Author Topic: NS's new "strategic plan"  (Read 2408 times)

BourdonBoy

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Re: NS's new "strategic plan"
« Reply #20 on: February 14, 2019, 11:34:54 AM »
*****>>OPINION ALERT<<*****

https://www.bizjournals.com/jacksonville/news/2019/02/13/amid-regulatory-scrutiny-csx-leads-nation-in.html

A CSX spokesperson said at the time that customers had been informed of the changes ďincluding a reduction in the grace period and an increase in the daily fee, all of which aligns with industry standards.Ē

CSX CEO Jim Foote goes on to say that the fees relate to customer requests to do extra "ancillary services," which conflict with the company's ongoing transition to an efficiency-focused operating model, precision scheduled railroading.
"In all cases, [the fees'] purpose is to further the efficient management of assets and promote a fluid transportation pipeline," Foote wrote.

It seems to me that, more and more in recent years, "industry standards" have changed from railroads wanting to keep their customer shippers happy to instead wanting to only keep Wall Street happy.  The logic behind that absolutely eludes me.  It reminds me of the old adage "Teaching would be great if there weren't all these kids here".

My dad worked himself to death in corporate sales.  If his company had started bowing-down to investors and totally stopped maintaining (and growing!) their customer base, he and everyone below him would have been out of a job.  I get that the goal of any business is to earn money for its owners.  But when your business is to provide a SERVICE, then that service--and customers who mostly can choose whether or not to use your service--must absolutely be the priority of the business.

*****>>END OF OPINION<<*****

Rick

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Re: NS's new &quot;strategic plan&quot;
« Reply #21 on: February 14, 2019, 11:58:05 AM »
*****>>OPINION ALERT<<*****

It seems to me that, more and more in recent years, "industry standards" have changed from railroads wanting to keep their customer shippers happy to instead wanting to only keep Wall Street happy.  The logic behind that absolutely eludes me.  It reminds me of the old adage "Teaching would be great if there weren't all these kids here".

My dad worked himself to death in corporate sales.  If his company had started bowing-down to investors and totally stopped maintaining (and growing!) their customer base, he and everyone below him would have been out of a job.  I get that the goal of any business is to earn money for its owners.  But when your business is to provide a SERVICE, then that service--and customers who mostly can choose whether or not to use your service--must absolutely be the priority of the business.

*****>>END OF OPINION<<*****
Well put.  I believe there is a fine line between keeping your share holders happy and the customers.  You keep pushing out the customers, you eventually run out of customers(insert middle class if you wish)

The push now is van traffic and itís increasing year to year.  The problem is, that makes the least amount of money for the railroad.  If the railroads arenít careful, that could be the only traffic left and there wonít be enough if it to maintain the profits they are currently experiencing. 


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IndyHog

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Re: NS's new "strategic plan"
« Reply #22 on: February 14, 2019, 12:04:10 PM »
Right. After all is said and done all that will be left will be captive shippers and bulk shippers. Pretty much railroads exploiting their monopoly.
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Rick

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Re: NS's new &quot;strategic plan&quot;
« Reply #23 on: February 14, 2019, 12:06:37 PM »
Right. After all is said and done all that will be left will be captive shippers and bulk shippers. Pretty much railroads exploiting their monopoly.
Yep, and when those customers realize itís cheaper and quicker to go by truck the railroads could be caught with their pants down.  Thatís an extreme case but not out of reality


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CSX_CO

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Re: NS's new &quot;strategic plan&quot;
« Reply #24 on: February 14, 2019, 12:34:12 PM »
Yep, and when those customers realize itís cheaper and quicker to go by truck the railroads could be caught with their pants down.  Thatís an extreme case but not out of reality

Itís never cheaper to go by truck.  Quicker, yes, but never cheaper. Donít forget truck companies know this, and so price their services as a such too.

Railroads arenít necessarily a ďmonopolyĒ.  Power plants could get coal by truck. Purdue did this.  Grain can always go via truck too.  Plenty of elevators not on rail lines.  Railroads know their customers are somewhat stuck between a rock and a hard place.  So, why not capitalize on that?  Again, provide good enough service they donít go to trucks.  After all, theyíre somewhat stuck unless they want to go to trucks.  Isnít that called leverage?

Rick

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Re: NS's new &quot;strategic plan&quot;
« Reply #25 on: February 14, 2019, 12:42:12 PM »
Itís never cheaper to go by truck.  Quicker, yes, but never cheaper. Donít forget truck companies know this, and so price their services as a such too.

