We are hearing rumors from one of our larger customers in the town North of here that CSX is thinking of stopping their rail service to this one plant. Last year they shipped over 2K loads into and out of this plant. Just when will this PSR madness end. These railroads sooner or later are going to tick off a customer that has the balls to go the Federal Government and say we need them reregulated this madness has to stop. It is beyond stupid anymore with what they are doing to customer service anymore. NS just tried to bill us for their rerouting of those 2 cars back to PA.
Shadow the Cats owner The railroad industries problem is twofold. They have forgotten how to market their industry. 2nd and this the biggest problem they have become consumed with the all powerful Operational Ratio and seeing how low they can lower it. By doing that they run off business that they think will not make them enough money to justify the costs to service it. A customer that makes you a 10% profit is still one that contirbutes to the profit margin. You drive him off that revenue is gone and you more than likely will never get it back again. So you start losing a million dollars here and there next thing you know your bosses decide a 10 million dollar contract isn't enough for them to service so they get run off. Then you start running into real money flying out the window in lost revenue that can not be made. I would rather have a railroad that went after the business than one that wants an OR of around 50.
The railroad industries problem is twofold. They have forgotten how to market their industry. 2nd and this the biggest problem they have become consumed with the all powerful Operational Ratio and seeing how low they can lower it. By doing that they run off business that they think will not make them enough money to justify the costs to service it. A customer that makes you a 10% profit is still one that contirbutes to the profit margin. You drive him off that revenue is gone and you more than likely will never get it back again. So you start losing a million dollars here and there next thing you know your bosses decide a 10 million dollar contract isn't enough for them to service so they get run off. Then you start running into real money flying out the window in lost revenue that can not be made. I would rather have a railroad that went after the business than one that wants an OR of around 50.
I think the "$10 million a year isn't enough" mark was passed years ago. I know of a few chances for business that would've been 6 or 7 million dollars profit, that could've been handled in existing trains, wouldn't have required more crews or train starts and was passed up.
Jeff
From one fellow MIT Old Senior House Alumnus:
This is a common problem in corporations that are KPI-driven. (Full disclosure: I spent many years in the "corporate performance management" space, and helped many firms implement the software systems that track Key Performance Indicators, like the metrics discussed below).
This is sadly common in many organizations. There are very few (if any) metrics that are both meaningful and free of side effects. From toxic metrics at banks that fleece low-income customers to counterproductive ones (like those below), they remind of the joke about the drunk looking for his keys under the streetlight. He didn't lose them there, but at least he has some visibility.
You've hit on the one thing that can best minimize the negative: are you actually helping your customers do what they need you to do? If you focus on that, good things come. Focus on internal metrics, and you get gamesmanship.
It's particularly ironic, given that the classic HBR article, "Marketing Myopia," published in 1960 and excoriating the railroads for their inability to understand customer needs, is still relevant today. Getting my MS at NYU, Burlington Northern was a case study in the inability to adopt technology.
Now it's 2021 and I'm sad. I love rail travel. And rail freight could be so much better.
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