Some are speaking of 'activist investors' as though they were one and the same with 'vulture' capitalists. They are not, in my opinion.
According to the Investopedia, an activist investor is an individual or group that purchases large numbers of a public company's shares and/or tries to obtain seats on the company's board to effect a significant change within the company. On the other hand, a vulture capitalist is a type of venture capitalist who looks for opportunities to make money by buying poor or distressed firms. “Distressed” refers to companies or property in trouble, mismanaged, dying and heading toward bankruptcy. The “vulture” fund believes they see some “meat on the bone” and may get involved when all others have passed. They will either try to turn the asset around or liquidate it before it goes into the inevitable bankruptcy process.
greyhoundsPut the small shippers in containers and do the pick up and delivery by highway.
How many containers would it take to replace 10 full sized tankers of cooking oil? Delivered twice a week? Or two flat cars of steel shapes, too big for the highway?
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...
BaltACDIf you are serving ALL customers large and SMALL you are not running PSR because you still have loose car railroading. Loose car railroading requires car for car switching to service the SMALL customer. If you have small customers you cannot have PSR.
What I really like about this thread is that I'm learning. My mom taught school for 43 years and I guess she taught me to learn to learn. Nobody has changed my mind, but I get to better understand people who differ with me. I kind of like that.
I'm going to speak up on this one. Sorry Balt, but you're wrong.
Serving ALL customers, great and small, does not require loose car railroading. While there is a niche for loose car business, it's generally a very inefficient system. Somebody will have to pay for this inefficiency. There just ain't no free lunch. The government can't try to force the investors to pay, because then they won't invest. If the customers would pay there would be no problem, but they won't. Who's left?
Put the small shippers in containers and do the pick up and delivery by highway. There will be a need for more intermodal terminals, and trains. But it's usually far less costly to do small shipper PU&D by truck with the line haul by rail. And lower cost logistics are good for all of us.
caldreamerThe way to run PSR is to serve ALL of your customes, large and small. Do not abandon customers because they do not generate a lot of money for the railroad and are on a line that has only a few customers. You can run fewer, but longer trains and plan shipments so that not all trains server all yards enroute..
If you are serving ALL customers large and SMALL you are not running PSR because you still have loose car railroading. Loose car railroading requires car for car switching to service the SMALL customer. If you have small customers you cannot have PSR.
Never too old to have a happy childhood!
The way to run PSR is to serve ALL of your customes, large and small. Do not abandon customers because they do not generate a lot of money for the railroad and are on a line that has only a few customers. You can run fewer, but longer trains and plan shipments so that not all trains server all yards enroute..
Juniata Man Now; if we are going to start singing the praises of activist investors - I will part ways with you. Typically these folks are in it for the short term to rake as much cash as possible then skitter back under the rocks to wait for another victim to drift by. I‘ll repeat something I said in my earlier post; if the railroad uses the lower cost structure achieved with PSR to invest in the railroad and grow the business; PSR can be a good thing. Too often though; the railroad uses the extra cash flow along with taking on additional debt to buy back shares and drive the stock price up so their activist investors can cash out. I certainly do not see that as a positive for the other stakeholders with a longer term interest in the company - the customers, employees and the communities served.
Now; if we are going to start singing the praises of activist investors - I will part ways with you. Typically these folks are in it for the short term to rake as much cash as possible then skitter back under the rocks to wait for another victim to drift by.
I‘ll repeat something I said in my earlier post; if the railroad uses the lower cost structure achieved with PSR to invest in the railroad and grow the business; PSR can be a good thing.
Too often though; the railroad uses the extra cash flow along with taking on additional debt to buy back shares and drive the stock price up so their activist investors can cash out.
I certainly do not see that as a positive for the other stakeholders with a longer term interest in the company - the customers, employees and the communities served.
+1.
There are many employees who are embracing PSR - Pickup, Setout, Recrew. Until they get a better feel, it seems like all the working trains hit some of the yards at the same time. Often, this causes trains to sit and wait their turn for access. Ultimately, some hog law before reaching the next crew change point causing a dog catch crew to be called.
Although they still have a ways to go, I do think they are getting better. At first every manifest, and some stacker (so much for being 70mph) and hopper trains, were working almost every yard. This really choked things up. While more trains are working more places, they seem to have planned out work events a little better. Not every train works every yard. Things still get plugged up, but maybe not as bad as at first.
Jeff
greyhounds I'll ask if you prefer "Passive Investors?"
Actually, yes. Those are the folks who want to use their investment twenty or more years down the road for their retirement. They want to see the company grow and improve in the long term. That means putting part of the profits into that growth and improvement, not harvesting the profits out like some sort of crop.
greyhoundsActivist investors are rarely just trying to loot a company. They see an opportunity to make it a better company. This increases its value and this increase in value is what puts money in their pockets. All in all, activist investors are good for the economy and the people.
All in all, activist investors are good for the economy and the people.
Activist Investors all tend to work in the short term - as such they tend to loot the treasury and lost interest in a company and then move on to the next 'mark'. The 'activist investor' when they have control of a company, tend not to permit 'long term' capital investment projects to happen as that would decrease the amount of money available to the 'activist investor'. They may not want to 'loot' a company but they do want to insure that they get the most first.
greyhoundsAll in all, activist investors are good for the economy and the people.
