Railroads will have to shift to an operating model based on reliability, velocity, and growth rather than a simple mandate to maintain a low operating ratio, Bailey says. A railroad that is reliable and efficient is also one that’s low-cost and should produce an attractive operating ratio. But ultimately, investors will have to support a pivot to growth, she says.
How much of an impediment is Wall Street? Bailey says she’s encouraged that all of the Class I railroads are talking about growth. “The CEOs of the railroads know that this is the future of the industry,” she says.

But Surface Transportation Board Chairman Martin J. Oberman, speaking in a later presentation, said he was not encouraged by trends in the industry.

Activist investor TCI Fund Management, he notes, has been critical of Canadian National’s financial and operational performance. CN then adopted a plan to eliminate jobs, cut costs and capital spending, raise rates, and buy back shares while reducing its operating ratio. “It could not be more obvious that the timing of this new plan … is in direct response to the investor-driven pressures,” Oberman says.

Wall Street has an outsized influence on the railroad industry, he contends. “The Class I’s have become almost completely shareholder-centric in their business philosophy and actual operations and have long ceased being customer-centric,” Oberman says.

Oberman says rail executives have told him that if they don’t do what Wall Street wants, they’ll be replaced by someone who will.

A term we have heard recently from those railroads implementing PSR principles is that they are entering a phase where they are “pivoting to growth.”

Again, referring to my April meeting with the financial group consultant, a key point of discussion was a significant rail business opportunity being pursued by the state. This opportunity involves a significant amount of freight presently moving daily from a manufacturing facility in Northern Nevada to another facility in California, approximately 280 rail-miles distant. What is proposed in this opportunity is to replace the trucks (up to 52 per day) currently transporting this freight with a dedicated train providing overnight service. The specific question asked by the consultant was in regard to the possibility of providing such service by rail. My response was, “Absolutely, it’s possible, we’re already doing it.” The parties currently advocating for the movement of this business from truck to rail expect that achieving the participation of the railroad will be difficult.

Why would a transportation company potentially walk away from such a growth opportunity? Perhaps because the business isn’t profitable? In this case, rather, it appears the railroad may be reluctant to conduct serious discussions because the business isn’t profitable enough. It would be a low-margin business not conducive to the railroad reaching that all-hallowed 55 operating ratio PSR focuses on.

The shunning by a railroad of such a business opportunity because it is not profitable enough (the euphemism for which, apparently, is “marketizing”) does equate to stifling local economic development initiatives, hampering job growth, and obstructing certain climate initiatives. It may even equate to the railroad shirking its common-carrier obligation specified in Title 49 of the U.S. Code. It most certainly does not equate to “pivoting to growth.”

Can we please be honest here?

If you want to know what it’s like when Alden Capital buys your local newspaper, you could look to Montgomery County, Pennsylvania, where coverage of local elections in more than a dozen communities falls to a single reporter working out of his attic and emailing questionnaires to candidates. You could look to Oakland, California, where the East Bay Times laid off 20 people one week after the paper won a Pulitzer. Or to nearby Monterey, where the former Herald reporter Julie Reynolds says staffers were pushed to stop writing investigative features so they could produce multiple stories a day. Or to Denver, where the Post’s staff was cut by two-thirds, evicted from its newsroom, and relocated to a plant in an area with poor air quality, where some employees developed breathing problems.. . .

Alden’s calculus was simple. Even in a declining industry, the newspapers still generated hundreds of millions of dollars in annual revenues; many of them were turning profits. For Freeman [Heath Freeman, principal officer at Alden), and his investors to come out ahead, they didn’t need to worry about the long-term health of the assets—they just needed to maximize profits as quickly as possible.

From 2015 to 2017, he presided over staff reductions of 36 percent across Alden’s newspapers, according to an analysis by the NewsGuild (a union that also represents employees of The Atlantic). At the same time, he increased subscription prices in many markets; it would take awhile for subscribers—many of them older loyalists who didn’t carefully track their bills—to notice that they were paying more for a worse product. Maybe they’d cancel their subscriptions eventually; maybe the papers would fold altogether. But as long as Alden had made back its money, the investment would be a success. (Freeman denied this characterization through a spokesperson.)

"They came not to praise news but to bury it and sell it for parts." Alden Global recently bought the parent company of the Sun Sentinel. I notice that lately almost all of their opinion articles on economic matters are coming from people affiliated with the Heritage Foundation."

I'll bet Biden and his team are considering all sorts of options, I think they have had it with the Class I's' Wall Street bosses and don't want to reduce the Brotherhoods' bargaining power, but want freight to keep moving. I'm not positive but I believe some sort of directed service order a la the Rock Island in 1979 would allow them to cut out the carriers and negotiate a fair deal with the Brotherhoods, not to mention an USRA-style takeover. Far-fetched, but I don't expect Biden to stand still.

Tell me more about how we have a "liberal" media, when so much of it is corporate owned. . .

I can tell you that the view from the actual left about our "corporate" media is very different, and there very much is a corporate line. If you don't think so, then take an hour and watch a random episode of a totally non-profit, non-corporately-funded program like DemocracyNOW! with Amy Goodman. Their take Friday on the passing of the Queen was unlike anything I have heard from any broadcast or cable news outlet, and a lot more critical of her and monarchy in general.

Here's a snippet of what the BLE put out to us members today....

"....Late on Friday, September 9, the nation’s largest railroads began warning major shippers that they are declaring an embargo on certain types of new shipments five days in advance of the end of the federally mandated cooling-off period at 12:00 AM EDT September 16. They further advised that all rail shippers could be blocked from making any rail shipments well in advance of next Friday’s deadline for a lockout or strike. This completely unnecessary attack on rail shippers by these highly profitable Class I railroads is no more than corporate extortion...."

The railroads are going to try to turn public sentiment against us.... I bet it's a confusing time for some of our MAGA union members... how they reconcile being a member of an organization with whom their chosen political party will do anything to eliminate...

While I called it off-topic, the results could have a huge impact on preservation, especially concerning track and equipment. Will a reorientation away from OR to growth change the impulse to abandon track and equipment which are profitable but "not profitable enough"?

The most important part of this article, at least in my opinion.



https://www.trains.com/trn/news-reviews ... P3t3qO7-YM

Starting a new business, or growing an existing one, can be and very often is hard. Anyone who has attempted something like that knows just how difficult it is. Those who have struggle with inadequate resources all the time. I know, I dealt with business owners daily for 36 years as an auditor for the State of West Virginia. I saw the troubles they often had.

But that's OK for someone running a mowing and grounds business out of his basement. It's just TOO STRENUOUS for the millionaires and billionaires of Wall Street.

From an editorial at Railway Age.

RAILWAY AGE!!



There's more at the source:

https://www.railwayage.com/freight/psr- ... nest-here/