The war of attrition

Posted 3 years 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 3 years 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 3 years 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 3 years 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 3 years 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 3 years 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 3 years 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 3 years 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...

Is this merger doable (or worth it)?

Posted 3 years 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 3 years 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...

Where in the world is Fred?

Posted 3 years ago by Fred Frailey
Thank you for missing me, for the emails asking if I were sick or angry or just tired. I did not realize the abundance of your affection. When I agreed to blog several years ago, I told Trains Magazine editor Jim Wrinn I’d post something online twice a week—that is, if I had anything to say. And that explains my absence; I haven’t had anything to say. Something else got in the way. After 30 years in one place, Cathie and I decided this spring to uproot ourselves from our rambl...

A PTC "fix" won't be easy

Posted 3 years ago by Fred Frailey
I’ll begin with this observation: If our political system can shut down the U.S. government repeatedly, it’s altogether possible it can allow the U.S. railroad network to close up shop, too, however briefly. That said, I think rational minds will ultimately prevail and extend the deadline to install positive train control for another three years past this December 31. Just don’t bet your last buck on it, and I’m here to tell you why. As background, Congress in 2008 enact...

BNSF: We will shut down

Posted 3 years ago by Fred Frailey
In a candid letter to a U.S. senator, BNSF Railway’s chief executive, Carl Ice, said September 9 that BNSF would in effect shut down most of its network rather than violate a federal law mandating that positive train control be operational by December 31. CSX Transportation has said it, too, questions whether it should violate federal laws, and other Class I carriers are likely to follow suit. This set up the real possibility of a national transportation crisis at the beginning of 2016. Th...

Thinking the unthinkable

Posted 3 years ago by Fred Frailey
Cathie and I rode the Cape May/Lewes Ferry across Delaware Bay this weekend to attend a wedding. It’s a relaxing, 90-minute trip between Delaware and the southern tip of New Jersey. On the way back, my mind got to wandering: What a perfect setup for a terrorist! You drive your car onto the boat. Once well away from shore you take your weapons out of the trunk and there’s nothing anyone can do to stop you doing what happens next. Kind of like what could happen on a long-distance trai...

Who carries the coal in 2015

Posted 3 years ago by Fred Frailey
The slump in coal traffic on railroads is abating a bit, and about time. Loadings through Week 33 of 2015 (last week) showed year-to-date coal declines  (versus last year) of 12 percent at CSX Transportation, 23 percent at Kansas City Southern, 17 percent at Norfolk Southern, and 16 percent at Union Pacific. Only two Class I lines showed year-to-date coal increases, BNSF Railway (up 3% ) and Canadian Pacific (up 7 percent). Still, the skid has knocked a hole in railroad revenues so big that...

My Hypocrite of the Year Award

Posted 3 years ago by Fred Frailey
I’ve never had a high opinion of Connecticut politicians, of either party. I have developed a particular urge to kick in the ass that state’s senior U.S. senator, Richard Blumenthal, for being a publicity hound and hypocrite. That urge began after the overturning in December 2013 of a Metro North Railroad train on a sharp curve at Spuyten Duyvil, N.Y., resulting in the death of four passengers. Blumenthal and fellow Democratic Senator Chuck Schumer (they’re known to some repor...

The wreck of old 54 (Part II)

Posted 3 years ago by Fred Frailey
As the two derricks picked up the wrecked locomotives and cars from the October 12, 1955, head-on collision three miles from my home in northeast Texas (go here to read the first installment of “The Wreck of Old 54”), they were loaded onto flat cars and stowed on the short siding in Sulphur Springs. That weekend, I stood beside the depot and watched as Kansas City Southern Lines GP7 locomotive 151 towed a lengthy hospital train toward Shreveport. The shoofly at the accident site was ...

The wreck of Old 54 (Part I)

Posted 3 years ago by Fred Frailey
(The following account is dedicated to the memory of my friend Harold K. Vollrath, a railroader's railroader who died this month at age 92. Harold, or HKV to those who saw his initials on train orders, was dispatching the L&A Division the early morning that this collision occurred but was not involved in the mystery leading up to it. To Harold fell the job of collecting information, notifying everyone and ordering out the derricks and cleanup crews.) For me, the tale begins at the breakfast...

The scoop on my favorite train

Posted 3 years ago by Fred Frailey
Train name: VIA Rail Canada's Canadian. Length of route: 2,775 miles (give or take). Duration of trip: 82 hours (in theory). Car count leaving Vancouver August 11, 2015: 25 cars, including 14 regular sleepers and 1 Prestige class sleeper. Lounge and dining cars: 7 cars, including four dome lounges, two diners and 1 Panarama glass-roofed lounge. Passengers leaving Vancouver: 372, including 111 in the two coaches, 253 in regular sleepers and 8 in the Prestige car. On-board service staff: 32,...

The making of engineers and conductors

Posted 3 years ago by Fred Frailey
A month ago, in The Agony of Changing Amtrak, I mentioned the frustrations of New Haven-based Amtrak engineer Joe McMahon. Fed up with the incompetence he witnessed around him, by union and management employees alike, he tried to interest Amtrak officers in a more rigorous and OJT-intensive training program for train and engine people. Top management showed some interest, but in meetings with lower-level folks it became apparent to McMahon that he had run up against the Not Invented Here wall. N...

