ATLANTA — Norfolk Southern’s service has deteriorated over the past six weeks amid crew shortages and operational changes, according to shippers and connecting railroads.
Some expressed concern that the railroad is teetering on the brink of a meltdown as train speed falls, cars spend more time in yards, and a rising number of trains per day are held due to a lack of crews, power, and other reasons.
“Operations are suddenly in the ditch,” Rick Paterson, an analyst with Loop Capital Partners, wrote in a note to clients last week.
Average train speed on NS slumped to 17.6 mph in the week ending Nov. 5, the lowest weekly velocity in the railroad’s performance data since May 2018, when congestion centered on Birmingham, Ala., bogged down service in the Southeast. Since the first week of October the railroad’s velocity has fallen 17%.
Other performance metrics are trending in the wrong direction, too. Since the first week of October the number of loaded cars not moving in more than 48 hours nearly doubled, to 3,903, while the average number of trains holding per day has surged 123%.
Terminal dwell is up 27%, with cars sitting more than 36 hours at five yards in the Southeast. Birmingham again is a hot spot: Dwell at Norris Yard currently stands at 46.5 hours, up from 32 in the first week of October and an average of 29.7 hours in September.
Traffic volume is not the culprit: NS volume was flat in the third quarter and was down slightly in October.
Crew Shortages
NS is experiencing higher than normal attrition among its train crews and is having trouble hiring new conductors due to the tight labor market. NS says its new conductors and conductor trainees are also leaving the railroad at higher rates.
Norfolk Southern’s struggle to retain train crews and hire conductors mirrors trends in the industry and across the broader economy. In September a record 4.4 million Americans quit their jobs, according to federal data, yet job openings remained stubbornly near record high levels.
NS had 7,463 people in train and engine service in September, level with August 2021 but down 6% from a year ago, according to the latest Surface Transportation Board data available.
“The entire transportation and logistics industry is experiencing a perfect storm of challenges, and we’re not immune to those,” railroad spokesman Thomas Crosson says. “Challenges include staffing, heightened economic demand, port congestion, as well as historic lows in available warehouse and trucking capacity. We’ve managed for staffing all year, but saw a spike in the attrition rate in several critical parts of our network during late September and October, which further strained some areas of the network.”
He adds: “Solving this is our top priority.”
NS has stepped up its hiring efforts and increased the size of its “go teams,” train crews who are willing to temporarily relocate to areas where staffing is thin.
NS currently has more conductors in training than at any point this year and has taken several steps to ease the crew shortage. Among them: Offering referral, signing, and retention bonuses; doubling the rate of hiring since July; increasing conductor training class size and the number of classes; and increasing the pace of hiring another 75% through January. “We’re also reaching out to employees who have left the company to offer them opportunities to return to their roles,” Crosson says.
Operationally, Crosson says NS has “realigned crew districts in impacted regions to improve productivity, and temporarily adjusted traffic flows to move through other parts of our network.”
The railroad is building longer sidings to accommodate longer trains, and has completed the first of nine siding projects designed to improve fluidity. NS also has taken steps to increase capacity, including re-opening intermodal terminals in Greencastle, Pa., and Louisville, Ky.; adding chassis to its fleet; boosting parking space at intermodal terminals; and launching incentives for drayage truckers.
“People are the backbone of the railroad, and we need to make progress on these initiatives to better manage the effects of a tight labor market,” Chief Operating Officer Cindy Sanborn told investors and analysts on the railroad’s third-quarter earnings call on Oct. 27. “We are committed to having the right amount of resources in the right place at the right time, which will drive both cost control and service quality.”
But Sanborn says there’s no quick fix. The lag between hiring and putting conductors into service means crew shortages are likely to persist into early 2022.
“We’re working around the clock to communicate with our customers, to provide as much visibility into operations as possible while we work to restore service levels,” Crosson says.
‘It’s been all downhill’
Paterson, a railroader-turned analyst who closely follows railroad performance metrics, says the trends at NS are troubling. “The network was looking relatively good through the first week of September, which included the typical bump higher in speed as volume pressure eased around Labor Day,” he says. “Since then, however, it’s been all downhill.”
Although the number of trains held for crews each day remains relatively low, the number of trains held for lack of power has doubled over the last four weeks. The number of trains held for other reasons has spiked as well, which Paterson says is an indication of congestion.