Railroads arenít necessarily a ďmonopolyĒ.  Power plants could get coal by truck. Purdue did this.  Grain can always go via truck too.  Plenty of elevators not on rail lines.  Railroads know their customers are somewhat stuck between a rock and a hard place.  So, why not capitalize on that?  Again, provide good enough service they donít go to trucks.  After all, theyíre somewhat stuck unless they want to go to trucks.  Isnít that called leverage?
I just realized I didnít type that last post correctly.  I meant to say eventually trucking could be cheaper if they keep raising the cost of doing business.  You are correct, itís not cheaper to go by truck. 

Some years back, ns did this with oil trains to the east coast.  They charged a premium over what csx was charging them because ns could get the unit trains there a day faster.  One of the minions asked how does that make sense when said companies can only hold so much oil?  Ns representative had no answer for that.  That charged premium price didnít stay high very long. 


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SankyInbound

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Re: NS's new &quot;strategic plan&quot;
« Reply #26 on: February 14, 2019, 05:59:49 PM »
After all, theyíre somewhat stuck unless they want to go to trucks.  Isnít that called leverage?

Sounds more like exploitation than leverage.  Theres a difference between that and charging what the market will bare.  This type of an attitude will be exactly what officials need to push their case for regulation of the industry.  Especially in todays quick, fast, and in a hurry retaliatory world.  Very few rail customers in the U.S. can choose between two competing roads for their needs.  So we had better be careful when selecting our statements about industry "leverage." 

We are in the business of moving rail cars, we had best move them, all of them we can.  And move them promptly, efficiently, and to the liking of the customer.  We better start by figuring out how to do that to the best of our ability instead of concentrating on the evaluation of our customers to make sure they fit our "new cost margin threshold."  After all the expenses are paid; a dollar made is a dollar made no matter how you say it.  Those ideals are the basis of a solid business working towards a long term future.

We move a lot of rail cars to a lot of little guys everyday all over the country, if we loose those little guys the rail network would cease to exist as we know it.  Sure the big gains come from the big unit trains that take less switching, less managing.  But the industry managed many more customers in the the past, with hard work and dedication, and without smart phones, and without bookface as distractions.  If we cannot refocus as an industry, as a national railroad network, then there is a much bigger, underlying issue; the drive for service excellence has been substituted for the relentless pursuit of investment gains, at the cost of a long term profitable future.

If we cannot make a profit on moving every revenue rail car on our network then we will be answering some questions with "The Bobs" at some point...
« Last Edit: February 14, 2019, 06:19:19 PM by SankyInbound »
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510Russ

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Re: NS's new "strategic plan"
« Reply #27 on: February 14, 2019, 06:17:18 PM »
BourdonBoy wrote,

Quote
It seems to me that, more and more in recent years, "industry standards" have changed from railroads wanting to keep their customer shippers happy to instead wanting to only keep Wall Street happy.  The logic behind that absolutely eludes me.  It reminds me of the old adage "Teaching would be great if there weren't all these kids here."

I think that problem is present in many industries, not just railroads.  The principle is short-sightedness motivated by greed: "I got mine and got out."

-- Russ

xgap

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Re: NS's new "strategic plan"
« Reply #28 on: February 14, 2019, 10:56:57 PM »
Ding the small shippers, what about the Big ones? Service to the Ford Kentucky Truck Plant still has not returned to the levels of the pre Hunter days.
Time for open access and let the G&Ws, Cormans connect their dots via class 1 trackage. Regionals to the rescue.

CSX_CO

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Re: NS's new "strategic plan"
« Reply #29 on: February 14, 2019, 11:09:43 PM »
Time for open access and let the G&Ws, Cormans connect their dots via class 1 trackage. Regionals to the rescue.

Sounds good. 

As long as we do the same to the phone lines, cable lines, and electrical grid. Open access for everything then, no more being stuck with whomever is the local provider. 

Why is it Iím paying a local electric provider who just buys power from Duke?  ETC ETC ETC.

rrnut282

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Re: NS's new "strategic plan"
« Reply #30 on: February 15, 2019, 09:56:02 AM »
PSR is not a long-term strategy.  Pricing customers out of the market (running off the small shippers) is a very short-term, damaging, self-destructing idea.  Think for a second, how many big customers, were big customers right at start-up?  Very few.  Most were small shippers who grew into big shippers.  Running them off now doesn't let them grow into big shippers. 

