Norfolk Southern, best run railroad in North America?

[Anonymous]

This is part of the opening paragraph in the latest edition of Trains magazine in an article about NS by Fred W. Frailey.

The best run railroad in North America---- is theree any doubt? Not Union Pacific or CSX. Nor the Canadian railways, with lower pension and health care costs, and simple networks. Not even BNSF, well run but basically two lines from the Pacific to Chicago and a coal hauling core in the middle. It goes on to paraphrase NS is the best run railroad with its short runs complex route structures and all the while keeping customers and investors happy.

I'm not going to make this about all the railroads, just two. NS and CN. Fred W. Frailey thinks NS is the best run railroad in North America, I think CN is.

As it says in the opening Paragraph the Canadian Railways can't be the best run because of lower pension and health care costs and simple networks. Why not, it's not there fault that living in Canada is cheaper. It's not CN's fault that Canada has a better pension plan and health care system than United States. Next point, simpler routes. If I was building or running a railroad I think the better way to run it would be to have simple routes. Why be complex when simple will do? With that out of the way, here are some facts. Locomotives-CN 1958----NS 3755 NS has amost double the Locomotives running on roughly the same amount of track. NS does move approx. 1.6 times more cars in a year which means they should have about 3000, not 3755. Market capitalization---CN $17.16 Billion NS $14.07 Billion CN wins. Operating Revenue and revenue per car. CN $5.24 Billion with each car averaging $1074
NS $7.31 Billion with each car averaging $980. I would want my cars averaging more revenue per car. CN wins. Operating Ratio CN 66.9% NS 76.7% CN almost 10% better. Speaks for itself. Last point!!!!!!!!!!!!!!! NS had a rough go when it merged with Conrail. CN has aquired Illinois Central, Wisconsin Central, BC Rail and Great Lakes Transportation with no merger problems at all.

Yes I am bias towards CN because I live in Canada, but I think my arguments above show that CN is the BEST run railroad.

Comments are welcome and encouraged

[bobwilcox]

I think he basis his opinion on NS' comeback from the CR split. CN's management has never faced this type of challenge. Pension costs, route structures, etc. are not things that CN's management made happen.

I don't think you want too see a management test like the CR split. Remember the UP trying to absorb SP?

[Anonymous]

KevinRC, I want to comment on your last point. Indeed CN has acquired IC, WC, BCR, and Great Lakes without any problems which shows that CN has good leaders that know what they're doing.
Now to NS. You have to remember that NS didn't just gobble up Conrail, they had to split it with CSX. Basically what happened was, Conrail had to be split into two companies NYC and PRR. NS had to acquire PRR. CSXT had to acquire NYC. Then, to operate Conrail as Conrail until June 1, 1999 they had to put it back together. While splitting it NS had to make sure that they did not acquire anything that would belong to CSX, and NS had to make sure and absorb only part of the massive Conrail computer system. NS and CSX also had to upgrade their route systems to prepare for Conrail. Finally on June 1, 1999 they had to split it once again. Then, I think sometime last year NS finally absorbed PRR. So CN getting IC, BCR, etc. was a piece of cake compared to NS getting it's part of Conrail. An NS executive once said that NW and SOU coming together to form NS back in 1982 was simple compared to the Conrail split. I read somewhere else where they said that the Conrail split was probably one of the hardest railroad mergers that's ever been implemented.
I don't think that you or anybody else can really compare NS to CN because the two railroads are built on two different ideas, in two different parts of the world CN mostly in Canada and NS in the Eastern U.S., and the two have totally different missions to fulfill.

[Anonymous]

I keep seeing threads and posts about is this railroad better, or that railroad better. Are any one of them really any that much better or worse than the others? It seems like, at least with my point of view that it's really subjective, and a lot of that depends on what part of the country you live in and what railroad merged with your favorite. Some guys like this and some guys like that. So can this question really be answered?

Please don't tell me that UP is the most horrible thing in the world. We've already beat that one to death.

Thanks in advance, I just don't get it.

mike

[Anonymous]

Thanks for your views on the subject, I agree that each railroad has it's own set of working conditions and geography. It all goes back to the first paragraph in that story. Yes NS did a wonderfull job in the merger after a couple of years. But to come out and say they are the BEST run railroad in North America is not right in my opion. Are there mangers and employees great, Yes. It just got to me, that first paragraph. Thanks again for your replies

[waltersrails]

i would have to agree NS is the best run railroad.

