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When Lou saved a Zephyr

Posted 20 minutes ago by Fred Frailey
In his long railroad carrier, Louis Menk ran four big railroads: Frisco, Burlington, Northern Pacific, and the newly created (in 1970) Burlington Northern. He was unafraid to make momentous decisions and comfortable with his opinions. One oft-repeated opinion he voiced to me late in his life was this: “You couldn’t make money then, can’t make money now and won’t make money ever on intercity passenger trains. That’s all there is to it.” At the Frisco, Menk sou...

Making do with less

Posted 21 days ago by Fred Frailey
The four big U.S. railroads share the same problem this spring: the urgent need to resize themselves to match the business they have. Coal is an obvious problem. The collapse of this traffic has been swift and unrelenting. Let me give you some numbers. Union Pacific in November of 2014 loaded 28 unit coal trains a day in the Powder River Basin of Wyoming. Last month it averaged but 12 trains a day. Rival BNSF Railway loaded 46 trains a day in the PRB in November of 2014, but last month, a mere 2...

Inside the mind of Michael Ward

Posted one month ago by Fred Frailey
Sometimes you wonder why you ever wanted the job. What a fix your company is in today. And it’s not just about CSX Transportation. You could as easily be Lantz Fritz or Jim Squires or the chief executive of any other U.S. Class I railroad. We’re all running enterprises that are in a world of hurt—running on fumes, even. The bottom has fallen out of your businesses. What in the heck are you going to do? You have done all the easy things. You laid up locomotives (and gosh does i...

Why your fried chicken ate Brazilian corn

Posted one month ago by Fred Frailey
Get this: It’s now cheaper for a hog farmer or chicken raiser in North Carolina to buy corn grown in places like Brazil or Argentina than in the U.S. Midwest. A host of reasons account for this anomaly, but not the least of them is the price charged by American railroads. The strange occurrence will be seen more frequently in 2016. First of all, the world is awash today with commodities of all kinds, from really hard stuff like iron ore to greasy goo like crude oil to crunchy things like,...

Advice for the NEXT rail merger

Posted one month ago by Fred Frailey
I’ve been working on a book, a tiny piece of which involves examining the failed attempt by Burlington Northern Santa Fe and Canadian National railways to merge. That was in 1999-2000. And the more I lift the dead leaves off that failed enterprise, the more startled I became. The parallels between Canadian Pacific+Norfolk Southern in 2015-2016 and BNSF+CN in 1999-2000 are striking. Granted, BNSF+CN was a friendly affair between those two railroads, whereas CP+NS is quite the opposite. But...

Hunter's grand plan revealed

Posted 2 months ago by Fred Frailey
Mr. Harrison’s office, Irma speaking. How can I help you? Irm, this is Jim Squires at Norfolk Southern. May I speak with Hunter? Sir, my name is not Irm. Mr. Harrison says he has nothing to say to you. You have hurt his feelings. But Joyce . . . Irma . . . Irma, I want to speak to him. My board of directors now says we need to talk, Hunter and I, like adults. Mr. Harrison says . . . just a minute . . . what did you say, Mr. Harrison? . . . he says you need to spend some time with you...

What if Donald wins? Hillary?

Posted 2 months ago by Fred Frailey
It's not too soon to be thinking about how railroads will be affected by the election of our next president. Let's start by imagining President Donald Trump. Every U.S. chief executive since the creation of Amtrak in 1971 has done no better than to give the passenger train company lip service. Most (I'm tempted to say all) Republican presidents sought to end its federal subsidy, which would have led to its demise. I can see a President Trump possibly making one big difference in the other direct...

60 minutes in the life of EHH

Posted 2 months ago by Fred Frailey
“Hunter Harrison here, Michael. How are things in Jacksonville? And when are you going to come down to Plantation and see my horses? . . . Whatdaya mean, you’re pissed at me? . . . Yeah, I told the Journal about our offer to buy CSX, and yeah, I know the Journal said I offered $20 billion and you heard me offer you a lot less. Michael, this is the real world and I just wanted to apply some public pressure. But if you’ll come to the table we can get the deal to $20 billion. I ca...

Requiem for the Tidewater Turn

Posted 3 months ago by Fred Frailey
In the larger picture of coal’s demise as a source of electric power (and railroad tonnage), what happened this week in Northeast Texas carries little meaning. But it means a lot to me and to a circle of my friends, including Nathan Bailey. So let me explain. When I grew up in the little town of Sulphur Springs, what is now called Kansas City Southern Railway’s Greenville Subdivision, between Shreveport, La., and Dallas, was in a world of hurt. Two freight trains a day each way beca...

Ever feel you're being stalked?

Posted 3 months ago by Fred Frailey
That uncomfortable feeling must be going through the mind of Norfolk Southern chief executive Jim Squires. Until two weeks ago, the prevailing assumption had been that the stalker, Canadian Pacific, would mount a proxy contest to elect its directors to the NS board and thereby hasten a friendly merger between the two railroads. Then CP abruptly changed direction. In an interview with me on February 3, CP chief executive Hunter Harrison raised two issues that he claimed would keep his company fr...