Maybe economy, but people? I don't know. Trains don't operate in a vacuum. They operate among the public. Should they be allowed to blcok US-main street with 20,000 foot trains because they don't fit anywhere? Sure hope to hell your ambulance isn't stuck on the other side....
Personally, I think there needs to be a balance between profits and regulation. Too much of either isn't good, but lack of either can be just as harmful.
It's been fun. But it isn't much fun anymore. Signing off for now.
The opinions expressed here represent my own and not those of my employer, any other railroad, company, or person.t fun any
tree68The problem with PSR today is that the process has been tainted by the "activist investors," eager to wring a buck out of the railroads for their own gain.
Well, I defended PSR without getting flamed. I was surprised by that.
So now I'll defend "Activist Investors". I'll ask if you prefer "Passive Investors?" The goal is to get the greatest output while using the fewest inputs. (Fuel, labor, capital, etc.) Doing that will maximized the benefits the railroad provides to the overall population.
Management just doesn't always do that. They get comfortable, settle in, go on "Retreats" to places like Jackson Hole, WY, etc. Don't make waves, leave well enough alone. They should always be constructively disatisfied. Looking for better, more efficient ways to get things done. But that's hard work and it involves personal risk. If someone's initiative just doesn't work out he/she runs the risk of getting fired. Better to just go along with the routine.
And that, over time, will kill the company. It will get displaced by more agressive firms.
Activist investors act when they see an underperforming company just rolling along with a settled routine. They come in a light a fire under management. Changes start getting made. Some of these changes are mistakes, but as long as adjustments are made things will get better over time.
Activist investors are rarely just trying to loot a company. They see an opportunity to make it a better company. This increases its value and this increase in value is what puts money in their pockets.
I spent 40 years as a rail shipper in minerals and ores; fertilizer and chemicals. I experienced the good and the bad of PSR implantation on CN, CP and CSX and the first steps in that direction by NS and UP.
In my opinion; CN’s was our least painful implementation which I attribute to the close cooperation of CN’s marketing and sales folks along with their network operations people. Rather than simply having changes shoved down our throat; CN’s folks engaged with us to develop a service plan that actually resulted in a measurable improvement in our service despite a reduced frequency of local service.
The most painful implemendation award goes to CSX for the absolute cluster EHH visited on that railroad’s customers, employees and communities served. Our service levels in 2019 are no better than in pre-PSR 2016 despite the pain and additional costs we have experienced.
In my opinion; if a railroad takes the lower cost structure obtained from PSR and uses that to grow their business in the manner CN has under JJ Ruest; then the concept can be a good one. If PSR is implemented solely to improve shareholder value by stripping assets, shedding employees and picking the pockets of your customer base - then it shifts to being a flawed process that threatens the long term viability of the railroad implementing it.
greyhoundsI am convinced that the concepts of PSR are sound and will be a net benefit to the economic well being of the people of North America. But it's change. And change upsets some folks. There are going to be some mistakes in implementation, there always are. But we learn and progress by trial and error. So there are going to be some mistakes.
I tend to agree - the fundamental concepts are sound, and in many cases, are concepts that have been around for years, even if they were not well executed.
The problem with PSR today is that the process has been tainted by the "activist investors," eager to wring a buck out of the railroads for their own gain.
This is why you're seeing slow implementation of PSR concepts by those who haven't been subjected to the hedge fund impetus.
And the trial and error factor is why you're seeing railroads that have already implemented PSR backing out of the parts the aren't working for them.
OK, before I kick back with a hot dog and a beer to watch the 4th of July White Sox baseball game, I'll say this.
I am convinced that the concepts of PSR are sound and will be a net benefit to the economic well being of the people of North America. But it's change. And change upsets some folks. There are going to be some mistakes in implementation, there always are. But we learn and progress by trial and error. So there are going to be some mistakes.
New technology always involves a learning curve. People don't immediately grasp how to use it to its best advantage. But they'll get there, by trial and error. So let's look at some of what railroad technology has changed.
1) AC traction. A big improvement that allows locomotives to do more work with more efficiency.
2) Distributed Power. Longer trains are possible and more efficient. They don't have to be slow moving "Land Barges". 300 containers can move along at 70 MPH with distributed power.
3) Information Technology. IT makes scheduling, planning and analysis much more "doable".
Learning to integrate these three, along with many other advancements, is going to take a while. But it's being done. And it's change, which does upset people.
From my marketing point of view a big plus for PSR is that the railroads are again doing pick ups and set outs. At one time they were in to what I've seen called "Boutique Trains". I was working on a project to move westbound meat when the railroad marketing managers desired a unit train. No, that won't work. Make a pick up with an existing train. "Oh, we can't do that". I heard that a couple times from different railroads.
Well, the marginal costs, and they're what really counts, of adding additional revenue loads to an existing train are far lower than trying to run special "Boutique Trains" for every market. Sometimes there may be a need for a 20 car special train. But if the business can be handled on an existing schedule, do it.
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