Aubrey Brown With CSX Transportation

Intro: [00:00:01] Broadcasting live from the Business RadioX Studios in South Florida. It’s time for South Florida Business Radio.

[00:00:08] Now, here’s your host.

Lee Kantor: [00:00:14] Lee Kantor here another episode of South Florida Business Radio, and this is going to be a good one. But before we get started, it’s important to recognize our sponsor, Diaz Trade Law, your customs expert today on South Florida Business Radio, we have Aubrey Brown with CSX Transportation. Welcome, Aubrey.

Aubrey Brown: [00:00:34] Thank you very much.

Lee Kantor: [00:00:36] I’m so excited to be talking to you today. For the folks who don’t know, can you share a little bit about CSX, Transportation, how you serving folks?

Aubrey Brown: [00:00:45] Absolutely. So CSX Transportation is the third largest freight railroad in the United States. Now, that’s a freight railroad versus a passenger railroad. And CSX operates through 21,000 mile network east of the Mississippi River, roughly 20,000 miles across 26 states, including including the District of Columbia. We have some of the most advanced intermodal terminals, container terminals in the country. We connect to 240 Shortline railroad partners and and various ports, about 70 ports. And we provide an alternative to trucking and just a great rail network. And we service all of the state of Florida, including South Florida, Miami Dade County.

Lee Kantor: [00:01:31] Now, I don’t think that the public at large really understands how important rail is as part of the supply chain and logistics. You mentioned that. I guess in some ways it takes the place of the trucking, but just the fact that it’s been around for so long and is, you know, a rail is a permanent line throughout the United States. And without rail, we couldn’t have the supply chain that we have today. Right. It’s super important.

Aubrey Brown: [00:02:04] Absolutely. Look, most of the you know, first of all, a train is more efficient than a truck. If it’s a product which is heavy and moving a long distance, the railroad is really very effective. And what we talk about, we try to provide an innovative freight solution. The other thing which I think folks don’t realize is you see a train out there, you don’t realize that trains emit a lot less pollutants than the alternative than a truck, you know, and we can carry a ton of freight, 465 miles on one gallon of fuel. And that’s an interesting statistic, if you think about it that way. You know, but the for instance, any industry that requires raw materials, the railroad is the way to get that material there, especially over the long distances that they travel. You know, this is a very large rail network in the country. And the freight railroads, you know, very safely carry a lot of these materials. And there’s just not there’s not a safer way for you to carry something that’s that heavy for that long of a distance, but by rail. And we certainly look to, you know, our biggest challenge is to try to divert more freight off the highways without sacrificing reliability. And I’ll get into some of the things that we’ve been doing in just a minute. But there’s definitely, definitely a place and we think the future for rail looks bright and we think there’s more opportunities in the future.

Lee Kantor: [00:03:30] Now, I recently had a chance to go to Savannah, Georgia, and obviously that’s a large port and a lot of shipping containers coming and going from that port. But something I noticed while I was around there is that having a port is allows a lot of business to take place. Now I’m seeing a ton of warehouses being built farther and farther away from the port, but the goods have to get into these warehouses. Having a port or one of these kind of nodes where a lot of activity happens is great for the economy in those areas. Right. And there must be a lot of opportunities for rail, I would think, moving forward in these nodes where this type of intersection occurs.

Aubrey Brown: [00:04:20] Absolutely. Especially if if the intersection if you think a little bit about South Florida and the huge influx of of of goods and material that come in from abroad into the Port Miami and Port Everglades. And so on, you do have a connection with the FEC short line railroad, but the CSX railroad comes in to South Florida directly as well. And in fact, we are exploring to do something just exactly the same as what’s being done in Savannah, where they’ve increased their containers on rail from 500,000 per year to 1 million. And exactly to your point, Lee, what that has spurred is these huge distribution warehouses, both for imports and exports. And we’re very interested in looking at how we can explore replicating that along the East Coast, particularly with emphasis in South Florida, because the greatest percentage of the greatest population in the state of Florida is, as we all know, between Orlando and South Florida. So we absolutely believe this is absolutely an opportunity for South Florida moving forward. If we look at what’s happened in a place like Savannah and if we can emulate that, not at exactly the same scale, but just look at what that possibility could be. And we would like to be part of that solution to provide a real alternative.

