Euclid rrnut282 What does PSR give the customer? Less consistancy. Please explain what this means and why it is so.
rrnut282 What does PSR give the customer? Less consistancy.
Please explain what this means and why it is so.
Well, in the post above mine, that I replied to said this,
Unloading containers there was successfully promoted as giving a day or two earlier arrival in Chicago, a premium service. But then PSR started leaving them sitting on the dock for days because the train was maxed out.
I don't think that needs much explaination, but if you insist... As a shipper, I worked to get my 100 container shipment to Halifax on the implied promise that it would be in Chicago (or where ever) a day or two faster than other options. Image how I feel when only 80 or so of my containers show up. Now I have a logistical nightmare of expediting/re-routing a part of my shipment that I had already arranged (and presumably paid for.) What did PSR get me, a headache and endless phone tag and frustration.
Shippers who reliably shipped 85-car unit trains were told no more, even if there was a contract still in effect. Now each car has to be billed separately and probably at a higher price. Instead of zipping through stations, my shipment now goes over the hump like every other loose-car shipment. Pay more, get less service. This is a fictional account based upon some of the PSR 'tenets.' YMMV
blue streak 1 Here it means that routine track maintenance is being put off.
Here it means that routine track maintenance is being put off.
That does not seem to be true from my seat.
An "expensive model collector"
blue streak 1 Here it means that routine track maintenance is being put off. So now CSX will have deferred maintenance costs to build up .
Doubtless off to wreck another company. The job of an "activist investor" is never done.
Mantle Ridge cashing out more shares -
https://seekingalpha.com/news/3507542-mantle-ridge-exits-nearly-1b-position-csx
Never too old to have a happy childhood!
Actually the UP post is one of the easiest to read that I've seen. It is a bit frightening as a stock holder to see that UP has not erned the total return to us since 2014; its also interesting that the real reason for all the borrowing is stock buy back which is of course the way senior exectives keep their compensation high both in incentives and stock bonuses. And for the economy as a whole they are far from the only corporation doing this. Big Short anyone.
blue streak 1 Hope we are wrong but what does a low OR really mean. Here it means that routine track maintenance is being put off. So now CSX will have deferred maintenance costs to build up . Once all the capital needed to do that maintenance is removed and CSX then has to put so much capital into getting the deferred maintenance resolved that their OR will "suddenly" return to being over 100,. That will happen because the old adage pay now or pay more later applies to deferred maintenance. Prime example is the NEC of Amtrak. One way this problem can be resolved is requiring companies to somehow place deferred maintenance into the OR costs calculation. How? Unknown but certain costs of track surfacing, signal upgrades, loco replacements, etc per track mile might be one way? That is even if not completed still in costs? Maybe revenue ton miles per track section as well?
Hope we are wrong but what does a low OR really mean. Here it means that routine track maintenance is being put off. So now CSX will have deferred maintenance costs to build up . Once all the capital needed to do that maintenance is removed and CSX then has to put so much capital into getting the deferred maintenance resolved that their OR will "suddenly" return to being over 100,. That will happen because the old adage pay now or pay more later applies to deferred maintenance. Prime example is the NEC of Amtrak.
One way this problem can be resolved is requiring companies to somehow place deferred maintenance into the OR costs calculation. How? Unknown but certain costs of track surfacing, signal upgrades, loco replacements, etc per track mile might be one way? That is even if not completed still in costs? Maybe revenue ton miles per track section as well?
In 1968, the glorious Penn Central had an OR of 83.62, with years of deferred maintenance. Your logic escapes me.
rrnut282What does PSR give the customer? Less consistancy.
So consistently inconsistent..
How many customer surveys have the railroads paid for that told them customers were looking for consistant service? Not faster or cheaper, though, I'm sure they came in second or third. What does PSR give the customer? Less consistancy.
Ulrich More tonnage with fewer crews maybe.. not fewer locomotives. And I doubt power is fitted exactly to tonnage, and they wouldn't leave 2000 tons behind just because taking those extra tons would require one more locomotive. PR or no, it's about optimizing available resources.. whether its locomotives or crews, cars or track.
More tonnage with fewer crews maybe.. not fewer locomotives. And I doubt power is fitted exactly to tonnage, and they wouldn't leave 2000 tons behind just because taking those extra tons would require one more locomotive. PR or no, it's about optimizing available resources.. whether its locomotives or crews, cars or track.
Actually, they probably would because PSR has put that extra locomotive into storage and it is no longer available. PSR crippled the port of Halifax as a container port. Unloading containers there was successfully promoted as giving a day or two earlier arrival in Chicago, a premium service. But then PSR started leaving them sitting on the dock for days because the train was maxed out. Might as well bypass Halifax and unload the whole ship in New York, save some dollars, and have more predictable service.
