Trains.com

Feature: Hunter's way or the highway

11253 views
92 replies
1 rating 2 rating 3 rating 4 rating 5 rating
  • Member since
    March 2013
  • 711 posts
Posted by SD70M-2Dude on Thursday, March 30, 2017 2:07 AM

Los Angeles Rams Guy

I respectfully beg to differ.  I worked in Customer Service for CPRS for nearly 10 years and had to work with both big and small shippers in my jobs and the smaller shippers have just as important needs as the biggers ones.  Running off business is just a sorry excuse for a railroad that doesn't know how to be creative in serving both kinds of customers.  

+1

And CN now seems quite happy to go after carload customers large and small.

Greetings from Alberta

-an Articulate Malcontent

  • Member since
    June 2009
  • From: Dallas, TX
  • 6,843 posts
Posted by CMStPnP on Thursday, March 30, 2017 2:24 AM

Los Angeles Rams Guy
I respectfully beg to differ.  I worked in Customer Service for CPRS for nearly 10 years and had to work with both big and small shippers in my jobs and the smaller shippers have just as important needs as the biggers ones.  Running off business is just a sorry excuse for a railroad that doesn't know how to be creative in serving both kinds of customers.  

Can't speak to the railroad industry but definitely the concept of how any decently run business should be run.   If you look at what tanked General Motors over and over again it was their focus on large customers vs the small guy.    Remember when GM used to cater to the big rental car fleets to keep their factories humming.........a strategic blunder that swelled the inventory of like new cars as the cars left the rental car fleets and were sold to the public at deep discounts and competed with the new cars GM was trying to unload at dealerships.

Then they tried deep incentives or "employee pricing".    Another strategic blunder which taught the consumer to withhold their next car purchase in an effort to wait for an even better deal when the Manufacturer was more desperate to unload cars.

Finally GM has returned to normal and serves both sides of the equation as it used to.......the big guy (rental car fleets) and the individual purchaser.    And they no longer have these huge swings in on hand car inventory.    With the equation now balanced between large and small customer they are a better managed company and no more do we see large financial hits on the balance sheet to offload excess cars nor do we see over production.

  • Member since
    July 2006
  • 9,610 posts
Posted by schlimm on Thursday, March 30, 2017 7:58 AM

greyhounds
Allstate Insurance was once a Sears operation.  So was Discover Card.  They got spun off when Sears started to tank.  Sears was eating their income.

Sears Financial also included Dean Witter.  Homart was the mall building subsidiary. In 1981, Sears acquired Coldwell Banker (realtor), sold it in 1993.  It was part of its everything for everyone approach at the time. The Sears credit card operation was sold off in 2005.  Of course the end actually came in 2004 when Sears was acquired by another failing retailer, Kmart.

C&NW, CA&E, MILW, CGW and IC fan

  • Member since
    August 2006
  • 655 posts
Posted by 466lex on Thursday, March 30, 2017 10:53 AM
Saturnalia said:  “I think what often gets overlooked by railfans is that the railroads of today, by and large, are pushing up against the diminishing return barrier in many traffic lanes.”
 
Class 1 volume peaked in 2006 at 35,748,000 units.  By 2016, volume had dropped to 31,911,000.
 
Daveklepper said:  “Becuse right now CSX is not choking from too much business and needs more business.”
 
CSX volume in 2006 was 7,358,000 units.  Last year:  6,451,00 units.
 
The Class 1s embarked on their “Core Pricing Strategy” in the 2002 – 2005 period in reaction to volume growth and the (very) belated recognition that the excesses of post-Staggers Act price-cutting would yield inadequate capital for maintenance and expansion.  Presumably (hopefully), sophisticated logistics/competitive analysis confirmed that a sustained period of above-inflation price increases would not seriously jeopardize volume.  As a result, Operating Ratios have plunged (all to the good) and cash flow has surged (more good) for a decade.
 