Lee Kantor: [00:05:39] Now, isn’t it funny how rail has been along around for the longest period of time and there are still ways to innovate, you know, decades and decades after, you know, the first thought of how rail could impact the country.

Aubrey Brown: [00:05:52] Yeah. You know what’s so interesting about rail is that because you’re able to bring such a large amount of raw material into an area, you allow those industries in that area particularly to flourish. I’ll give you an example. I’m not going to mention names, but some customers that I’ve assisted in Miami Dade County by being able to get a direct rail service on CSX, they’ve been able to increase the amount of employees they hire. They’ve been able to increase their output of what they of what they produce by about 100%. So there’s a clear example of what that can do. And I think, you know, there’s little knowledge about railroads. Folks see that train. And it’s more of an annoyance when you held up at a crossing somewhere. But the benefit is unbelievable if you just think about the connectivity across this country.

Lee Kantor: [00:06:40] Right. And people forget that the United States is very large. Yeah. And it’s not that simple to make something appear on one coast and then appear again on another coast. It takes a lot of coordination and a lot of energy for that to occur. And rail is an important component of that that I think sometimes that we lose track of the.

Aubrey Brown: [00:07:03] Absolutely because and you know, there are so when we talk about freight railroads, there are more than 600 freight railroads in the United States, but there are only seven class one railroads. And these are railroads with operating revenue in excess of $500 million a year. Csx is one of the largest in the east. In the west, you’ve got the Union Pacific and the Burlington Northern Santa Fe. But we would be, you know, on the railroad, you’re able to take product from Miami all the way to California. You can’t do that very effectively or in any sort of, you know, any it would be cost prohibitive to do it on a truck. But you’re able to do that on the railroad very easily because you have that connectivity on a on a very large rail network in the United States. And people don’t realize just how large that is.

Lee Kantor: [00:07:48] Now, are we heard so much about the supply chain issues from Asia to the West Coast. Has the that benefited the folks on the East Coast and South Florida specifically? Has there been some, you know, frustration that people are like, hey, I need this to get to a port somewhere?

Aubrey Brown: [00:08:07] And then. Exactly. So that’s been exactly the benefit for the East Coast. And, you know, the East Coast ports have been the beneficiary of of labor disputes and of supply chain issues. Now, you know, will you get the full amount that that comes in on the West Coast? It’s still the preeminent port for things coming out of Asia. But there’s clearly there’s a there’s a there’s a real desire by the large companies who want to diversify that, you know, the way that their product comes into the United States, they don’t want to be dependent on one port only. So they’ve they’ve explored the use of East Coast ports. It’s been the benefit of the East Coast. And we will continue to see that because they they want to eliminate supply chain disruptions to the best of their ability. Now, the pandemic, Lee, was something unusual. But what we have done at CSX, like most companies, we lost a number of employees when the pandemic started. But we have been on an accelerated pace of hiring. And the railroad’s view is that even if if things do slow down in the economy, we’re going to continue hiring because we do not want to be in a position where we do not have enough employees to able to meet the demand of our customers. And in fact, because we’ve hired a large number of engine and train folks to run these trains and we continue hiring, we’ve seen our service level out to pre-pandemic levels. The railroad is running very smoothly right now. It’s taken us quite a while to get back. But yes, to your point, absolutely. What’s happening on the West Coast is going to be a clear benefit to East Coast ports.

Lee Kantor: [00:09:46] Now, are you seeing any opportunity with the with new technology coming on like there’s so much happening in like electric vehicles? Is there a play there for rail as well or is that something that rail is just too large and too heavy for electric to really play this?