[TH&B]

Mr Kevein, your points ironicaly made me think you are supporting the NS. NS has a much more difficult railroad to operate then CN and does it very well. CN has a much easier railroad to run and ultimately does better then NS. I'm impressed with NS, even though I'm a CNR rail fan. Any railroad that can make $$$ on short haul in a hotly compedive environment (CSX and trucking) is respectable.

[Junctionfan]

I think NS is better though it has nothing really to do with the pensions. The reason why NS is better is it doesn't feel it needs to merge with every little railroad it fancies. NS also has a nice amount of modern updated equipment. NS also has much more customers than CN and produces larger revenues from the operation (over 1200 trains a day) NS seems to be more intuitive with new ventures and often successful which is why Triple Crown still exists and CN Roadrailer doesn't. I can think of how many new CN service ventures or innovations has been produced but nor NS but NS seems to be the one buying new locomotives, running Blue Streak trains with UP and maintaining a highly successful roadrailer service.

I am not particularly familiar with the management of NS but David Goode seems to have a better success than E Hunter Harrison. I wonder how the railroads would do if thease gentlemen switched places? Then I would have an answer to my hypothetical question.

As far as rates of share performance, who does better?

[MP173]

Kevin:

You make very good points. I think you can compare the companies, and I think it is done on a daily basis...in the financial markets. Now, we all know that stock prices are only a snapshot of the moment and things do change...Enron, Adelphia, Delta, and KMart are a few that come to mind.

It doesnt really matter whether NS or CN is better, this isnt college football where we have our favorite teams. What is important is that both companies are providing pretty good service to their customers. They seem to be finding more success than the other major carriers.

A few questions for you. You seem to be mining data. For instance you comment that NS has far more locomotives than CN does, based on equal mileages. Yet, you do not question why CN's revenue is not the same as NS's based on that same mileage basis (NS's revenue is 39.% higher than CN's).
What is the amount of tonnage hauled by each carrier? What is the average haul (in miles or km)? Those are objective questions that can easily be answered. Please respond to those questions so we can begin to analyze the two carriers.

Also, does the fact that NS runs a scheduled railroad mean that it requires more (or less) locomotives? I monitor both CN and NS's lines and NS does run their freight trains on schedule, much more so than CN.

BTW, if it seems I am beating up on CN, I am not...just asking questions. I personally own CN stock and have been very happy with the long term results.

Regarding the OR of the two companies, CN wins hands down. I am wondering if CN would have been able to handle the increased business that NS did this past year. They absorbed a huge influx of business...how I dont know.

Kevin, I challenge you on this. Take a serious look at both railroads by using objective data. I will do the same. Things just havent been the same since the Montana Wheat debate and the discussion on Milwaukee Road. I need a challenge!

The comment by my fellow Southern Illinoisian about the ease of merging IC, WC and others into CN begs me to ask....if it is so easy to merge an end to end carrier, why did UP fall flat on their caboose when they bought Chicago and North Western?

ed

[Anonymous]

Thanks again, it's getting a little more debated, there has got to be more CN fans out their that agree with me. For the record, CN isn't my favorite railroad, they just run a great railroad. MP 173, the reason NS has more locomotives is they move more cars in a year and have more track. They have more than they need if they were as efficient as CN. They move 1.6 times more cars, less distance (people have said in this topic they run shorter miles) but need twice the amount of locomotives to do it. That is probably why there operating ratio is 10% higher than the best operating ratio in North America, CN's. MP 173, if owned railroad stock it would be with CN as well. Yes NS does have some interesting ventures but so does CN. NS doesn't buy every little railroad out there because it has way too much track now for the area in which it operates. Why does NS move more cars, where it operates. The eastern seaboard, the top half, Boston to Washington, DC has more people than all of Canada

[Junctionfan]

How much milage of track do those railroads have? I don't think CN would have been able to handle the increase of business NS has because they just don't have the locomotives for that. Alot of their equipment is aged and outdated or at least in bad condition. Look at NS that has all those Dash 9s, ES units, SD70Ms and so on. CN has the capability to be as operationally strong in revenue as NS does but for some reason, the management does see it or wi***o physically do door-to-door salesmenship in order to increase the revenues at least from where I'm sitting.

I wish I new the reasoning for that without having to hear a big convaluted lecture on principles of business.

[waltersrails]

i also agree with ns railfan. it is true its hard to come pare cn with ns. The merger with conrail was not easy.

[Anonymous]

JunctionFan, CN operates 19,304 Route Miles, NS operates 21,336. CN does have a lot of new equipment and is buying more and more all the time. Here in Nova Scotia all you see is SD75I on the Main Line