Is it time to re-think rails? These thoughts and others, coming from recent meetings with shippers and short lines, have given me pause. The rails are clearly behind their self-imposed deadline of service improvement in H2/22, even if recent comments by rail leaders in some equity conferences about sequential improvement are encouraging (NS now expects to get to 2019 levels around YE22). But, despite the awkwardness of phrasing, I believe in “Service Begets Growth”… So I will, for now, stick with Top 10 core beliefs:
- PSR was brought into the US because service improvements were in a long stall – they were brought in for the shipper (and the shareholder).
- PSR was a success in Canada – for the shipper and the shareholder.
- For the most part, Wall Street doesn’t understand PSR and promotes only the margin portion of it (The Cult of the OR).
- The implementation of PSR at the US pioneer, CSX, colored DC’s opinions of it then and to this day.
- US rails had, for the most part, successfully completed what I (and some carriers) called Phase One (restructuring) by January 1, 2020 – and were poised to try out the Growth Pivot.
- The service issues that emerged in 2021 are not, for the most part, PSR but rather pandemic related (a possible exception being hump yard closures).
- Whether rightly or not, PSR has become a dirty word in the rail ecosphere and rails haven’t helped themselves either in public discussion.
- Washington has become a problem – not just the STB but perhaps even more so the FRA.
- The rails re-tried to talk the talk on growth in January of this year… (Again, they must talk – and set up investor expectations, before walking the walk) before “events” intervened.
- The rails have to act tactically (solve this service/political problem) while retaining strategic planning and spending (technology).