Whatever happened to service?

Posted 3 years ago by Fred Frailey
  The quarterly earnings call with analysts in July was something of an embarrassment for David Starling, chief executive of Kansas City Southern Railway. I mean, what excuse matters when carloadings fall 6 percent versus a year earlier and you still have huge delays for lack of crews to move less traffic? The problem centered on KCS lines in Mexico, where hiring and qualification of new train service employees apparently fell far behind the attrition rate. Customers of high-value cargos f...

Is it the air in Britain?

Posted 3 years ago by Fred Frailey
At my age, it’s hard for my eyebrows to go up in alarm. But they really started flickering upon reading a dispatch from RailPersonnel.com. It seems a man, Robin Lee, 45, was arrested for charging his cell phone on a London Overground train. Say what? And we think Amtrak is screwed up. . . . London Overground is a relatively new name for a network of suburban rail lines radiating from London. The unfortunate Mr. Lee casually plugged his iPhone into an outlet aboard a train from Hackney Wic...

Politically correct railfans

Posted 3 years ago by Fred Frailey
Jack runs a company that sells supplies to competitive swimmers. He advertises in Jill’s magazine, which is devoted to competitive swimming. And Bart is a competitive swimmer. On Facebook one day, Jack says that Bart is a alcohol-swilling has-been of a swimmer. Bill and Bob are admirers of Bart and subscribers to Jill’s magazine. They are angered by Jack’s remark and pressure Jill not to accept Jack’s advertising. Jill asks, what in the dickens do I have to do with this?...

Free speech is not divisible

Posted 3 years ago by Fred Frailey
This is something I do not want to write, because a lot of unpleasantness proceeds it. Begin with the derailment of Amtrak train 188 at Frankford Junction, Pa., in May. We know a lot about that multi-fatality accident but we really do not know why it happened. Add to that an online comment by a small advertiser to Trains Magazine that was disparaging of the engineer of train 188, to the effect that he was a “foamer,” which as we all know is a railfan first and foremost. The advertis...

The agony of changing Amtrak

Posted 3 years ago by Fred Frailey
Why is change so hard to bring about in life? The status quo is like a dead weight that defies being moved. You see this all the time in the railroad business. But you see it up close and personal at Amtrak. At every level, our national passenger train corporation cries out for change, for reform. Let’s start with the Northeast Corridor. The position Amtrak is in becomes ever more untenable. It’s responsible for the NEC’s maintenance and improvement, yet every year the politic...

Railroads without coal

Posted 3 years ago by Fred Frailey
Lehigh Valley. Lackawanna. Reading. Jersey Central. And let’s not forget the Old Woman, the New York, Ontario & Western. What did they have in common? Why, coal, of course. They were the kings and queens of anthracite, and when the fortunes of this hard, high-carbon substance waned in the Twentieth Century, so did the futures of each of these railroads, never to recover. All went bankrupt. Today, you’d almost think bituminous coal is suffering the same fate. Among the seven Clas...

The idiocy of locomotive cameras

Posted 3 years ago by Fred Frailey
When a company supported by the public trough is caught up in a disaster, the urge to do something dramatic—anything, so as not to just stand there—is understandably strong. So it is that Amtrak has bowed to two U.S. Senate scolds and the National Transportation Safety Board and said it will install inward-facing cameras in the cabs of its 70 new electric locomotives used in the Northeast Corridor. Said Senator Richard Blumenthal (D-Conn.): “Inward-facing cameras, with the rig...

Media and the railroads

Posted 3 years ago by Fred Frailey
From a friend: “The media reporting (especially CNN, MSNBC, NBC and ABC because CBS has been a bit more cautious talking about things they know nothing about) has been abysmal. Case in point, one reporter saying, ‘The investigators have removed the black box from the first car of the train.’ Uhhh, that would be the locomotive?” Okay, time out. This is a familiar complaint from people who know way more than the lay person about a specialized subject, in this instance rail...

Rules written in blood

Posted 3 years ago by Fred Frailey
The rules by which trains operate on American railroads were written in blood. As the rail network developed in the 19th century, every accident was a lesson learned -- and brought a new rule to prevent it from happening again. Today the General Code of Operating Rules is a 167-page collection of lessons learned. But even 185 years of experience haven't yet protected railroads from the danger no rule can banish: simple human error. (For the remainder of this commentary, please go to CNN.com.)...

Railroads and their money

Posted 3 years ago by Fred Frailey
It’s really easy to discover the financial choices made by the Class I railroads. They are laid out for all to see in the annual 10-K reports filed with the Securities and Exchange Commission (www.sec.gov). Make a beeline for the Consolidated Statements of Cash Flows, and see for yourself where the money comes from and where it goes. You’ll come upon some surprises. What follows are from the 10-K filings for 2014. BNSF Railway. This Berkshire Hathaway subsidiary generated $6.6 billi...

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