Ten years and a major recession later, volume is down more than 10%.  Yes, I know the coal story, but other carload traffic is down 7% and Intermodal (the “growth story”?) is up a very modest 5% in that period.  Has the “Core Pricing Strategy” run its course?  Or is there in reality a “harvest” strategy being followed?
 

 

April will bring 1st Quarter 2017 earnings calls.  Should be interesting listening.  Especially for CSX.
  • Member since
    February 2003
  • From: Guelph, Ontario
  • 4,793 posts
Posted by Ulrich on Thursday, March 30, 2017 8:21 PM

SD70M-2Dude

 

 
Los Angeles Rams Guy

I respectfully beg to differ.  I worked in Customer Service for CPRS for nearly 10 years and had to work with both big and small shippers in my jobs and the smaller shippers have just as important needs as the biggers ones.  Running off business is just a sorry excuse for a railroad that doesn't know how to be creative in serving both kinds of customers.  

 

 

+1

And CN now seems quite happy to go after carload customers large and small.

 

What about small parcel delivery..or  important shippers who ship one or two skids a week... what about all those important shippers who ship within urban areas? You know what I'm getting at: alot of business  (about 80% of all shipments )just doesn't fit well with what railroads do, so they have to cherry pick that business which works best based on what they're able to do. They'll focus more on moving bulk commodities and far less on delivering letter mail to your home.  Running off business that doesn't fit is smart business.. CP or CSX wouldn't be interested in delivering a new fridge to my home.. why not? Because it doesn't fit in with what they do.. (just one extreme example).. 

 

 

 

  • Member since
    January 2001
  • From: Atlanta
  • 11,968 posts
Posted by oltmannd on Thursday, March 30, 2017 8:54 PM

Ulrich

 

 
SD70M-2Dude

 

 
Los Angeles Rams Guy

I respectfully beg to differ.  I worked in Customer Service for CPRS for nearly 10 years and had to work with both big and small shippers in my jobs and the smaller shippers have just as important needs as the biggers ones.  Running off business is just a sorry excuse for a railroad that doesn't know how to be creative in serving both kinds of customers.  

 

 

+1

And CN now seems quite happy to go after carload customers large and small.

 

 

 

What about small parcel delivery..or  important shippers who ship one or two skids a week... what about all those important shippers who ship within urban areas? You know what I'm getting at: alot of business  (about 80% of all shipments )just doesn't fit well with what railroads do, so they have to cherry pick that business which works best based on what they're able to do. They'll focus more on moving bulk commodities and far less on delivering letter mail to your home.  Running off business that doesn't fit is smart business.. CP or CSX wouldn't be interested in delivering a new fridge to my home.. why not? Because it doesn't fit in with what they do.. (just one extreme example).. 

 

 

 

 

But, would you run off UPS because they only ship 5 days a week or JB Hunt because they have a big weekly peak on Thursday and Friday and both refuse to "smooth out" their shipments by day of week? 

Or, your plant only runs M-F.  The RR spots a load on Friday at noon and then charges you $100 a day for the car you didn't release on Saturday?

These are the kind of things EHH wants.  Read the article.

-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/

  • Member since
    January 2001
  • From: Atlanta
  • 11,968 posts
Posted by oltmannd on Thursday, March 30, 2017 8:55 PM

466lex
April will bring 1st Quarter 2017 earnings calls.  Should be interesting listening.  Especially for CSX.

Wonder if EHH will speak on the call?

-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/

  • Member since
    February 2003
  • From: Guelph, Ontario
  • 4,793 posts
Posted by Ulrich on Thursday, March 30, 2017 8:57 PM

CMStPnP

 

 
Los Angeles Rams Guy
I respectfully beg to differ.  I worked in Customer Service for CPRS for nearly 10 years and had to work with both big and small shippers in my jobs and the smaller shippers have just as important needs as the biggers ones.  Running off business is just a sorry excuse for a railroad that doesn't know how to be creative in serving both kinds of customers.  