Is Hunter too old to run NS?

Posted 3 months ago by Fred Frailey
Hunter Harrison raised the issue in an interview we did yesterday: He fears winning a proxy battle for control of Norfolk Southern’s board of directors and not being able to go there as its chief executive. You can read the Trains News Wire story here. Now that Harrison has brought the subject out of the realm of email and blog debates and fully into public view, let’s examine it. What Canadian Pacific Railway has proposed is to buy Norfolk Southern. NS directors have rejected three...

3 Amtrak trains in jeopardy

Posted 3 months ago by Fred Frailey
Some friends of mine in the railroad business now question the viability of CSX Transportation and Norfolk Southern as going concerns. One such person awoke the other night with brain spasms. Holy moly, he thought, veering in and out of sleep, Virginia and West Virginia in 2016 are beginning to look a lot like Pennsylvania in 1960. Back then, Pennsylvania railroading was defined by the movement of coal. Anthracite was dying, and Erie, Lackawanna, Lehigh Valley, Jersey Central, and Delaware &...

What would Hunter do at NS?

Posted 4 months ago by Fred Frailey
There exists on this blog a great deal of anger about and ignorance of Ma Harrison’s boy Hunter. You are entitled to your opinions—and lord knows I let you freely express them—but most of you talking the loudest don’t know jack about the man’s strengths (and are clueless about his weaknesses). The people who really know the man are those who have worked for him. They've see it all up close. I’ve spoken the past two days with three such people. I put this to t...

The Canadian Pacific derailment

Posted 4 months ago by Fred Frailey
Hunter Harrison and Keith Creel got a lot of attention this week during Canadian Pacific’s quarterly call with analysts. The upshot is a speculation that Calgary-based CP may be backing away from its proposal to buy Virginia-based Norfolk Southern. That may well be the case. I have never felt confident that the U.S. Surface Transportation Board will approve this merger (or any other one involving the Big Six railroads). It’s fair to say that nobody running a Class I railroad wants a...

The party's over

Posted 4 months ago by Fred Frailey
Jack and I left Grand Island at 6:30, fully an hour before the sun appeared behind us over the Platte River valley of Nebraska. West we went on U.S. 30, past Alda, Wood River, and Gibbon. Through Kearney, Odessa, and Elm Creek. Then Overton and Lexington. These are towns along the busiest freight train corridor in North America, maybe the world, triple-tracked for the 100 miles from Gibbon to North Platte. We saw snow-covered farm fields, herds of cattle, occasional cars and trucks. What we did ...

Newell Winford Derryberry

Posted 4 months ago by Fred Frailey
When I came of age in the 1960s, his was a name on the cover of Missouri Pacific timetables, that railroad’s superintendent of transportation. In the mid 1950s (preteen for me), I think we met while he was chief dispatcher of Texas & Pacific’s Western Division. Only much later in our lives, when I wrote a feature story in Trains about the revival of the Texas & Pacific route across West Texas (“Union Pacific’s Desert Bloom,” August 2002), did we finally get ...

4 who could run Amtrak

Posted 5 months ago by Fred Frailey
When I put out the call for your ideas on who should lead Amtrak after Joe Boardman’s retirement next September, you made me proud. Lots of good responses. But one in particular struck me. John Heffner wishes for someone of the caliber of Herb Kelliher, the legendary president of Southwest Airlines. Heffner continues: “The ideal candidate would be someone with a passion for passenger trains, a railroad operating executive who could go toe-to-toe with the host railroads when necessary...

A plan for Mr. Squires

Posted 5 months ago by Fred Frailey
It is becoming apparent that the chief executive of besieged Norfolk Southern wants just to wait out invader Canadian Pacific. If you clam up and do nothing, the thinking goes, CP and its leader, Hunter Harrison, will either become discouraged and go away or be soundly defeated in a shareholder vote for directors next spring. I say this because the plan Squires put forth when CP first made an offer to merge the two railroads is so feeble as to be laughable. Squires’ plan had two parts. Fir...

After Joe Boardman, who?

Posted 5 months ago by Fred Frailey
My first reaction upon reading Joe Boardman’s plan to retire as chief executive of Amtrak next September was that my fellow Trains columnist, Don Phillips, will need to find new topics to write about—Joe and Don were not a marriage made in heaven. Then I reread the Boardman’s statement, which ends this way: “The Board has asked me to work closely with them in the selection of the new CEO. I am confident that the time I have given the Board they can achieve the goal of sel...

The war of attrition

Posted 5 months ago by Fred Frailey
A lot of smart people who participate in this blog are busy hashing up the North American railroad network in the wake of the Canadian Pacific-Norfolk Southern imbroglio. I’m impressed by the logic you put forth for A+B and D+E and C+F, all as a result of CP+NS. Let me just suggest you are all premature. First there must be CP+NS. It is getting late in the day for a friendly resolution of Canadian Pacific's bid to buy Norfolk Southern. A war of attrition has begun. Both railroads seem int...