Aubrey Brown: [00:10:05] Lee There are you know, the rail industry is constantly looking to to innovate. Now, what combination that would be? Would it be a hybrid locomotive? I’m not sure if if a locomotive with the tremendous weight that they have to carry can be completely electric. But I can tell you that they are constantly they’re constantly looking at how we can reduce any kind of particular emission, how to do greater cost savings, what type of locomotive. It uses less diesel. Absolutely. I mean, those the entire rail industry is looking at how technology can assist. And the most important thing is that ESG is such a large component for new companies that are coming that are starting up and that are reshoring to the United States, that when you look at the numbers and the carbon emissions on the railroad and just see how that compares, that’s a compelling argument for companies as well. And we continue working to make that an even greater number. And, you know, who knows? I don’t have a crystal ball into the future, but you might have, you know, a locomotive that that needs no diesel, some other kind of technology. It’s being looked at at the moment.

Lee Kantor: [00:11:13] Now, for you mentioned the opportunity for companies in other countries to kind of take advantage of some of the assets that South Florida has when it comes to this. Are there certain industries in particular that you think would benefit from at least inquiring about how CSX could help them, you know, get into the United States states and get their goods across the country? Absolutely.

Aubrey Brown: [00:11:41] So one thing that we look at, I mean, the railroad’s network, its intermodal network, its container network is just unsurpassed. And so the the velocity from Florida to the markets up in New York and Chicago, no truck can compete with. And so we currently partner with the FEC railroad, which goes right into the Port of Miami to take containers and particularly, I think of of flowers. The largest amount of stems come into before Mother’s Day, come in through South Florida. All kinds of food products that come in could could go by rail. The railroad has refrigerated large refrigerated railroad cars to move this product and then the flow into South Florida of building materials and shingles and windows and gypsum, those sorts of things that are used in the building industry, particularly with the growth that’s going to be taking place towards the southern part of Miami Dade County, specifically between Miami and Homestead. We know there’s a lot of development going on down there. We think the railroad can really provide an alternative to bring some of that building material, aggregate material, you know, down into South Florida and vice versa, you know, product that’s coming into South Florida. You know, if companies have not considered the railroad in the past, we would do a study. We would assist the companies, do an analysis. Obviously, they’re going to want to know what those rates would be. But it just provides another alternative to the trucking industry, which is rather expensive, to bring product into South Florida all the way down there.

Lee Kantor: [00:13:25] Now, do you also work with kind of local municipalities to say, you know what, if we had kind of a node here, maybe this would be an opportunity for them to have an area where they could kind of build out that little ecosystem of trade.

Aubrey Brown: [00:13:44] Exactly. So we work closely with the Miami Beacon Council. The. So absolutely. We discussed that with business groups, with local municipalities, with customers, with the entire business community as an alternative, you know, but we’re trying to do a better job of making ourselves visible and known. I think what you see in South Florida, you see Tri-rail trains, we see Amtrak. You know, now Brightline goes to or, you know, to Orlando. You don’t see very much on the freight side because we really operate, you know, in the middle of the night because of the way things are in South Florida now. That’s the only window we currently have to operate between midnight and 6 or 7 in the morning before Tri-rail starts up. But that’s good. I mean, we still have a way to bring the goods in. And, you know, we’re trying to and this is one good opportunity with this show is to just let folks know what you do. Have a freight railroad alternative out there which can provide some alternative to you for your shipping needs.

Lee Kantor: [00:14:44] Yeah, it’s frustrating being a best kept secret, especially for something that’s been around for as long as rail has. Exactly. Now, is there anything you can share, maybe trends looking ahead or things that you’re excited about in 2023 and beyond?