 

Can't speak to the railroad industry but definitely the concept of how any decently run business should be run.   If you look at what tanked General Motors over and over again it was their focus on large customers vs the small guy.    Remember when GM used to cater to the big rental car fleets to keep their factories humming.........a strategic blunder that swelled the inventory of like new cars as the cars left the rental car fleets and were sold to the public at deep discounts and competed with the new cars GM was trying to unload at dealerships.

Then they tried deep incentives or "employee pricing".    Another strategic blunder which taught the consumer to withhold their next car purchase in an effort to wait for an even better deal when the Manufacturer was more desperate to unload cars.

Finally GM has returned to normal and serves both sides of the equation as it used to.......the big guy (rental car fleets) and the individual purchaser.    And they no longer have these huge swings in on hand car inventory.    With the equation now balanced between large and small customer they are a better managed company and no more do we see large financial hits on the balance sheet to offload excess cars nor do we see over production.

 

Is that your theory?.. never heard that one before..To my knowledge GM has always sold retail.. Their problems had nothing to do with focussing on large customers verses small.. 

 

  • Member since
    September 2013
  • 6,199 posts
Posted by Miningman on Thursday, March 30, 2017 9:26 PM

Ulrich- Flip side of the coin. Just finished watching a PR clip this weekend past from the 50's done for Erie RR. They track an order for a bicycle from a store going to a boy in another city. Its crated nicely, into the freighthouse, loaded LCL with a few other items, ( at this point the narrator boasts about the importance of LCL and how important and great it is ), the train gets made up, leaves a yard in the middle of the night and REA delivers it to the awaiting family licketty split. 

Of course they could deliver a fridge. Used to ship my motorcycle up North by CN/ONR every fall. Never a problem. 

Of course this would be all dismissed today and I would be laughed out of the room. 

Really? 

  • Member since
    May 2003
  • From: US
  • 24,955 posts
Posted by BaltACD on Thursday, March 30, 2017 9:35 PM

Miningman
Ulrich- Flip side of the coin. Just finished watching a PR clip this weekend past from the 50's done for Erie RR. They track an order for a bicycle from a store going to a boy in another city. Its crated nicely, into the freighthouse, loaded LCL with a few other items, ( at this point the narrator boasts about the importance of LCL and how important and great it is ), the train gets made up, leaves a yard in the middle of the night and REA delivers it to the awaiting family licketty split. 

Of course they could deliver a fridge. Used to ship my motorcycle up North by CN/ONR every fall. Never a problem. 

Of course this would be all dismissed today and I would be laughed out of the room. 

Really?

Railway Express Agency and LCL were the era's UPS and FedEx.

Never too old to have a happy childhood!

              

  • Member since
    March 2013
  • 711 posts
Posted by SD70M-2Dude on Thursday, March 30, 2017 10:23 PM

Ulrich

What about small parcel delivery..or  important shippers who ship one or two skids a week... what about all those important shippers who ship within urban areas? You know what I'm getting at: alot of business  (about 80% of all shipments )just doesn't fit well with what railroads do, so they have to cherry pick that business which works best based on what they're able to do. They'll focus more on moving bulk commodities and far less on delivering letter mail to your home.  Running off business that doesn't fit is smart business.. CP or CSX wouldn't be interested in delivering a new fridge to my home.. why not? Because it doesn't fit in with what they do.. (just one extreme example)..

That first bit sounds like an opportunity to try and partner with a logistics/shipping/trucking company a la U.P.S & BNSF stateside.  You know, try and become part of the supply chain like CN keeps touting. 

And I did say carload traffic.  You'd be surprised how many car/containerloads of refrigerators or other appliances we haul, just not door to door.  Rather terminal to terminal.  Use the trucking part of intermodal to go futher.

And if you can't or don't think you can do the whole job why not try to get/keep part of it instead of abandoning it completely.  Leave the messy door-to-door end segments to someone else like Purolator or CanPar.

Of course that would require some sort of premium intermodal service with truck-competitive times, something which I don't believe we have in Canada.  Unless Q111 counts...

