Managing Editor’s Note: While the mission of Railway Track & Structures is to provide reporting on topics about or related to railroad engineering, the overall welfare of the railroad industry affects us all. That’s why we occasionally focus on stories like the one below on the recent NEARS conference in Burlington, Vermont, by Railway Age Editor-in-Chief, Bill Vantuono. As most readers know, Railway Age, along with International Railway Journal, are our sister rail publications at Simmons-Boardman. We are fortunate to have a team of seasoned professional railroad journalists at each magazine, enabling us to collectively provide the most complete coverage of the rail industry you’ll find anywhere. Thanks for reading! DCL
After attending the North East Association of Rail Shippers (NEARS) Fall Conference in Burlington, Vt., Cowen and Company Managing Director and Railway Age Wall Street Contributing Editor Jason Seidl “came away with the view that while economic growth is sluggish, most do not expect a full-blown recession. In addition, several railroad executives admitted that the rails need to do a better job marketing to and servicing their customers. It was clear that Class I’s, short lines, and shippers need to do a better job of working together if rail wants to take share from the trucking space in the future.”
Following are observations from Seidl (who is also NEARS President) and Cowen analysts Matt Elkott and Adam Kramer.
Arthur Adams, Vice President Sales and Customer Engagement for CSX (recently promoted), updated attendees on the railroad’s progress of improving the customer interface, which they believe is one of their key growth objectives. Thus far this year, the company has hired new customer relations analysts, streamlined its ShipCSX interface and rolled out new intermodal public tools and pipeline alerts. The next phase will focus on Trip Plan visibility, carload equipment details and enhanced tools for the carload pipeline. CSX already creates an individual trip plan for every car and container on its network. CSX’s intermodal trip plan compliance has improved notably from 73.4% in late 2018 to just above 94% this quarter. Carload business has seen a smaller improvement in trip plan compliance, moving from 65.8% to 74% over the same time period. Further enhancements and rollouts to trip compliance should provide customers “performance transparency they have never seen before.”
Michael Miller, President of North America for short line rail giant Genesee & Wyoming, presented a regional railroad view. With the Class I railroads going through many phases of Precision Scheduled Railroading (PSR). Miller felt shippers should understand what it means for short lines for both the present day and future. Current phases of PSR have led to unexpected service changes, larger trains at interchange, bunching of customer traffic, increased switching, numerous equipment supply constraints and locomotive usage changes. Over the longer term he predicts PSR will help short lines as it provides a more consistent interchange, gives increased reliability/car fluidity, helps optimize interline service, leads to a more overall reliable service,and potentially increases volumes. He noted that while PSR cannot be applied to short line operations per se, certain concepts can be adopted by the short line railroad industry, which is what GWR did when it launched its Roots Reset program back in 2017.
John O’Bryan, Senior VP Business Development & Integration from The Greenbrier Companies, noted that PSR implementation “will continue to cause short-term pain,” but longer term, it presents opportunities for both carriers and suppliers. “New innovative car designs could play right into the PSR theme, with higher capacity cars contributing to network productivity.” Additionally, there are real opportunities to improve railcars aerodynamics. Replacement demand should also be a long-term driver as parts of the industry fleet age.
NEARS conference participants believe that a trade deal with China would be a nice boost to their businesses, with 20% of respondents believing that it would be a benefit of 10% or greater. 44% of respondents believe that rail service has gotten better over the last year, and only 22% believe that it has gotten worse, a positive referendum on the PSR implementations at Kansas City Southern, Norfolk Southern and Union Pacific. 29% of attendees believe that contract pricing will be up year over year in 2020; 27% believe that pricing will be down y/y; and 44% believe it will be flat.