“When we add all the trains holding numbers together we get 84 delays per day, which is a worryingly high proportion of total daily train starts,” Paterson says. “All of this contributes to the upturn in terminal dwell over the last three weeks.”
Making matters worse is that a slower railroad needs more crews and locomotives to move its freight. Any increase would come as NS faces crew issues on two fronts: a lawsuit from two unions claiming the railroad is forcing engineers to work as conductors, contrary to its labor agreements [see “Two unions sue Norfolk Southern …,” Trains News Wire, Oct. 29, 2021], and resistance over federal vaccine mandates. CEO Jim Squires warned last month that the mandate could add to crew shortages [see “Norfolk Southern warns that COVID-19 vaccine mandate poses risks …,” News Wire, Oct. 27, 2021].
“The best-case scenario here is that this mini-meltdown turns out to be a couple of particularly ugly derailments, a weather event, or domino effect from an interline partner, but we haven’t heard of any of those occurring,” Paterson says. “The worst-case scenario is that in the third week of October we crossed a threshold where labor supply can no longer meet demand, in terms of crews and/or at some key yards and terminals, and the network is reacting to it. Our guess is more likely the latter.”
Ross Corthell, who chairs the National Industrial Transportation League’s railroad shipper committee, says the group’s members have been experiencing problems with both NS and CSX Transportation. CSX, which began having crew shortages earlier this year, has already been the subject of an inquiry from Surface Transportation Board Chairman Martin J. Oberman.
“NITL members have been vocal about less than par service on both eastern roads, frankly,” Corthell says. “In our conversations with STB, it is clear that their customer assistance desk is fielding more calls related to eastern roads’ service than any others.”
He adds: “Both railroads are acknowledging they are having service issues and expect them to continue into the foreseeable future.”
An STB spokesman would not say if the board has received a rising number of complaints about NS service, citing confidentiality rules designed to protect shippers.
It’s not just Norfolk & Southern problem the rest of the rail companies, they thought the same idea longer trains would be economical with using less crews and more locos, but it’s not it takes longer to put the train constants together wasting crews’ time, longer to start and stop the trains, can’t fit the longer trains in their finally destination yard with more time to take them apart. But I think the breaking point is what the price of fuel is, the more locos you use the more costly it became. What the answer is shorter trains mean faster trains and the more crews you use the more money is made with product delivered to the customers within a reasonable time frame PERIOD.
Boy, if this article is not an indictment of PSR what on earth ever will be? Straight from the shoulder , Bill Stephens tells it as it is. This should be copied and placed on the wall in every HQ office and be mandatory reading for all officers.
The first and main thing that needs changing is the way train crews are treated and the number available. Instead of furloughing train crews need to be kept in business down turns. Yes it would cost money but, when business upturns comes the railroads can respond immediately. That keeps customers from turn to trucks and lord knows that just keeps happening every day.
Hats off to you Mr Bill Stephens for “telling it like it is”.
gang: I think new HQ facility and the decline of the most basic value of NS (movement of goods in timely fashion) may be more related than we assume. The new building, built in the highest fixed cost area of Atlanta, seems to have a lot of perks (daycare, coffeeshop, maybe others) for the HQ staff. But do the frontline soldiers get daycare, coffeeshop perks, and others? Eventually, the folks doing the work will see how they are valued, and vote with their feet. So the HQ folks have the toys and benefits, but can’t deliver the goods to the customer. And the machine grinds to a halt. The leaders need to seek a servant mindset,
To put in simpler terms, Norfolk Southern should model its operating system after its primary predecessor, the Southern Railway System. Southern Railway ran an efficient operation without sacrifice to service quality and employee morale. Southern maintained and upgraded the tracks with welded rails on its main lines. CSX’s predecessor Louisville and Nashville Railroad was more derailment prone with less frequent track maintenance.