PSR may be an excellent method for operating a railroad. But the railroad should be in the business of providing transportation at a profit, which is more than just playing trains. Constraining the growth of a business in a growing economy is a good recipe for mediocrity, and even shrinkage as dissatisfied customers depart. The railroads are somewhat protected by many commodities having no realistic choice but rail for shipment, and often only one railroad available to serve them.
zardozI have a question regarding this whole PRS fallacy: Supposedly one of the benefits of PSR is the ability to "move more tonnage with fewer locomotives". Someone please explain this to me.
Two ways.
The main one is fewer locomotives in the fleet because the train flow is balanced by design. (there are other ways of balancing flow, but the EHH way is the dirt-simplest.) This where the bulk of it comes from.
The second way is much smaller, but make each locomotive "increment" more useful. If you have 16000 tons to move and need 1 HP/ton:
Two 5000 ton trains and a 6000 ton train each need two "big" locomotives (4000+ hp) for a total of 6 locomotives.
Two 8000 ton trains need two each for a total of 4 locomotives. This is much smaller, overall, and tends to reduce the avg over the road speed a bit.
The somewhat overpowered three train scenario should result in somewhat faster trip times on the average - better than what the service requires.
-Don (Random stuff, mostly about trains - what else? http://blerfblog.blogspot.com/)
zardoz So how, exactly, does PSR get around this slight problem of physics? Or is it all done with 'smoke and mirrors'?
So how, exactly, does PSR get around this slight problem of physics? Or is it all done with 'smoke and mirrors'?
It is only a "slight problem of physics" if you take the term literally. The PSR goal is to have the locomotives spending less time sitting around doing nothing, and more time pulling trains. Doing so means you need less of them overall, so less locomotives are needed to move the same amount of tonnage.
To use an example from a different industry, Southwest Airlines was famous for their 10 minute turns on aircraft. Doing so resulted in the airplane spending more time flying and less time sitting at the gate, resulting in less aircraft needed to fly their schedule than a legacy airline would need.
https://www.npr.org/2015/06/28/418147961/the-man-who-saved-southwest-airlines-with-a-10-minute-idea
https://www.cnbc.com/id/43768488
"To meet costs, one of the company’s four planes was sold. Instead of cutting service, Bill Franklin, former Vice President of Ground Operations, and other leaders, calculated three airplanes could do the work of four if the planes were in and out of the gate in 10 minutes."
I don't know.. you'd need to ask them that. Maybe because Paul Hilal is still on the board, and their work isn't quite done yet. But I wouldn't be surprised to see them sell all of their shares over the short term.
tree68 If Mantle Ridge is interested in long term growth, why did they sell off $305M in shares? Profit taking?
If Mantle Ridge is interested in long term growth, why did they sell off $305M in shares? Profit taking?
If Mantle Ridge was just in it for a quick buck, why didn't they sell all 40 million shares that they own, instead of just 3 million?
jeffhergertAfter implementing PSR, any no longer needed assets (human, infrastructure/land and rolling stock) is slated for liquidiation to return money to the stock holders. There is no room for growth when you mold the company to operate exactly to your planned level of business. Has CN has found out, needing to reinvest in certain areas for growth because of EHH's cuts. Railway Age had an article on this a few months ago. I had the impression that EHH had lost some of the shine on his "golden boy" image there.
I have a question regarding this whole PRS fallacy: Supposedly one of the benefits of PSR is the ability to "move more tonnage with fewer locomotives". Someone please explain this to me.
Let's assume one locomotive can haul 5000 tons. If one has x tons to move, how does it make any difference whether this is moved in a train of 5000 tons and one locomotive or in a train of 20000 tons with 4 locomotives? It will still take the same amount of HP to move.
Or is it the efficiencies exactly matching a train's tonnage to it's power? And what if there are 7000 tons ready to go? Leave 2000 tons for the next train? To match exactly each time, there will be either loads left behind, or trains held for tonnage. (Too bad for the customers of those 2000 tons. If they don't like it, they can call the other railroad [a take off of the old joke about monopolies, "If you don't like the phone service, call the other phone company]).
EHH's play book was to implement his "precision scheduled railroading" to, in his words, "Sweat the assets." Do more with less through better efficiencies. Then get rid of those now extra assets. Not hold them in reserve for fluctuations or new growth. Mold the railroad to a handle a set amount of business and mold business to that planned level. Cost control and containment are the priority. It's not a plan for a growing industry, but rather one that's stagnated if not in decline.