Greetings from Alberta

-an Articulate Malcontent

  • Member since
    February 2003
  • From: Guelph, Ontario
  • 4,793 posts
Posted by Ulrich on Friday, March 31, 2017 9:04 AM

There's just so much business out there that it doesn't make sense to take what one can't do efficiently. Moreover, customers want to deal with experts and specialists.. so if I need some furniture moved I'll call Allied Moving. If I need a container shipped to California I'll call CN or CP who will in turn interline it with their American rail partners. Why is it that railroads feel they need to be all things to all people? Just focus on what you're good at, like everyone else does.. For how many decades have railroads attempted to match trucking speed and door to door service? Yet, trucking continues to grow, and there are now MORE trucks on all the targeted intermodal corridors, not fewer. What's worse than not having enough business? Having the WRONG kind of business is much worse.. because now all your valuable resources are tied up in serving a customer base that is mismatched to your capabilities. I see that happening alot in all kinds of industries, including the one in which I work. Just because one can do something doesn't mean one SHOULD do it. We too could crate a bicycle and ship it to Saskatoon.. but doing so wouldn't be good business as it would be a very poor use of limited resources that could otherwise be used to move more lucrative loads for repeat customers. 

  • Member since
    February 2008
  • 602 posts
Posted by Bruce Kelly on Friday, March 31, 2017 9:24 AM

I was once told that during a business train tour of BNSF, when CN was looking to merge with them, EHH took notice of a passing BNSF Z train and stated in no uncertain terms that, in the event the merger was completed, he would not allow such trains to be operating on his railroad.

  • Member since
    July 2006
  • 9,610 posts
Posted by schlimm on Friday, March 31, 2017 9:30 AM

Ulrich

There's just so much business out there that it doesn't make sense to take what one can't do efficiently. Moreover, customers want to deal with experts and specialists.. so if I need some furniture moved I'll call Allied Moving. If I need a container shipped to California I'll call CN or CP who will in turn interline it with their American rail partners. Why is it that railroads feel they need to be all things to all people? Just focus on what you're good at, like everyone else does.. For how many decades have railroads attempted to match trucking speed and door to door service? Yet, trucking continues to grow, and there are now MORE trucks on all the targeted intermodal corridors, not fewer. What's worse than not having enough business? Having the WRONG kind of business is much worse.. because now all your valuable resources are tied up in serving a customer base that is mismatched to your capabilities. I see that happening alot in all kinds of industries, including the one in which I work. Just because one can do something doesn't mean one SHOULD do it. We too could crate a bicycle and ship it to Saskatoon.. but doing so wouldn't be good business as it would be a very poor use of limited resources that could otherwise be used to move more lucrative loads for repeat customers. 

 

Whether we like it or not, whether it is better or not, we have been living in an era of specialization for many years.

It is true in transportation, true in retailing, medicine, dentistry and even my field.  Generalists cannot do everything equally well or efficiently.

 

C&NW, CA&E, MILW, CGW and IC fan

  • Member since
    June 2009
  • From: Dallas, TX
  • 6,843 posts
Posted by CMStPnP on Friday, March 31, 2017 10:18 AM

Ulrich
Is that your theory?.. never heard that one before..To my knowledge GM has always sold retail.. Their problems had nothing to do with focussing on large customers verses small.. 

You might not have heard about it, all of the Big Three ran into this issue in the 1990's.    GM down to the dealership level is split between individual retail sales and fleet sales.   Always has been and as a conglomerate (or at least it was when I was there).    Retail sales are nice but fleet sales keep the factories running when the more economically sensitive retail sales dip and are a nice suppliment to retail sales when times are good and fill in the gap when times are bad.

All of the Big Three made the mistake of using fleet sales to rental car fleets as a way to balance against a drop in retail sales and their mistake was to incentivize the process of selling to fleets in order to time some of the large sales to take place at a time when retail sales were falling to keep their factories running instead of shutting them down or reducing operations in the hopes retail sales would rebound.