To be fair I do not think Norfolk Southern is the only one having trouble, I have observed serious issues with CSX, I think the PSR crowd should study whether longer trains are really a good idea, most classification yards especially in the east were built in the 1800’s to 1920’s, the receiving tracks often only hold 40 to 60 cars, when you bring in a 300 car DP train it wrecks havoc on yard operations, often most of the yard tracks are blocked, the locals can’t work, yard jobs are blocked, other road trains can’t move in or out, most of the time train is hanging out on the main blocking important interlockings and junctions, it kills efficiency, all in the name of saving a few thousand dollars in crew pay, millions of dollars of freight is delayed. I have seen several times were CSX tries to build a 300 car train and the crew outlaws with out leaving the yard. Between getting the power together, setting up the DP power, drilling out shops, paper work problems, doubling 6 or more tracks, troubles with the conductor communicating to the engineer due to the monster train lengths, it is often a total nightmare for the crews. I think this focus of running 200 to 300 car trains really needs to be reevaluated. Some places it might work fine, other it is causing service melt downs. I am a stockholder in CSX, I would rather see more of a focus on growing business and creating better customer service, enough with only focusing on operating ratios, constantly looking for what jobs can be cut, or thinking longer trains are the solution to everything. I think in many cases it would be better to run two shorter trains a day between major terminals to keep traffic flowing, instead of running 1 monster train that will more or less outlaw, delaying customer freight and clogging the main line.
“”most classification yards especially in the east were built in the 1800’s to 1920’s, the receiving tracks often only hold 40 to 60 cars, when you bring in a 300 car DP train””
….well gee whizz, don’t you think the RRs could have improved their infrastructure with the 10s of billions they’ve made over the last hundred years (or last decade even) to accommodate larger trains?? They must have a bunch of dummies running these places trying to put 10 gallons of crap in a 5 gallon bucket. The RRs are not about growth, they are about profit by cuts.
Railroads often are some time (a few years or a few decades) ahead of other businesses in showing up the weakness in corporate trends, The essential failure of financialist based capitalism shows up in heavily capital dependent industries that are dependent on fewer and fewer employees to get things done. Railroads cannot just off shore their business to some cheaper place. Operations are fine if there is no outside hiccup to create an unanticipated need which keeps Wall Streeters happy. But that’s not the real world: stuff always happens out of managers control and if there is no slack the system collapses. Business are there for a social function of which financial results are only one aspect, and as a society we loose out when we forget it. Railroads are only the tip of a collapsing economic system.
Precision Scheduled Railroading. Three words, three lies.
Furlough thousands of employees, sell off or mothball a good amount of your locomotive fleet. Close and even remove yards. Most of the furloughed employees aren’t coming back, as many have been furloughed more than once. Discipline is rising for even the slightest infraction. The word is out on the railroads and their treatment of employees. There are lots of good paying jobs out there that don’t require the sacrifice and headaches of railroading. There are many railroaders that are leaving for better work environments and home time. Until the railroads decide to treat their employees as human beings and not just objects to be beaten down, things aren’t going to change.
Amen to that.
“Mama always said, ‘Stupid is as stupid does.'”
Welcome to the REAL world of PSR, not the make-believe of Wall Street and the C-suites. NS has so demoralized its work force with overly-stringent punishments for minor rules infractions, dictating to experienced engineers how to run their trains by office dwellers in Atlanta who are totally unfamiliar with the terrain, and cutting crew sizes to the bone. Time for a major shakeup in the Atlanta Taj Mahal.
Think how often we have read in these pages of 30 layoffs in Altoona; two dozen layoffs at such and such yard; etc.. Drip, drip and drip. Suddenly, the need for crews appears. Amazing that employers can’t understand that there are times when you need to hold personnel that may be “excess” in order to hedge against future needs.
What happened to Precision Scheduled Railroading?
Conductors jobs are all weather, uncontrolled schedules, and thankless. It is not surprising that many don’t want to get in line when there are better and then after a couple of months, they get furloughed. Hit me once shame on you, hit me twice, shame on me. I bought my NS shares back when it was in the $30’s. Rode behind 611 on the Roanoke Chapter NRHS trips to Detroit and Chicago. Track was excellent, things were running well. Now, I wonder whether they know what to do to correct things.
Bought my shares back in ’14. Now >270. Time to bail?
The gentlemen above have pretty explicitly described the nature and extent of the problem. Charging demurrage fees on top of slow deliveries is adding insult to injury.
