Where is Hunter Harrison headed next? That is the question on everyone’s minds after Canadian Pacific announced Wednesday that its leader of five years will retire immediately instead of July 1. He’s definitely got something lined up. After all, he’s foregoing a package worth $118 million, won’t be bound by a non-compete agreement, and is free to work with other Class I railroads. It definitely sounds like Harrison has a better offer.
The Wall Street Journal says Harrison is set to connect with an activist investor with plans to make a pass at CSX, the eastern giant that Harrison tried to merge with when he was at CP. Both CSX and NS had a rough 2016 – heck, every Class I railroad did as the bottom fell out of everything except grain and automobiles. All of these big railroads are still making money, but they’re just not making as much as they did just a few years ago. Coal isn’t coming back; intermodal hasn’t blossomed as a robust cash cow; the future is murky.
Still, I have to wonder why Harrison wants to make another try at CSX, when he failed there before. CSX seems content to pursue its “Railroad of Tomorrow” strategy, network that is an intermodal triangle with New York, Chicago, and Florida the three points. When I was in Jacksonville last year to interview Michael Ward for a Q&A in our news pages, CSX’s CEO had just received a three-year extension on his contract. Jim Squires is just a little over a year into his job as NS’s boss and seems to be making the transition to the post-coal railroad that it will have to be – it lost the least traffic of any of the big systems last year. NS also successfully fought off a Harrison-led attack. I figure both of those eastern railroads still remember how to kick, bite, and swing a spike maul like hell before they allow Harrison and any of his minions in. Besides, the Surface Transportation Board rules on mergers are still just as complex, stringent, and anti-merger as they were in 2016.
And that makes me wonder. What if the rules changed? What if Harrison was the one who changed them?
I have colleagues telling me that I’m wrong, but given that it’s inauguration week, I have to think that Harrison is eyeing the ultimate prize, a spot in the Trump administration. As an insider he could guide the STB toward rules that are favorable to railroad mergers. And if that’s not the case, then I have to wonder why he’s not going in this direction because the fit is perfect. Harrison and Trump have much in common – Trump’s the outsider come to fix Washington and Hunter is the maverick on a crusade to cure railroading’s ills. They’ve both written books about how they’re the master of the situation. They both have huge egos, they run hot, they’re both outspoken, and they’re both either loved or reviled. A friend says Harrison wouldn’t tolerate government culture more than 30 minutes, but this is supposedly the cut-the-bureaucracy, less regulation, free-business-to-do-its-job federal government that we’re getting Friday. So, if the background music has changed, why not.
But, you ask, what about the big money Harrison is passing up? Surely, he’s off to another big payday. Well, maybe not. When Harrison made his bid for NS last year, I said that he was just out for the money. But a colleague pointed out how wrong I was. Harrison could care less about the money. At this point, at age 72, Harrison wants confirmation for his vision of the industry. He wants a final validation that Hunter’s way is the way. What better way to do that than by putting his imprint on the master set of rules that ultimately call the shots for all of railroading in the U.S.