The problem came back to bite them as the fleet sales to rental car fleets became more frequent, the rental car fleets had to dispose of the "like new" used cars on the auction market which created more of a choice for consumers.   A ready supply of "like new" low mileage used cars that were discounted or paying full price or slightly less than full price for a new car.

In fact GM has made repeated attempts to supply vehicles for DoD and one of the reasons it purchased Hummer was for the large DoD contract as well as the opportunity to leverage their civilian retail sales experience and expand sales as a luxury line civilian vehicle.   They also had the CUCV contract, selling Chevy Blazers to the Army in the 1980's via their Fleet Sales (they sucked, BTW).

Even the Mercedes Dealership I go to here in Texas has a fairly large fleet sales department.    Specializing in Sprinters and MB Vans (Metris and B series) as both limos and delivery vehicles..........and if you look Winnebago and a good percentage of the RV firms sell RV's on the Mercedes Cab and Chasis.

  • Member since
    August 2006
  • 655 posts
Posted by 466lex on Friday, March 31, 2017 12:45 PM

oltmannd

 

 
466lex
April will bring 1st Quarter 2017 earnings calls.  Should be interesting listening.  Especially for CSX.

 

Wonder if EHH will speak on the call?

"CSX Corporation Announces Dates For First-Quarter Earnings Release and Earnings Call

"JACKSONVILLE, Fla., March 23, 2017 (GLOBE NEWSWIRE) -- CSX Corporation (Nasdaq:CSX) will release first-quarter financial and operating results on Wednesday, April 19, 2017, after the market close.

"The company will host an earnings conference call from 8:30 a.m. to 9:30 a.m. Eastern Time on Thursday, April 20, 2017 via teleconference and a live audio webcast.

"Those interested in participating via teleconference may dial 1-888-327-6279 (1-888-EARN-CSX) and ask for the CSX earnings call. Callers outside the U.S. dial 1-773-756-0199.  Participants should dial in 10 minutes prior to the call.

"Presentation materials and access to the audio webcast will be available on the company’s website at http://investors.csx.com. Following the earnings call, a webcast replay and an MP3 audio file will be archived on the company’s website."

 

Analysts will be vitally interested, needless to say.  Ward always led and participated in these calls.  Seems highly likely that EHH will do the same.

 

 

  • Member since
    December 2001
  • From: Northern New York
  • 24,873 posts
Posted by tree68 on Friday, March 31, 2017 12:50 PM

Ulrich
Just focus on what you're good at, like everyone else does..

The question becomes what do you think we're good at, vs what I think we're good at.  

As Bruce Kelly notes, apparently EHH does not value high-value, expedited service.  

We've had this discussion here before - it's the heart and soul of the issues railroads have with Amtrak.  A high volume railroad works best when all of the trains run at the same speed.  Trying to run 80+ MPH Amtrak trains, along with 70 MPH Z trains, and 60 MPH manifest/bulk trains is a headache.  

That's one reason that NYC and PRR had four tracks on their trunks, so the passenger trains (which were far more numerous) and the freights didn't interfere with each other.

Sounds as if EHH would prefer all 60 MPH trains, running in lockstep, seven days a week.  Anything that interferes with that flow has to go.  I'm sure that the drops and pickups made at Utica, NY for NYSW and MWHA (f'risntance) would be considered superfluous as they tie up one main for the hour or so it takes them to do their business.

NYSW has reopened their line to Binghampton, so they'd be OK.  MWHA would be out of business.

LarryWhistling
Resident Microferroequinologist (at least at my house) 
Everyone goes home; Safety begins with you
My Opinion. Standard Disclaimers Apply. No Expiration Date
Come ride the rails with me!
There's one thing about humility - the moment you think you've got it, you've lost it...

  • Member since
    February 2008
  • 602 posts
Posted by Bruce Kelly on Friday, March 31, 2017 1:59 PM

Even more challenging when those Amtraks and Z trains have to mingle with trains that are 100 TOB or over (coal, grain, etc.) which are, in some places, limited to speeds of 50mph or less.

