What would Hunter do at NS?

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 them: His critics think Harrison would fail miserably in overhauling Norfolk Southern to become a better railroad. Do you agree with them?

Person #1 worked for Harrison in a top operations job while Hunter was president of Illinois Central, and he later went on to distinguish himself as president of another railroad. Said he: “The first thing Hunter would do is acknowledge coal is o-v-e-r and toss his coal network together with that of CSX and run it as a separate company, like Conrail Shared Assets. He would spin off to short lines everything that doesn’t fit into a core network. In other words, he would simplify things. If he were smart, as I know he is, he would buy Kansas City Southern because the two railroads fit together well and because of KCS’s Mexican franchise, which still has 30 years to go. That way NS would become a better bride for the next and final merger. So do I think Hunter would succeed at Norfolk Southern? Oh, goodness yes.”

Person #2 worked for Hunter as a senior VP at Canadian Pacific: “Could he bring efficiencies to Norfolk Southern? Absolutely. He excels in the yards. He is good wringing productivity out of them, and NS is cluttered with yards. NS has not had good terminal people in a long time, and shows it. The customers loved Hunter at CP. He always delivered on what he said he would do. Maybe they wanted 7 a.m. deliveries. Hunter would say no, that won’t work but 9 a.m. will, and delivered on time every day. Everyone thought he would run off intermodal customers at Canadian Pacific, but he actually grew that business.

“Hunter is very present, very focused on the present. He doesn’t starve the network for capital—if it is a main corridor and needs investment, he provides it. Asset utilization at CP is close to perfect. Locomotives stay in tip-top condition, and he keeps them rolling. Will he do what he says he will do at NS? Yes. NS is more complicated than CP. He will simplify the network and make it far more efficient without driving out traffic except that which requires four or five handlings and is cost-inefficient.”

Person #3 is a Calgary-based CP officer who has had many first-hand dealings with Harrison: “EHH at the head of NS or a NS/CP merger would restore the railway to glory, but the map will look very different. The key to the equation (like every other place EHH has gone) is ensuring customer cars are transited through yards in less than 24 hours and that the total number of handlings and switches, from initial pickup to delivery, is kept to a minimum. By the way, this philosophy works regardless of a network’s complexity, but there can be prices to be paid with this, because not all customers will be happy, especially if the railway's profit margin on that business is low. An EHH-led railroad will not sacrifice profitable business to maintain traffic which is not. The key metric to watch internally is the revenue/cost ratio, which is expected revenue generated per car, divided by the cost to move the car from point A to B (and return if necessary). If your business doesn’t meet the required criteria to be considered profitable, expect the level of service to change.
“Asset utilization would be one of the biggest initial impacts. With scheduled precision railroading comes trips plans for cars which can be followed and predicted and result in reduced cycle times. This translates into fewer customer cars being required in many lanes of business thus less congestion in yard and on the network which quickly translates into the removal more assets and even faster cycle times. As assets are removed or parked your operating costs reduce yet your ability to move more business increases.”

I’ll add one other comment, my own. The challenge as I see it for Harrison is not to let his talent for intensive use of the fewest possible number of cars and locomotives get ahead of his business sense. When BNSF Railway and Canadian National were trying (unsuccessfully) to merge, BNSF hosted a Chicago-Los Angeles business car train for the top people of both railroads. Harrison was heard to remark that if every train were run at 50 mph, the railroad would run a far sight easier and less expensively. BNSF people were proud of their reputation for running 70-mph Z trains for United Parcel, the U.S. Postal Service and less-than-truckload truckers, and Harrison’s insensitively to this highly profitable business was stunning. But Harrison now tells this story on himself, shaking his head with wonderment, so there is hope for the man.

Kathleen Parker, an op-ed columnist for The Washington Post, wrote in today’s edition, “The challenge for those of us in the observation business is to illuminate what’s plainly obvious without offending those who prefer not to see.” How true, how true. Those of you who keep your eyes closed no matter what: Time to open them.—Fred W. Frailey