I'd like to talk to you about an important public policy issue facing our country - carbon dioxide or CO2 - and how decisions likely to be made in Washington around this issue could affect CSX and our nation's economy.

Many of you have heard about global warming and the theory that man-made production of CO2 may be contributing to global climate change. In Washington, our political leaders are starting to discuss legislative changes to limit CO2 production in the United States.

Before we talk about the impact of these possible changes to CSX, first it's important to understand that CO2 is not a pollutant as we usually think about pollution. As I'm sure we all learned in science classes early in school, humans and animals breathe in oxygen and breathe out CO2, then plants take in CO2 and release oxygen. It's a very natural process. The issue arises because CO2 also absorbs warmth from the sun.

At CSX, we think it would be better to put increased emphasis onimproved fuel efficiency in all modes of transportation. Since railroads are 3-4 times more fuel efficient than trucks, and produce as little as a fourth of the CO2 to move the same amount of freight, CSX has a good news story to tell here.

Our country is going to have to make some important decisions in the near future about CO2. Many of our elected officials are rightfully concerned that any rush to judgment on regulation of CO2 emissions could adversely affect our economy and our quality of life. Still, the decisions that have to be made are difficult and there is no guarantee that mistakes won't be made in the political process. I will be watching what happens closely and will keep you informed in the months ahead about this important debate.

Thanks for listening, have a safe productive day, and I'll talk to you again next week.

Results Communicated / Chief Executive Officer supports in weekly phone message:


Recently, our CEO communicated the impact CSX has on the environment and the air we breath

in his weekly phone broadcast

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5.A Team Selection / Involvement

Team Selection & Involvement Criteria

Team Selected by SLT / Champion:• Who can impact project• Who has required training• Who has insight needed• How much depth is needed

PIT+ Structure Incorporating Six Sigma Methodology:• Accountability (PIT+)• Project rigor (Six Sigma)• Project management (Six Sigma)• 20% of team make up are Black Belts and

one Master Black Belt• All team members are SME’s

The team was selected by the SLT & Champion with Project leader input.

The criteria was designed to select team members that could impact results, would provide diverse insights, or managed areas that would be effected by process change.

The project was to be completed with structured accountability.

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5.A Team Selection / Involvement

Task Owner Due Contact Phone What Obstacle Status Completed

New hire / recurrent engr training program Seguin 1-Dec

M. Chapman

426-6234

new hire & recurrent training

photos / dialogue

Pilot / REDI 17-Nov

System RFE meeting Seguin 14-Oct

D. Menefee 7541

review APU procedures, feedback from RFE 14-Oct

This week @ CSX & Employee Gateway Seguin K. Okie 1509

set up / shutdown 21-Oct

Instructions for APU / EST to engineers reading file Seguin 7-Oct

D. Menefee 7541

new operational instructions to reading file 1-Oct

Senior RFE to sample their engrs Seguin 21-Oct

D. Menefee 7541

solicit feedback from engrs 31-Oct

This week @ CSX & Employee Gateway Seguin K. Okie 1509

Yr round fuel consr / APU vs Manual S/D 25-Nov

Q&A for supervisors Seguin

M. Chapman / D. Menefee

426-6234 / 7541

3 -5 questions that handout (card) should answer

Sr. RFE do not report to Dean 10-Dec

Mech Desk APU Training Seguin

week of 11/14 M. Drylie 3631

What should be reported

Mech Desk accountability 21-Dec

Mech Desk APU Training - Survey Seguin B. McCall

388 2125

Training effectiveness 10-Jan

Fuel Conservation

Weekly Team Work Assignments

The accountability model required documentation of who is responsible for what by when.

This included monthly feedback from the team to the member owning departments with meeting attendance

records and minutes detailing assignments.

Early team meetings included a template of current activities and timelines as part of the agenda.

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Six Sigma Drives Fuel conservation InitiativeSix Sigma Drives Fuel conservation InitiativeSix Sigma Drives Fuel conservation InitiativeSix Sigma Drives Fuel conservation Initiative

Control

Improve

Analyze

Measure

Define•Determined project purpose (VOC & VOB)•Identified stakeholders / resistance•Planned for project communication•Completed phase deliverables

•Identified project key X's and Y's•Validated and collected data•Determined improvement goal•Completed phase deliverables

•Determined X's significant to CTQ's•Completed phase deliverables

•Identified and tested solution/improvement•Gained business case approval•Completed phase deliverables

•Established control plan•Completed handoff to Sponsor•Closed and leveraged project

5.B Team Preparation for Work

Our touchstone for project management was the use of the six sigma DMAIC process.

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Fuel Conservation Team Trained in DMAIC & Six Sigma (6σ) σ) σ) σ) Techniques

• Applied 6σ methodology of one day overview training for team- Data driven decision making – team included one MBB and 2 BB’s- Additional training at each phase as project milestones reached

Project phases:

Define Measure Analyze Improve Control

•What is theproblem?•What are the project goalsand scope?•Have all key players been identified and engaged?

•What is the currentprocess?•How welldoes that process meet customerexpectations?

•What are specific rootcauses?•Where willimprovement efforts befocused?

•What actionswill driveperformance?•Who willimplement? •When willthey be completed?•Is therebuy-in?

•Has controlplan beendocumentedand implemented?•Are stakeholderexpectations being met?

5.B Team Preparation for Work

All team members received at least one day of Six sigma overview training and additional training with specific tool use, FMEA,

C&E matrix, process mapping, etc.

In addition 20% of the team are six sigma black belt or master black belt certified.

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5.C Team Effectiveness

Weekly Team Meetings:

• Meetings scheduled with agenda• Meeting minutes sent in timely fashion• An accountability or “to do” list of assignments• “To do” list updated as necessary

Monthly Champion Reviews:

• Go – no/go• Maintenance of applied resources• Feedback to “Owning Departments”

Quarterly Senior Leadership Reviews (SLT) Reviews:

• Maintained alignment with corporate vision, purpose, and values

Team Effectiveness Continues

The timelines for meetings, expectations for attendance and contribution, were established at the project onset.

Monthly report outs were established, with feedback to each team members owning departments and quarterly reviews by the SLT

During this process several key members were identified for performance and rewarded with spot awards

This has been a terrific project

The individuals on the team increased their familiarity and understanding of process improvement tools,

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our workforce developed more disciplined behavior,

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we reduced noise and emissions becoming better corporate neighbors,

recognized by government agencies,

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Doing our part to conserve fuel – 650K barrels to date

CSX saved $28M over the 3 year life of the project,

And, at 42 gallons per barrel, we have saved over 650,000 barrels of a scarce non-renewable resource.

Thank you for the opportunity to share our project with you.

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There is no End in Sight for Fuel Conservation Opportunities!

Thank You!

Documents

Locomotive Shutdown A Fuel Conservation Project...Locomotive shutdown may not sound like a big deal but historically locomotives were never shutdown. The utilization levels of the