And when certain sidings across one of the busier segments of the system are unbonded and/or have one or more grade crossings through them, requiring the first train to arrive (in most cases) to hold back until their meet is getting close, and then whichever one takes the siding must (in most cases) enter the siding at restricted speed.

  • Member since
    October 2006
  • From: Allentown, PA
  • 9,810 posts
Posted by Paul_D_North_Jr on Friday, March 31, 2017 8:38 PM

This comment originated during my review of the "Not Enough Women in Railroading" NewsWire thread: 

Cynthis M. "Cindy" Sanborn (age 51) is Chief Operating Officer (COO) and Executive Vice President (EVP) of CSX Transportation, Inc., a subsidiary of CSX.  This is from her bio at a Bloomberg webpage as linked below.*  

Now, I wonder what will happen to her when EHH is fully on-board ?  If he thinks CSX's Operating Ratio is so bad, doesn't that implicate her in a negative way ?  

Interestingly, her father - Richard D. Sanborn, Jr. - was a highly regarded operating officer with CSX, and then came to ConRail in March 1988 as COO - so it runs in the family.  He was appointed Chairman and CEO effective Jan. 1, 1989 before suddenly dying of an apparent heart attack on Feb. 12, 1989 at age 52.**  

- PDN. 

http://www.bloomberg.com/research/stocks/private/person.asp?personId=31204091&privcapId=257948 

Ms. Cynthia M. Sanborn, also known as Cindy, has been Chief Operating Officer and Executive Vice President of CSX Transportation, Inc., a subsidiary of CSX Corp. since September 8, 2015. Ms. Sanborn served as an Executive Vice President of Operations at CSX Corp. from February 12, 2015 to September 8, 2015. She served as the Chief Transportation Officer and Vice President of CSX Corp. from December 31, 2009 to February 11, 2015. Ms. Sanborn is responsible for safety and for coordinating operations and service across divisions based at Albany, N.Y.; Baltimore, Md.; Cincinnati, Ohio; Indianapolis Ind.; and Chicago, Ill. She served as Vice President of Northern Region at CSX from January 12, 2007 to December 31, 2009. Ms. Sanborn served as an Assistant Vice President of Network Operations in Jacksonville. She joined CSX Transportation in 1987 and worked in a wide range of transportation positions. She headed up the Detroit and Baltimore divisions of CSX and served as General Manager of its Florida Business Unit before it was integrated into the Jacksonville Division. Ms. Sanborn has improved the distribution and utilization of CSX's fleet of nearly 3,800 locomotives. Ms. Sanborn has a Bachelor's Degree in Computer Science from Emory University and a Master's in Business Administration from the University of Miami. 

**http://www.nytimes.com/1989/02/13/obituaries/rd-sanborn-52-conrail-chief.html 

"This Fascinating Railroad Business" (title of 1943 book by Robert Selph Henry of the AAR)
  • Member since
    February 2011
  • 34 posts
Posted by CPRcst on Sunday, April 2, 2017 10:13 PM

I don't think Hunter cares if you are male or female; he's more interested in performance. His style is to demand results immediately; this created the rule of terror at CP. In his first meeting in Winnipeg, shortly after taking over at CP, he said to the management team present " if I ask you a question and you don't have an answer, YOU'RE FIRED" , the #2 local manager lost his job that day. 

  • Member since
    October 2006
  • From: Allentown, PA
  • 9,810 posts
Posted by Paul_D_North_Jr on Monday, April 3, 2017 5:02 AM

I understand that Joseh Stalin had similar management methods . . . 

"This Fascinating Railroad Business" (title of 1943 book by Robert Selph Henry of the AAR)
  • Member since
    March 2016
  • 123 posts
Posted by IslandMan on Monday, April 3, 2017 5:10 AM

Dumping marginal business is the "accountants' method" of achieving profitability - prune out the deadwood to leave a healthy tree.

