Personal attacks and a forced merger for CSX is what Ancora is pushing.
Personal attacks, weak, flimsy arguments and unprofessional behavior. That’s Ancora. fully known as Ancora Holdings Group LLC. They are a bunch of pirates. The pick out a target, throw money at acquiring the target’s stock, and launch a personal attack campaign. Now they have CSX in their crosshairs and has already attacked Joe Hinrichs, who won the Railway Age’s coveted 2025 Railroader of the Year Award with a personal attack: “Aside from bolstering employee engagement, making use of the Company’s private planes and manicuring his social media footprint, we are hard pressed to find any real accomplishments tied to Mr. Hinrichs.”
Really? Not only is this accusation on the 2025 Railroader of the Year bullcrap, but the use of such attacks should tell us the rest of the bullcrap to come.
Personal attacks mean weak arguments! Weak arguments start with weak tactics, and making personal accusations is always view as a weakness. If you have strong, compelling arguments, you can convince others that your side is right. There is no need for a big mouth and shock value. There is no need for ad hominem attacks against a person. Ancora launched an ad hominem against Joe Hinrichs because not only does Ancora have NO arguments, their obsession for CSX to “find a merger partner” is to promote a Penn Central fate for CSX.
That increasing operational ratio: The adults in the room know why, and it’s not Joe or the need for merger. Ancora complains about CSX’s increased operating ratio. The operating ratio is, basically, a comparison of a company’s operating expenses to its total revenue. (See also Operating Ratio – Overview, Components, Shortcomings) An increase in the operating ratio means that company is spending more. So, going from 58% to 67% means CSX is spending more of its revenue. But for CSX, there are rational and reasonable reasons, very good reasons, that have to do with severe weather, lower coal prices, but also costs of investing in the future, like the Howard Street Tunnel Project. Below you will see the main reasons for the increased operating ratio explained with links. It’s far more than you get from Ancora.
- Severe weather, especially Hurricane Helene’s damage to the Blue Ridge Mountain subdivision, the cost of which exceeds $400 million and affected 60 miles of track,. The cost of hurricane damage is so high because of the extensive damage to rail infrastructure. The process of repairing the damage of this epic storm is a major undertaking for CSX. (Blue ridge recovery fact sheet). There are additional costs to rerouting and congestion are also associated with the loss of the 60 miles of track Blue Ridge Subdivision. There was also the tragic accident in the Port of Baltimore when a ship hit and took out a bridge.
- Lower coal prices – Coal is a large part of what CSX hauls, the Chessie System before CSX, and was for many of CSX’s predecessor railroads, starting with the Baltimore and Ohio in 1828! Today, on the domestic side, there is a movement to replace coal with cleaner energy and many power plants have been retired. Both lower prices in coal and natural gas also dragged down CSX’s revenue.
- Investment strategy. It’s likely that CSX does see a future where demand for coal is less. The Howard Street Tunnel Project aims to improve the passage of double-stack trains to the Port of Baltimore and mid-Atlantic (FRA, Maryland State Port Administration). There is also the CSX Select Sites designation means a rail served property is vetted and given a rating by CSX to be development ready, give a participating company a faster start to operations that cuts down on time and vetting and development. ( Progressive Railroading Jan. 2012, CSX March 2023).
Choose a merger partner or else! Merger and consolidation uber allis is being pushed by Wall Street types who place dividends for shareholders over the future of building and investing in the business. Wall Street is obsessed with mergers and consolidations to the exclusion of other forms of railroad business practice, like partnerships and collaboration. For Wall Street, and that includes Ancora, nothing else exists or is acceptable but a merger. Ancora and Wall Street have NO reflections about Penn Central and why forced mergers are awful for railroads.
The notable bullcrap from Ancora’s letter:
- “[T]he Board needs to announce in the near term that it is working with identified third-party advisors to explore a range of merger options.”
- “Shareholders cannot afford more missteps as CSX plays catch-up in the rail consolidation race.
- “It is truly confounding that CSX did not establish a fruitful dialogue with Union Pacific in the first half of 2025, when public momentum was building for a transcontinental railroad.”
So, to Ancora seriously thinks that there is a “rail consolidation race” going on and that forced merger is the only solution! Railroad mergers are long, messy affairs involving years of government processes and merger is not a done deal because it’s announced by two parties. For CSX to “miss a chance at merger with Union Pacific” is a mortal sin. Ancora chided CSX because it “did not establish a fruitful dialogue with Union Pacific in the first half of 2025.” Well, with the announcements of “No Deal” from CPKC and BNSF, if there were no “suitable partners” then, there aren’t now! Ancora’s letter could have been written by Alfred Pearlman of New York Central. Remember him? He led his railroad into the biggest merger failure ever, known as Penn Central.
Ancora wants to force CSX into a Penn Central. Ancora does not seem to understand a few things. They are obsessed with forcing CSX into a merger without allowing the freedom to take the better choice: Partnership and collaboration. Railroad mergers are long, messy and uncertain affairs. Mergers are old-fashioned and outdated, and remind many in the railroad industry of the Penn Central merger. Remember Penn Central, where two different railroads were thrown together to form a messy, total failure that was so colossal that it still serves as a watershed example of railroad merger failure! Yet, in its ignorance, Ancora is pushing for merger failure for CSX. Think Penn Central and how Hays Watkins, Prime Osborn, worked hard to avoid Penn Central for CSX. Let’s not allow Ancora to do the unthinkable to CSX!