Associations representing railroad shippers say they’re concerned about Ancora Holdings’ proxy battle at Norfolk Southern, fearing that the activist investors will put an emphasis on boosting short-term profits at the expense of service.
“Seems as if NS is making strides on improving service which, to a certain degree, means abandoning some of the Precision Scheduled Railroading practices, and focusing more on capital improvements, its employees, shippers, and ultimately the end-consumer,” says Ann Warner, a spokeswoman for the Freight Rail Customer Alliance, National Industrial Transportation League, and the Private Railcar Food and Beverage Association. “However, this proposed new leadership slate seems to be an excessive reaction to what may be a brief rise in NS’ operating ratio where they are only interested in short-term gain rather than what is needed in the long run for NS to better serve its customers and its investors.”
The FRCA is an umbrella group of trade associations representing more than 3,500 chemical, manufacturing and agriculture companies, electric utilities, and their customers. The NITL represents shippers’ interests in all modes. The PRFBA represents 17 food and beverage companies, including General Mills, MolsonCoors, KraftHeinz, and Tropicana.
Railroad unions and federal regulators also have said they back the current NS management team and its long-term service resiliency strategy.
Ancora, which launched its proxy battle to gain control of the NS board and oust CEO Alan Shaw and Chief Operating Officer Paul Duncan last month, has been highly critical of the railroad’s response to the Feb. 3, 2023, hazardous materials derailment in East Palestine, Ohio, as well as NS’s lagging financial and operational performance.
Ancora has touted former UPS executive Jim Barber as NS CEO and former CSX operating chief Jamie Boychuk as NS chief operating officer.
NS shareholders ultimately will decide the matter. A vote tally will be announced at the railroad’s annual general meeting which is typically held in May but has yet to be scheduled.
I’ll heartily second Mr. Carbonetti’s praise of Mr. Powell’s post.
Sounds like the Wall Street wackos are the only group to think their “improvements” and “better cash flow” proposals will be a good thing for NS.
We have RRs, its labor unions, and businesses all sounding the alarm. Now national labor unions should enter the fray because their steady jobs may get hurt with delivery disruptions. There will be a lot of political push to finally do something.
That Ancora referred to Hunter Harrison as a “legend” in a recent press release is all one needs to know about how tone deaf their management is in terms of understanding the rail industry. PSR was no more than exactly what the RRs should’ve been doing all along – running assets as much as possible on a reliable schedule. It’s simple on the surface but he quickly learned that some systems (CSX) aren’t as easy to turn into PSR models as was CN and CP. He was a snake-oil salesman and got paid, and ever since, the industry has been on an apology tour to shippers and regulators and trying to run disciplined railroads while not cutting to and through the bone. Ancora’s might have been welcomed in 2015 – but the industry has come a long way and learned a lot since then. Whomever is giving them advice on this attempted takeover needs to be smacked in the head.
Well said. Here’s hoping shareholders heed your advice.