The carriers are regulated , chartered public utilities. As such, they are obligated to provide service in the public interest at a reasonable rate of return. They have largely escaped regulatory oversite for years. The costs inflicted on customers have become intolerable and threaten the economy as a whole. I believe we should carefully study adoption of the British model wherein government owns all fixed assets (roadbed, signalling, bridges and tunnels etc) and lets the carriers bid on track time within the constraints of performance parameters. The carriers will never willingly perform at an adequate level without dire incentives to compel them. The funds that should be set aside for replacement in kind and improvements are falling into the insatiable maw of Wall St. That’s no way to run a railroad. De-capitalization is a one-way trip down a dark hole. It destroys the ability to respond to both the unexpected and the reasonably anticipated.
Couldn’t agree more with Mr Ward an Mr Gishlick. My self I think a lot of these hedge funds get into the railroads because of the amount of employees they have and the assets they own. There idea is cut every body an sell everything we have to keep the stock prices going up and our investments. And if things start looking bad we’ll just dump the stocks ( for a good profit ) and get the H— out! Most of these investers don’t give a darn about the employees or the business that depend on the railroads for there livelihood
I think hedge funds and others are getting into railroads because in an era of near zero interest rates creating cheap money these groups ran out of high return investments to put their money and started looking at lower margin businesses. EHH offers a real stark difference in return from the other Class 1s, so you adopt force adoption of PSR and get a good return on your money.
But unless your name is Keith Creel, the other class 1s got a good PSR guy, but not necessarily the best. And they aren’t the top man at CSX, NS, or UP, so you can only change the culture so much to how EHH ran the ship. And no one is capable of being the System Trainmaster EHH was, so you don’t have rock star operating people to keep the place running like a watch.
Then COVID comes and you shrink fast and you brag how great you are in recovery with longer trains. But then the global supply chain stayed screwed up and you furloughed employees and cut assets. Even though there were warning signs for years that railroads were struggling to attract people to conductor/engineer jobs you are now completely caught off by people being totally fine giving up railroad work because the quality life sucks or not wanting to get a vaccine (I honestly think vaccine mandate is second fiddle to people who don’t like the quality of life).
And that brings us to the problems of today.
Those of us who are out here observing things in the field could have told you this would happen. The railroad has sold off their “excess assets” and let go as many people as they could. It was only a matter of time before this happened as they are not able to weather even the slightest uptick in traffic. Service has been in the toilet for much of the year, with yesterday’s trains often being followed or even passed by to-day’s trains. And this is on the Pittsburgh Line, which according to the article isn’t even the hotspot.
Interesting that the railroad spokespeople want to blame the situation on everything but their short-sighted management practices, and the bottom feeders who have bought heavily into the company forcing the changes that have torpedoed service.
And to think that only a few short years ago, Norfolk Southern was actively preparing for a future of increased traffic volumes……
To put this into perspective, does anybody remember the “Crescent Corridor?” The busiest route for trucking is the I-40/ I-81 corridor between Memphis and Hagerstown/Harrisburg. NS is the only railroad that can offer direct service to most of the places in this corridor. The business is there for anybody smart enough to pursue it. But that requires thinking beyond the stock price and the next quarter.
Fancy new HQ it Atlanta, they must have some money.
According to C. Northcote Parkinson (author of the well-known ‘Parkinson’s Law’ some sixty years ago) an organization has reached its top and will shortly decline when it builds a fancy new headquarters.
Heck, very few executives can get through the day without thinking about their companies stock price let alone quarterly results. Love how the favorite line is people are our strength when they realize that it someone to actually do the work.
Jeffrey – Yes we who read Trains Magazine remember the Crescent Corridor. Spoon fed to NS by the Commonwealth of Virginia, which paid for it.
Can I state the obvious? Of the Big Four in America, Trains Magazine readers posting on these pages hold only one of the four in high regard.
And where would we be without the Canooks? In my area, southeastern Wisconsin, there are three Class Ones – CNR, CPR, both of which actually run trains, and, for a third, the owner of the parking lot in Milwaukee and Wauwatosa for laid-up yellow locomotives.
The quest for lower operating ratios leads to decreases in employee morale, longer trains that require more horsepower ie. more locomotives rather than fewer locomotives slower service and meltdowns. It signifies the outcome when satisfying Wall Street is more important than satisfying Main Street.