It is of course necessary for any industry, especially a mature one like rail, to keep an eye on low-yield or lossmaking business and either reshape or dispose of it. This is not enough however, as without healthy new shoots the 'tree' will die back to a rotten stump.  It is particularly important for rail companies to bear in mind that:

(i) Some potentially good business starts out as low-volume/low-yield.  This will be the case for example where a shipper wants to experiment with sending stuff by rail, having never used rail before or having had a bad experience with rail transport in the past;

(ii) A low-volume shipper might be part of a larger enterprise which contains high-volume shippers; or be part of a supply chain which includes high-volume shippers (think of the automotive industry for example).  Careless dumping of unprofitable business could have long-term repercussions.

(iii) Business people do not exist in isolation and meet and compare notes both in formal and informal settings.  If a loyal (but for the rail company, low-margin) customer is inconvenienced the "word" will get around that 'Grand Dump Railroad' is not to be trusted with handling transport business.

 

In all these three situations marketing and customer care are paramount. If a particular shipper's business is not (very) profitable it is imperative to find out why and if the business could be expanded or made more profiable by other means; and if beyond redemption, work with the shipper to arrange an orderly transfer to trucking.  Marketing and customer care takes time and effort, of course.  I suspect a large company trying to impress the stock market with a quick increase in profits would have to skimp on these things.

  • Member since
    February 2003
  • From: Guelph, Ontario
  • 4,793 posts
Posted by Ulrich on Monday, April 3, 2017 7:56 AM

All business has the POTENTIAL of becoming good high volume business.. every last account that one could name has that potential. Just as accounts that pay in 90 to 120 days could suddenly go to 15 days.. but.. freight margins are thin at the best of times, and one is taking bets on the future when one says "you know.. maybe these deadbeats will turn it around in five years or so and become our largest most valuable account" It's possible.. and it's possible that one might say that "if only we hung on to those deadbeats we'd now have ourselves a fantastic customer". All of that is possible... but highly unlikely. In business we have to deal in facts and we have to hedge our bets..Most of the time things don't work out. A weak customer today will likely be a weak one tomorrow or more likely still, gone altogether. If its a good customer and they're only testing the waters then that's of course different.. a good sales person can distinguish between that kind of reluctant customer and the low volume slow payer that is far FAR more common. That's where good salesmanship comes in: a good salesperson can determine if the prospect is testing the waters or if the prospect doesn't likely have alot of business to offer. The number one problem most businesses have is that they have too many problem customers.. No customers at all is better than having a bunch of hard to serve slow payers who are going nowhere and threaten to take you and your business along for the ride. 

  • Member since
    July 2006
  • 9,610 posts
Posted by schlimm on Monday, April 3, 2017 8:05 AM

Ulrich
e prospect is testing the waters or if the prospect doesn't likely have alot of business to offer. The number one problem most businesses have is that they have too many problem customers.

That statement is true in business, HR, education and in my profession: a small percentage (of customers, staff, students & patients) consume a disproportionate amount of resources and time.

Time lines are a critical factor.  Public corporations today need to placate shareholders looking at the short-term ROI or they face "activists" etc. seeking to dump management, eg., CSX.  Privately held companies can look longer-term if they have the resources to grow the business through profitless times.

C&NW, CA&E, MILW, CGW and IC fan

  • Member since
    February 2003
  • From: Guelph, Ontario
  • 4,793 posts
Posted by Ulrich on Monday, April 3, 2017 11:36 AM

So true Schlimm.. its the 80/20 rule applied to business.. 20% of customers are responsible for 80% of problems.. 

  • Member since
    October 2008
  • From: Calgary
  • 2,044 posts
Posted by cx500 on Wednesday, April 5, 2017 11:33 AM

Indeed the good salesman should be able to tell the difference between a small account that is going nowhere and a potential bigger one in the future.  His (or her) problem is first getting that job with the railroad, and then selling, not to the customer, but the rest of the railroad who are only focused on cutting costs in their local budget and avoiding change to old thinking.

  • Member since
    December 2001
  • From: Northern New York
  • 24,873 posts
Posted by tree68 on Wednesday, April 5, 2017 11:56 AM

Ulrich

So true Schlimm.. its the 80/20 rule applied to business.. 20% of customers are responsible for 80% of problems.. 