Aubrey Brown: [00:15:01] Absolutely. So, you know, I can tell you this, there’s a lot of discussion about a corridor. There’s a 25 mile stretch of railroad track from, say, from Miami, if you know where the Miami Zoo is, all the way down to Homestead. And that’s a corridor that has not been utilized in quite some time. And we’re exploring the possibility of of whether that could be revitalized as as a freight corridor, particularly as we know growth will, you know, go further down south. In the county. That’s something we’re looking at. And the other thing is we’re also looking at potential rail sites along that corridor and all up in the in the Miami Gardens area near the airport. We’re identifying buildings that have a rail spur that might not have been used in quite some time and simply would need to be refurbished. We see it’s a very great opportunity to bring in things like rice and beans, you know, things which which come into the South Florida market. So we’re working with numerous groups of realtors in Miami Dade County. We’re working with the Miami Beacon Council, and then we’re working with individual customers who have reached out to us to assist them coming up with a solution. And then we’re also obviously working with our partners. But I think for us, the opportunity this year is going to be the prevalence of rail in South Florida and to really show folks if it’s a good fit, what the advantages of rail would be and to make folks aware that there really is an alternative that for us is the most important. I mean, we’re in growth mode, Lee. We need to grow the railroads in the United States. I told you there are more than 600 railroads in this country currently only ship 9% of the freight in the country. The the trucks have got 91%. So our goal is to try to convert more traffic from the highway to the rail. And that is going to be the focus for 2023.

Lee Kantor: [00:17:10] So what is the pain that that customer is having where they might do well by exploring rail?

Aubrey Brown: [00:17:18] I think really it boils down to cost because you know, with the railroad, you know, you’re not going to get the same velocity as you can on a truck. But you definitely let me say this, Lee, The one railroad car has the capacity of almost four semi trucks. So you do the math on that and see what that cost saving could be, particularly if a customer is in the manufacturing space and they’re bringing in steel coils or, you know, plastic pellets for extrusion and so on, it makes a lot of sense for the railroad. So this is what folks are looking at. And I want to say it’s it’s the cost factor. Just just the amount of money that it costs to get a truck that far down south. And of course, we we also act as a consultant for the customer. In other words, if they’re even exploring, we do two things. What we’ll do at CSX, we’ll assist the customers to identify sites. We’ll find a site for them. We’ll work with the local community, we’ll do rail designs for them. If it’s just a greenfield site which needs design work, we’ll put an entire package together for them as well, which I don’t think is available in in the trucking industry at the moment.

Lee Kantor: [00:18:29] So if anybody has even the beginning of a frustration, it’s worth having a conversation, right? Like there’s no downside to having a conversation.

Aubrey Brown: [00:18:40] No, no. I mean, we would help them evaluate whether rail is a good fit or not. There are a number of factors, but that’s something that that we do. Our industrial development department is linked to the rest of the railroad and we absolutely are absolutely customer focused. I mean, this is the new in 2023, I believe. What’s going to be most important for for this railroad is going to be our customers. I mean, you know, the railroads made most of the revenue generated by shipping coal for 200 years. We all know that coal will no longer be around in the future. And so it is vital for the railroad to find alternatives. And we think the greatest opportunity is to convert from, you know, traffic that’s moving on the highway to rail if and when it’s a good fit for the customer.

Lee Kantor: [00:19:28] Well, if somebody wants to learn more, have a more substantive conversation with you or somebody on your team, what is the website? What’s the best way to get ahold of you?

Aubrey Brown: [00:19:37] Well, the best way is csx.com C, as in cat S as in snake X as in X-ray KSDK.COM Or they could and then you’d go to the TAB customers, or they could reach out directly. There would be a list of their business development person for the state of Florida. But I’m going to give you my information directly to Lee, if I may. So I am Aubrey. Aubrey Aubrey Brown. And my email address is Aubrey. Aubrey and then underscore the little underline Brown is in the color aubrey_brown@csx.com. Aubrey_brown@csx.com And I’m going to give you my mobile phone number as well. I’m available at any time. Folks can call me at the area code of 904334861. Again, that’s (904) 334-8615. Very happy to take any call, assist any customer and evaluate the rail.

Lee Kantor: [00:20:45] Well, Aubrey, thank you so much for sharing your story today. You’re doing such important work and we appreciate you.

Aubrey Brown: [00:20:50] Thank you very much, sir.

Lee Kantor: [00:20:51] All right. This is Lee Kantor. We’ll see you all next time on South Florida Business Radio.