And the dirty little secret EHH and other PSR devotees overlook:  customers go away through no fault of the railroad.  They go bankrupt, get bought out and shut down (consolidated elsewhere), or move to "cheaper locations," leaving a big hole in the railroad's traffic.  If all you have is big shippers, it's a big hit to traffic every time a customer fails.  And where will you find traffic to replace that big loss?  Hmmm, a lot of small customers?  It's much kinder to the bottom line if you have a mix of customers, and because of randomization, when you lose a customer, it's not always a big one. 
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MSchwiebert

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Re: NS's new "strategic plan"
« Reply #31 on: February 16, 2019, 06:44:57 PM »
I'm guessing (corrections welcome!) that the business base for a typical class one railroad adheres to the "80/20" rule just like many other things in the business world.  In other words, 20% of the customers provide 80% of the business (be it volume or dollar value).  One of the things that made me re-think PSR, and look at it more positively was an interview with Jim Foote, where he mentioned one of the outcomes of PSR was reducing the number of "touches" that a freight car had as it worked its way through the system.  Every industry is striving to reduce the number of operations/touches during the production process as a way to lower costs and keep more money in the producers pockets, it's refreshing to see this thought process come to railroading as well.  A good analogy of the "prior way" of doing things is if you ordered something and it went from the manufacturers warehouse, to the wholesalers warehouse, then to the distributors warehouse and then they would mail it to you - as opposed to what Amazon does where they either ship direct to you from the mfg. or they have the mfg. ship to a fulfillment center - which in turn ships direct to you.  (this is why I never quite understood the "railfan angst" over CSX realizing that they didn't need as many hump yards as they had - and taking action to correct it)  I will also contend that in some respects PSR concepts are indeed long term actions from the perspective of being necessary as the railroad industry moves to a "post coal" world.  Sure, picking up customers can - to a degree, offset coal becoming a fraction of the book of business that it once was, but there also has to be structural changes made, as the configuration of the physical plant will no longer make sense as coal continues it's decline.
Finally, it was inevitable that NS follow CSX down the PSR path - think if they wouldn't have.  1. their cost structure would have been out of whack making it extremely difficult to solicit business that could go to either NS or CSX.  (if it cost you 60 cents to make a widget, and your competitor can't make for less than 75 - think of how many options it gives the company that does it for 60) 2. The investment community would have made their displeasure known - and invested their capital elsewhere.  (yes I know that BNSF is "staying the course" - and being privately owned, they do have options that the publicly traded companies don't, and it'll be interesting to see how things shake out after the other carriers complete their implementation. Perhaps "Uncle Warren"  will still stay the course - perhaps not).

MP173

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Re: NS's new "strategic plan"
« Reply #32 on: February 17, 2019, 11:26:08 AM »
NS is running their locals out of Burns Harbor now on weekends.

BO8 just headed east with 1 car for Alpha Baking...nothing for Worthington Steel or INTek.

B05 is also running up the Michigan line.

Ed

Rick

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Re: NS's new &quot;strategic plan&quot;
« Reply #33 on: February 17, 2019, 04:39:11 PM »
NS is running their locals out of Burns Harbor now on weekends.

BO8 just headed east with 1 car for Alpha Baking...nothing for Worthington Steel or INTek.

B05 is also running up the Michigan line.

Ed
Yes.  I believe all locals system wide are currently running 7 days a week. 


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jdonutken

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Re: NS's new "strategic plan"
« Reply #34 on: February 20, 2019, 01:20:06 PM »
BourdonBoy wrote,

I think that problem is present in many industries, not just railroads.  The principle is short-sightedness motivated by greed: "I got mine and got out."

-- Russ

Agree. It's more of a "what can you do for me right now?".  One contribution I see to this is tax laws. If tax laws were re-written to favor re-investment, long-range planning, growing the business instead of maximize today, like tomorrow will never come, or at least we won't be around to see it, it'll be somebody else's problem...it might sober up businesses in general.  And Russ-you're right.  When I was driving crews, especially under EHH, the guys would marvel at the apparent corporate ignorance.  I assured them it wasn't just their railroad; in fact, that all (or most) businesses were being run in this fashion...
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rrnut282

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Re: NS's new "strategic plan"
« Reply #35 on: February 20, 2019, 03:11:38 PM »
Rick,

Not all locals are 7/wk, yet.  L69 here on the New Castle only runs on weekends as a relief crew L6Z or something to get the power back to the yard to re-start the circus Monday morning.
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Rick

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NS's new "strategic plan"
« Reply #36 on: February 20, 2019, 03:16:37 PM »
Rick,

Not all locals are 7/wk, yet.  L69 here on the New Castle only runs on weekends as a relief crew L6Z or something to get the power back to the yard to re-start the circus Monday morning.
Thatís correct.  From what Iíve heard, relief crews arenít considered part of the 7 day a week plan.  We still have a 5 day job thatís not 7 because the industries they serve are only open 5 days a week, again just what Iíve been told so take that for what itís worth.  Could be why that local us used as relief on weekends.


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