And 20% of the customers are responsible for 80% of the revenues...

LarryWhistling
Resident Microferroequinologist (at least at my house) 
Everyone goes home; Safety begins with you
My Opinion. Standard Disclaimers Apply. No Expiration Date
Come ride the rails with me!
There's one thing about humility - the moment you think you've got it, you've lost it...

  • Member since
    December 2007
  • From: Southeast Michigan
  • 2,983 posts
Posted by Norm48327 on Wednesday, April 5, 2017 2:37 PM

Larry,

I agree that the few major shippers constitute the majority of revenue and profits, but according to the CN people I have known over the years Harrison's policies have alienated some of the major shippers simply because they wouldn't meet his demands. Assembly plants, be they General Motors, Fors Chrysler or other can't always comply without incurring additional costs. In some cases  they had good reason for not complying with his demands.  CN lost contracts because of Harrison's demands and other railroads profited from that. In one case I'm familiar with Genreal Motors balked at some of Harrison's demands and chose to truck their business to another railroad.

Did that do anything to enhance CN's profits? More likely it was Conrail and CSX who benefited from his temper tantrums. Efficency in the name of enhancing investor profits is Wall Street's watchword. does that do anything to enhance the economy? That remains to be seen in the long run.

Norm


  • Member since
    December 2001
  • From: Northern New York
  • 24,873 posts
Posted by tree68 on Wednesday, April 5, 2017 2:49 PM

Norm48327
I agree that the few major shippers constitute the majority of revenue and profits,...

No question on EHH.  I was just kinda carrying the 80/20 rule over to the revenue side from the problem side.

The way the talk has been about EHH, I'm of the impression that he would seek to get rid of that 20% of the revenue in pursuit of making the 80% into 100%.

Of course, we know that's not possible - even if he gets rid of the 20% that's lower yield, the 80/20 rule still kicks in, it's just that the bottom 20% is now made up of what was the desirable 80%.

When does it end becomes the question.  As has been noted, eventually you've lopped off all of the branches and there is nothing to support the tree.

I guess as long as the investors are happy, all is OK.  If CSX tanks, they'll take their profits, sell off their stock, and move on to the next victim... 

LarryWhistling
Resident Microferroequinologist (at least at my house) 
Everyone goes home; Safety begins with you
My Opinion. Standard Disclaimers Apply. No Expiration Date
Come ride the rails with me!
There's one thing about humility - the moment you think you've got it, you've lost it...

  • Member since
    December 2007
  • From: Southeast Michigan
  • 2,983 posts
Posted by Norm48327 on Wednesday, April 5, 2017 4:41 PM

tree68

 

 
Norm48327
I agree that the few major shippers constitute the majority of revenue and profits,...

 

No question on EHH.  I was just kinda carrying the 80/20 rule over to the revenue side from the problem side.

The way the talk has been about EHH, I'm of the impression that he would seek to get rid of that 20% of the revenue in pursuit of making the 80% into 100%.

Of course, we know that's not possible - even if he gets rid of the 20% that's lower yield, the 80/20 rule still kicks in, it's just that the bottom 20% is now made up of what was the desirable 80%.

When does it end becomes the question.  As has been noted, eventually you've lopped off all of the branches and there is nothing to support the tree.

I guess as long as the investors are happy, all is OK.  If CSX tanks, they'll take their profits, sell off their stock, and move on to the next victim... 

 

And such appears to be the methology of corporate raiders and hedge funds. Short term profits come before all else. Leave a corporation in shambles. Shades of Carl Ichan. He was a corporate raider who got his cash and left many companies destitute. Who cares, he made money in the process. IMO that attitude sucks. Buffett seems to have the right attitude; going for the long term. Some of his thoughts should be observed by Wall Street.

Norm


Join our Community!

Our community is FREE to join. To participate you must either login or register for an account.

Search the Community

Newsletter Sign-Up

By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy