News & Reviews News Wire Squires ‘pleased’ with NS operations changes NEWSWIRE

Squires ‘pleased’ with NS operations changes NEWSWIRE

By Brian Schmidt | July 16, 2019

NS CEO outlines benefits of operations changes that are similar to Precision Scheduled Railroading

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James Squires, NS CEO
Norfolk Southern
LAKE GENEVA, Wis. — Norfolk Southern is looking ahead with its newly implemented TOP21 operations plan, in use now for less than a month. The comments come from NS CEO James Squires at the summer meeting of the Midwest Association of Rail Shippers at the Grand Geneva Resort.

“I think it’s going well so far in Norfolk Southern’s case,” Squires says. “I wish we had started down this path sooner.”

Squires says that the new NS operating plan, its version of “Precision Scheduled Railroading,” is focused on service, efficiency, and growth.

He says the company had the “benefit of observing PSR from the sidelines,” and “gained a unique understanding, a belief of how we can do PSR right, do it our way.”

Prior to rolling out its operating changes this summer, NS hosted 18 town hall meetings with customers and marketing teams. One month prior, the railroad provided customers with lane-by-lane analysis of upcoming changes.

“I’m pleased at how seamless the switchover has been for customers,” Squires says. “More than 80 percent of carloads in our merchandise network have different trip plans” compared with before the new operations plan. He says it enables the company to do more with less.

Squires says freight cars on line are down 18%, shipment consistency is improved 71%, terminal dwell times are down 39%, and customer volumes are up 77% for customers served six days a week or more. That translates to 30,000 fewer freight cars needed in 2019 than in 2018. The resulting surplus can be used to support traffic growth, he says. The railroad has stored more than 600 locomotives in past six months because of the better utilization.

“We appreciate, very much, your spirit of collaboration with us,” Squires says, noting that PSR has brought “urgency and discipline to operations.”

Addressing a question from the audience, Squires notes the company is “taking a look at” its demurrage policy after customer complaints.

However, Squires says he believes that better equipment usage and increased velocity is in everybody’s best interest.

Regarding the economy, the company is “looking for a resumption of growth in the second half,” noting that the “economy is fundamentally sound.”

18 thoughts on “Squires ‘pleased’ with NS operations changes NEWSWIRE

  1. this guy has never talked to his customers like I have to find out what they really think about the NS and PSR

  2. Get used to it Mr. Cook. No different over here on Big Yellow. They burn one road crew just to put the things together, then you add any work enroute and it becomes a recrew along the line. If you have multiple trains trying to work the same spot it just snowballs. But I honestly believe the railroads see jt as “Look we kept all of those cars out of a hump yard.” Nevermind the time lost once on the road, that doesn’t show as dwell time. And there are ways to pencil whip things to make the recrew rate look lower than it is also.

  3. Something is not matching up. The two train from Binghamton to Buffalo have been combined with DPU but this one monster train now has to do head end work on the run. Recently it took 5 train crews to get one train into Buffalo. Previously two crews had on time performance handling all the traffic.

  4. Steven Bauer- Obviously dwell is measured and is a good indicator of overall performance, but claiming lost time on line of road masks traffic moving quicker is inaccurate because train speed is also looked at heavily.

  5. I (accidentally) talked to a woman Sunday who ships 15 refrigerated containers of food products from Bakersfield CA to the “East Coast” per week by train. I forget to ask her her job title, but she was directly involved with the process.

    I asked her who was the carrier and if she was happy with the service. She said it was the UP and the service was “great” (her words). They truck the containers from Bakersfield to LA (I forget to ask where) and from there they go by train. She said they have an “8 day delivery” package, and the shipments were always on time. She said all the stuff goes by train to the “East Coast” unless they have a special shipment that has to go extra fast and then use a trucking company (sound like that wasn’t very common tho).

    Is 15 containers a week a small customer? (Just wondering).

  6. Paul; I don’t think line spinoff’s have “let the genie out of the bottle”. Class 1 line spinoffs pretty much always come with some sort of paper barrier that prevents the short line from interchanging traffic off the spun off line with anyone other than the former Class 1 owner.

    For the Class 1’s to “outsource” manifest / carload freight to a short line would essentially require allowing the short line to operate over the host’s tracks to perform industry switching and to build trains. It’s this aspect that Class 1’s have insisted – for a multitude of reasons – would never work, at least insofar as providing a competitive rail option to captive shippers.

    If a Class 1 allows an interested short line to perform switching and train building on their railroad; it’s not a great leap in a regulator’s mind to wonder why allowing a competing Class 1 the same freedom would not work.