It reminds of a column John Knieling once wrote. His advice on how to run the conventional (non-integral trains) network until everyone saw the light on his ideas. Stop investing in the railroad, run the current assets into the ground and squeeze every penny out that you can until it's done.
It's funny how all these properties that are embracing PSR, whether by EHH or by management trying to avoid being replaced by activist investors, are talked about as if they were on the verge of bankruptcy. They were all profitable, but they weren't returning enough money to suit a few activist investors who make their money on speculation. They see (or think they see) money that could be squeezed into their pockets. It's not just railroads either. I often see on one TV business news report where so and so company is under attack by some hedge fund because the activists think the company is under performing. Like sharks smeling blood in the water.
Jeff
Mantle Ridge is not interested in long term return.. they're interested in "renovating" existing businesses and then selling out for a profit. But their interests dovetail nicely with long term investors' interests in that the "renovated" property is in better condition than when they found it. Its like buying a house.. sprucing it up.. and then selling it for a profit. The act of selling doesn't mean the seller thinks its a bad property.. its just the business they're in. Mantle Ridge presumably can deploy their capital more effectively in other turn around ventures rather than having it sit in CSX passively..
Larry 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...
I don't think CSX is selling off assets to bolster shareholder return. On the whole shareholders could do alot better in terms of dividend yield than to invest in rail. Thus our overriding interest as shareholders is to see the value of the stock appreciate over time, and that can only happen if the company increases in value over the longer term.. i.e. is run efficiently and grows. They're not selling locomotives to juice up their shareholder payout. It's a work in progress.. the company is growing and revenues are up.
Ulrich Mantle Ridge likely disagrees with this assessment. They've brought about some major changes that have left CSX on a trajectory for long term growth and profitability.. my opinion supported by what the numbers show.
Mantle Ridge likely disagrees with this assessment. They've brought about some major changes that have left CSX on a trajectory for long term growth and profitability.. my opinion supported by what the numbers show.
How did they set the trajectory for long term growth? After implementing PSR, any no longer needed assets (human, infrastructure/land and rolling stock) is slated for liquidiation to return money to the stock holders. There is no room for growth when you mold the company to operate exactly to your planned level of business. Has CN has found out, needing to reinvest in certain areas for growth because of EHH's cuts. Railway Age had an article on this a few months ago. I had the impression that EHH had lost some of the shine on his "golden boy" image there.
Ulrich Nonsense..how are shareholders sucking money out of the company? Dividend yields are generally not that great for railroads... less than 1% for CP and less than 2.1% for the others..NS is the only one over 2% recently. And if I own shares in a railroad and the share price goes from 20 dollars to 70 dollars , how exactly have I "sucked money" out of the company?
Nonsense..how are shareholders sucking money out of the company? Dividend yields are generally not that great for railroads... less than 1% for CP and less than 2.1% for the others..NS is the only one over 2% recently. And if I own shares in a railroad and the share price goes from 20 dollars to 70 dollars , how exactly have I "sucked money" out of the company?
But I could take money from the sale and buy another house.. or rent an apartment and sock the money from the sale away in CSX stock..
Ulrich tree68 Ulrich And if I own shares in a railroad and the share price goes from 20 dollars to 70 dollars , how exactly have I "sucked money" out of the company? Two factors - why did the price of the shares rise, and you sold, right? Share prices rise and fall for a number of reasons, some of which are tied to the value and overall performance of the company. Thus far I've never sold any shares in anything. And even if I did sell at $70 ... someone else therefore would have had to pay $70.00 for them... no? Effectively switching Ulrich the shareholder out for Jennifer the shareholder doesn't suck money out of the company.. it's simply an ownership change.. i.e. if I sell my house to you does that change the value of the house?.. Nope.
tree68 Ulrich And if I own shares in a railroad and the share price goes from 20 dollars to 70 dollars , how exactly have I "sucked money" out of the company? Two factors - why did the price of the shares rise, and you sold, right?
Ulrich And if I own shares in a railroad and the share price goes from 20 dollars to 70 dollars , how exactly have I "sucked money" out of the company?
Two factors - why did the price of the shares rise, and you sold, right?
Share prices rise and fall for a number of reasons, some of which are tied to the value and overall performance of the company. Thus far I've never sold any shares in anything. And even if I did sell at $70 ... someone else therefore would have had to pay $70.00 for them... no? Effectively switching Ulrich the shareholder out for Jennifer the shareholder doesn't suck money out of the company.. it's simply an ownership change.. i.e. if I sell my house to you does that change the value of the house?.. Nope.
Doesn't change the value of the house - it just leaves you without a house.
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