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More railroads join the PSR parade

Rail News Home Rail Industry Trends November 2018

Rail News: Rail Industry Trends
More railroads join the PSR parade

UP and United Rail have adopted PSR principles to help meet performance improvement goals.
Photo – Andy Borysowski / shutterstock.com

By Julie Sneider, Senior Associate Editor

The precision scheduled railroading (PSR) bandwagon grew considerably heavier this fall, when two Class Is and a short-line company announced they’re phasing in PSR or considering elements of it as part of their operating plans.

Officials at Union Pacific Railroad and short-line operator United Rail Inc. said they’re incorporating PSR into their operating models. On Oct. 1, UP launched the first phase of “Unified Plan 2020,” a new operating plan that aims to eliminate inefficiencies and boost productivity across the Class I’s network.

The PSR principles to be adopted under the plan call for shifting the operational focus from moving trains to moving cars; minimizing car classification events and dwell time; employing general purpose trains by blending services; and balancing train movements to improve asset utilization, senior execs told analysts during a third-quarter conference call on Oct. 25.

UP first rolled out the Unified Plan 2020 last month in its Mid-America Corridor, which runs north-south between northern Minnesota and southern Texas. Further rollout will occur in phases, with implementation across the entire rail network expected by 2020.

Also last month, United Rail execs said they are executing a PSR strategy at short lines the company operates, starting with the Winamac Southern Railway in Kokomo, Indiana. United Rail is the first short-line operator to apply PSR on small railroads, company officials believe.

Meanwhile, during an Oct. 24 third-quarter conference call, Norfolk Southern Corp. executives revealed they’re developing a new operating model that might include some aspects of PSR. The plan’s details were sparse, with more information to be revealed during NS’ investor day in Atlanta in February 2019. However, PSR will be used “as long as it improves customer service and enhances shareholder value,” said NS Chairman, President and Chief Executive James Squires.

“We are looking at everything out there including elements of PSR that are complementary to our strategy,” said Squires, adding that the NS plan will feature aggressive goals aimed at reducing the operating ratio and improving the bottom line.

UP, United Rail and NS are following in the footsteps of the late CSX CEO E. Hunter Harrison, who was in the process of phasing in PSR at the Class I when he unexpectedly died in December 2017.

Harrison, who is largely credited with creating and refining PSR, also implemented it at CN and Canadian Pacific when he was CEO of those Class Is.

Success in athletics vs. railroading
Whether PSR succeeds in improving a railroad’s operational and financial performance depends on certain factors, according to a Sept. 21 report issued by analysts at Robert W. Baird Inc. & Co. The investment firm researched the parallels between success in athletics and success in operating a precision scheduled railroad.

“Our conclusion: The tactics of successful formulas (in either athletics or railroading) can be emulated and implemented, but intangibles (such as culture, experience and leadership) also play critical roles in maximizing the probability of success,” the analysts wrote.

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