  7. @John Privara. 15 containers a week is not a lot overall. roughly 300 tons of cargo. Most stack trains have upwards of 300+ container positions(40′ wells).
    However 15 cargos a week would make the average truck company say how high when the customer says jump.
    There are not a lot of temperature control(refrigerated) containers available and in use. On the ocean side it is very common for cargoes to be hauled to port in a temperature control trailer and transferred to an ocean container(and vice versa). I do not think this will happen with domestic cargoes.
    The thing of it is many temperature control trailers spend a considerable amount of time hauling dry loads(no temperature control needed) or loads needing a minimal amount of protection. There are many cargoes that need protection from freezing in winter or other materials that need to be protected from excessive heat in summer. Some times all that is needed is for the cargo to be loaded at room temperature in an insulated box and hauled to the receiver. The insulation will protect the cargo from temperature for 4 or 5 days during transit.

    What I can not understand is why the railroads do not understand the concept of a lot of shippers shipping 30 to 50 trailers a day can translate into a cluster(Salinas, Ca comes to mind) that would produce 4 or 5 trains a day is detail is paid to what the customer needs. IE consistent service.
    Railroads have a lot of capacity to absorb a lot of cargo, they just need to be smart about providing the service. And then sell the service.

  8. Of course Squires is “pleased”… he guzzled the PDR Kool-Aid and his tens of millions of dollars stock option compensation directly depends on Wall Street also being “pleased”.

    This is all about short-termism of juicing the share price.

    The public and shippers can pound salt in this game. The economy and environment suffer the long term consequences of asset-stripping management.

  9. I think the 77% thing is “77% of customers who got expanded day of week service shipped more than before”

  10. That’s a good point Curt Warfel. But isn’t that genie already out of the bottle? Albeit at a line segment spin off level and not (as I implied) an “open access to a short line” level.

    Then again it could be argued that open access for a “still captive” first or last mile serving short line is different from open access to another Class 1. In the first case the profitable long haul is retained for the “opening” Class 1 and in the other it’s surrendered to the duopoly competitor.

    All that said, whether open access exists in any form or not, low volume origins and destination spurs are more expensive to serve and are even more expensive (in line haul capacity) when located along a busy line haul district as opposed to a lower volume line segment or terminal district. This is where a transload solution at a better location might be better overall solution for all parties involved.

  11. Wait – 77% increase in carloads because of daily service. There is *certainly* a story there.

  12. I think one thing the proponents of shifting manifest or carload type traffic to short lines must keep in mind is the impact that will have on Class 1 opposition to any form of enhanced competition for captive shippers.

    If the Class 1’s “let the genie out of the bottle” by spinning this kind of traffic off to a third party; they essentially have blown up their own defense against competitive access.

    I suspect hell will freeze over before something like this happens voluntarily.

  13. One issue that comes to mind about PSR. Paul mentioned shifting lower volume to Short lines which I concur as well, but I would go even further… Truth is Class 1’s don’t want to classify, and switch cars, they want point to point service with none to minimal handling. So is PSR really about streamlining carload operations? Or is PSR the prerequisite to dumping the switching and classification of carload traffic onto the short lines, with Class 1’s just handling carload traffic as point to point traffic? One man crew push??? UP, NS are streamlining intermodal operations to handle high volume steel wheel interchange traffic. Who’s to say that short lines or contract switching won’t get low volume intermodal into the game again? I can see this.. Where low volume intermodal lanes are also handled by shortlines building trains for the Class 1’s.. Only time will tell the whole story..

  14. John Privara my opinion would be to use a lower volume sliding scale for “premium” higher revenue traffic like refrigerated. Although 8 days doesn’t sound especially fast, if it’s “always on time” at least the lack of schedule variance is a plus. Was the eastern carrier in this anecdote NS or CSX? I’d also be interested in knowing what the destination ramp and final destination were.

    Also a plus would be the 71% “shipment consistency” metric cited (but taken with a grain of salt as indicated due to small sample size problems).

    Regarding the volume point and the reported “high local service frequency” component of PSR “NS style”, IF these improved numbers hold up my guess is higher volume higher frequency local service customers will report better results (including a relative lack of unfair demurrage charges) but lower volume shippers not so much. Which makes some sense from a cost of service per revenue ton mile perspective. Which is why I favor spinning off these shippers to lower cost short lines (when possible).

  15. There is no detail on the comparison of measures. I suspect a lot of the improvement comes from general improvement in operations over the past year, little of it related to TOP21.

    You really need about two solid weeks of operation with the new plan to do a fair, apples to apples assessment. NS doesn’t quite have that yet.

    I would take Squires statements with a grain of salt, at this point.

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