It’s hard to imagine any theory of operations and management, so long opposed by the notoriously status-quo cultures of U.S. railroads, could take root so quickly.
Recall it was only in 2012 that PSR progenitor E. Hunter Harrison rebounded from retirement to take over Canadian Pacific. Harrison launched a quick turnaround campaign in CP’s Calgary, Alberta, offices, eliminating positions, people, and roadblocks to efficiency (and profit). The railroad is now a top performer.
Using CP, Harrison tried to take over Norfolk Southern in 2015, then CSX Transportation again in 2017. Harrison succeeded at CSX by resigning from CP and forgoing any future benefits he had coming to become the CEO at CSX.
Harrison’s frenetic turnaround efforts at CSX — completed by his successor Jim Foote after his December 2017 death — have made that railroad a top performer that the others needed to catch up to. The pretense of “not PSR here” soon fell at NS, Union Pacific, and Kansas City Southern. Kansas City Southern de Mexico is now on the PSR list.
BNSF Railway officially has yet to adopt PSR, but editors are led to believe that many of PSR’s principles already part of the Fort Worth, Texas-based Class I railroad’s DNA as a matter of good business practices.
Though it has dropped from our No. 2 story in 2018, our reasons remain the same for honoring PSR in the Top 10 list this year: “For the astounding success of a once vilified operating plan, the rapidness with which Precision Scheduled Railroading took over the North American railroad industry, and because the operating model went from a relatively unknown phrase to a well-used acronym in just a few years ….”
PSR is a money scheme plain and simple. That is why it took off. Customers were left behind in the debris field. The CN has made adjustments although it seems unable to run passenger trains on time. The jury is still out if other railroads will follow and become more customer service orientated as PSR has gutted human, faciltiy and equipment assets. This is an industry ripe for new ownership.
@ Vicent Saunders I understand your concerns, but you gotta keep in mind that no one is guaranteed to keep their job forever eventually at some point you will be laid off, and that is one thing employees have failed to realize.
Railroads never had a chance. Why? Two words: Wall Street! Those who know the least about running a railroad only saw something to improve their bottom lines, not the needs of shippers or all the employees laid off. Only one railroad has survived the Wall Street onslaught of implementation of PSR and its sacred cow, even lower Operating Ratios; Privately held BNSF.
While everyone else runs scared of hedge fund managers looking only to make quick killing profits at the expense of all shareholders, BNSF has had safe harbor under the private ownership of billionaire Warren Buffet’s Berkshire Hathaway. Buffet has no one to answer to but himself. BNSF still has the power to make common sense decisions about ITS railroad while everyone else must bend to financial prognosticators whose only tie to a railroad might have been the toy train they broke as kids. Now they are doing the same thing to the real McCoy.
PSR has some good things that can help railroads. But the minute it became an investment tool for hedge fund and Wall Street advisors it became the wrong tool at the wrong time forcing the lack of internal investment by the railroads just to improve the bottom line… Maybe those hedge fund advisors should start investing in trucking companies because that is where the business is going, sure as God made little green apples…
Best operating guy I’ve ever been around. All he did was apply common sense to the equation.
For those of you whom are a little skeptical about Precision Scheduled Railroading…it has been proven to work at least when Hunter Harrison brought it Canadian National, and Canadian Pacific transforming both railroads into industry leaders. Three of the publically traded Class I Railroads are essentially downsizing to become more competitive, while at the same time, getting rid of things that are no longer essential in running the railroad. What’s the point of running one train at a time when you can combine it? This would save time, and provide less crew starts.
Should be number #1….an industry going backward when the economy is going forward.
Other country’s have been doing it for years, not a big deal. Works for some and not others, depends on you customers and the flexibility they need. Harrison is one of the most over ratted rail CEOs out there, or was.
Who implemented advertising on bridges and right-of-way ?
PETER – Well spoken post. The recipe for a dying industry. I view PSR as proof that whatever hasn’t worked in the past, do again in the present and on into the future.
I view PSR as the de-middleclassing of the railroad industry. A bunch of white collar middle manager guys are let go, leaving nobody except the bonus culture at the tippy top playing with their pricing algorithms and those ‘turning and burning’ at the very bottom who pay for mistakes with blood.