Demystifying Hunter Harrison

Posted 5 months ago by Fred Frailey
Hunter Harrison calls his management style “precision scheduled railroading.” But what is precision scheduled railroading, anyway? And is it customer friendly or customer unfriendly? I’m here to explain. It helps to put aside both “precision” and “scheduled.” The words are almost misleading. The central element of precision scheduled railroading is so simple almost everyone misses it: intensive use of assets. The assets of a railroad are cars, locomotiv...

Matt Rose: If NS goes, we're in

Posted 5 months ago by Fred Frailey
The executive chairman of BNSF Railway is fond of saying that railroad mergers don’t occur in a vacuum. Do one, says Matt Rose, and there will be another. “They always go in pairs,” he said today. With hints like this, who needs to speculate? In case you still don't get it, Rose says that if Canadian Pacific and Norfolk Southern seek regulatory approval to merge, BNSF will participate, “both in the approval process and strategically in terms of buying another railroad.&rd...

Jim Squires turns into toast

Posted 5 months ago by Fred Frailey
“I’ve seen this movie before,” investor and Canadian Pacific director Bill Ackman said in the middle of today’s conference call with securities analysts. So have I. The movie was “The Hunter & Bill Show” that he and Hunter Harrison podcast over the internet from Toronto in 2011, when Ackman was campaigning to replace CP management with the recently retired Harrison. Watching their performance then, I thought to myself that Fred Green, then the CEO of Canad...

Norfolk Southern's woeful counterattack

Posted 5 months ago by Fred Frailey
Edited 12:14 p.m. Dec. 4 Give Jim Squires a “B” and a pat on the back for trying hard. He is freshly minted as chief executive of Norfolk Southern, and I wouldn’t wish for anyone in such circumstances to be under the pressure he’s had to withstand. Today NS formally rejected Canadian Pacific’s offer to buy the Norfolk-based railroad. Squires had to defend that decision in a public presentation and then under questioning from plainly skeptical securities analysts. H...

Then the door opened and . . .

Posted 5 months ago by Fred Frailey
Hunter Harrison must feel frustrated. It has been almost three weeks since his company, Canadian Pacific Railway, made a formal offer to buy Norfolk Southern and forge the first true transcontinental North American railroad. In the interim, Harrison has pledged some form of open access to shippers, offered NS chief executive Jim Squires a top job at the merged company and pledged to pay NS investors immediately by putting the acquired railroad in trusteeship while the merger is adjudicated. Yet ...

An hour in the life of Jim Squires

Posted 6 months ago by Fred Frailey
In an office high above the streets of Norfolk, Va., a handsome, middle-aged man picks up his phone on the second ring. “Squires.” “Jim! It’s Hunter!” “Hunter, you’ve got to quit calling me. I’ve told you three times today my board wants us to keep going it alone. It’s our best option to build shareholder . . .” “Ah Jim, I am only calling because your directors don’t know all the facts.” “Like what?” ...

Finding Nemo

Posted 6 months ago by Fred Frailey
Today is nasty, windy and rainy. So to pass the time in western Illinois, I’m looking for Nemo. Not Pixar’s fantasy movie Nemo (I’m not that stupid), but the real one. Well, that’s not right, either. My Nemo is fictional, too. There never was a town of Nemo, because the population of the place never made it from 0 to 1. And even the physical presence of Nemo has been gone for, hmmm, about half a century. Now that I’ve confused you, go to Google Maps and type: Ormon...

L'affaire NS: The end game

Posted 6 months ago by Fred Frailey
I am going to make a prediction: A purchase of Norfolk Southern by Canadian Pacific Railway will never make it to the Surface Transportation Board for its merits to be approved or rejected. The reason is simply this: Neither BNSF Railway nor Union Pacific can allow this to happen. It is inconceivable that either of the western rail giants would let one of the two eastern railroads be snapped up and not be part of that deal. Because if the unthinkable happens, then there is only CSX Transportatio...

Is this merger doable (or worth it)?

Posted 6 months ago by Fred Frailey
Will they or won’t they? More to the point, should they? They of course are Canadian Pacific and Norfolk Southern railways, reported this week to be considering a merger in which CP would buy the Virginia-based NS. CP’s traffic growth has sort of flatlined, meaning that the best way to grow may be to buy the carloads, in this instance, a whole railroad. Norfolk Southern is not in an enviable position. It’s top executives are all new to their roles, and I sense there is some dri...

Mr. Squires, you have a visitor

Posted 6 months ago by Fred Frailey
Well, here we go again. Just when I am trying to decide which root vegetables should adorn our Thanksgiving table, Hunter Harrison sneaks past all of us and steals Norfolk Southern! Okay, he hasn’t stolen Norfolk Southern. Or even bought it or merged with it. Yet. But this is the real thing, folks. We’ve been asleep at the switch, and Mrs. Harrison’s boy Hunter, the chief executive of Canadian Pacific, showed up with roses to give young Jim Squires, the chief exec of NS. Squir...

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