A Rare Class-1 Rail CEO Gathering ...

Posted by Bill Withuhn
on Friday, September 25, 2009

A rare trio spoke in August before an important annual professional gathering that represents all transport modes: 

Three leading Class-1 CEOs – BNSF’s Matt Rose, Kansas City Southern’s Mike Haverty, and Norfolk Southern’s Wick Moorman – spoke at a forum called “Balanced Regulation & Freight Railroads" at the 12th Annual Transportation & Infrastructure Summit in Irving, Texas.
 
These annual summits are multi-modal, drawing an audience of transportation decision-makers from federal and state governments, members of Congress from across the country (not just Texas) serving on House and Senate transportation committees, federal regulators, transportation engineering practitioners, consultants, and others.
 
But freight railroads have not been strongly represented. That changed this year. Let me paraphrase the major points the CEOs made:
 
Rose, Haverty, and Moorman stressed the economic benefits that consumers and shippers have gained since de-regulation. They each spoke concerning the economic fallacies of railroad re-regulation – a possibility that has been discussed recently on Capitol Hill.

Since the 1980s, freight rates (real prices to shippers) have actually declined. Railroad productivity, traffic, and financial health have all shot up. And – despite the complaints of some shippers – service has vastly improved. Shippers have forgotten how bad service was before de-regulation.
 
A key point was how Class-1 railroads use profits. Despite the nation’s economic “downturn,” BNSF, KCS, and NS have each committed increasing billions of dollars to reinvestment. All three CEOs, in variations, said: “Profits are how we improve our infrastructure. We don’t rely on government subsidy. When we make more, we invest more in our infrastructure; when we make less we invest less. It’s really simple: When profits drop, many desired infrastructure improvements can’t happen.”
 
The three railroads are open to cooperating with government, both federal and state, to accommodate infrastructure improvements beyond what railroads can afford. But re-regulation isn’t an answer. Cut railroad profits, and government subsidy would need to make up the shortfall. And it's important for the public to recognize: freight rates – real prices to freight shippers – have gone down since de-regulation.

Although I never speak for my employer on such topics, I organized, chaired, and moderated the one-and-a-half-hour session. Audience response was excellent, and it was standing room only n the big ballroom of the Omni Mandalay Hotel in Irving.

L to R in the group photo above:  

Bill Withuhn, chair and moderator of the session; Mike Haverty, CEO of KCS; Rose Cannaday, Deputy Mayor of Irving, the city that hosts these summits; Matt Rose, CEO of BNSF; and Wick Moorman, CEO of NS.

More Bill Withuhn on Trains.com:

Bad railroad language (September 18, 2009)

 

Photo courtesy Bill Withuhn


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