But a merchandise shipper told regulators that key performance metrics don’t show much that matters to them.
On-time arrivals, re-crew rates, terminal dwell, and car-order fulfillment figures are “misleading metrics in CSX’s weekly reports to the Surface Transportation Board,” Bruce Ridley, a vice president with Packaging Corporation of America, wrote to the regulatory board on Thursday.
The letter repeated a recurring theme that shippers and even executives from other railroads have raised: Key performance metrics, whether the standard Association of American Railroads’ measures or those used by CSX, don’t necessarily reflect the type of service that rail customers actually experience.
There’s a difference between network performance and customer service, Norfolk Southern CEO Jim Squires said at a transportation conference in May.
Network performance measures — like train speeds and terminal dwell — are important from the railroad’s perspective, Squires says.
“But our real focus these days is on customer-facing metrics,” he says, noting the railroad is working with shippers to define joint service metrics.
“What we’re trying to do with our customers is measure performance in the entire supply chain,” Squires says. “That’s different than merely measuring terminal-to-terminal train performance.”
Canadian National has taken this approach since 2010, after it noticed that its industry-leading operating metrics didn’t necessarily match the service that shippers were receiving. CN, intermodal terminal operators, ports, and other customers work off the same scorecard so that they measure what’s important from a service perspective.
“What we talk about and measure as railroads doesn’t really impact customers,” a regional railroad executive said at a conference in September, noting the disconnect between the dwell and velocity figures railroads report and what customers feel. “It makes you think we as an industry are not measuring the right things.”
Trip-plan compliance should be the gold standard for measuring service, he suggests.
Linda Bauer Darr, who heads the American Short Line and Regional Railroad Association, says true on-time performance is what matters.
“Customers really only care about the first and last mile, pick up and drop-off on time, doesn’t matter so much in between,” she tweeted on Friday.
Short lines and regionals need to work with their Class I railroad connections to do a better job of using data and presenting meaningful, accurate information to shippers in real time, she tells Trains News Wire. The association is looking at ways to do just that, she says.
The STB did not immediately respond to a request for comment on performance measures or their usefulness.
However, the STB’s actions speak to the shortcomings of metrics that don’t tell the whole story. The board imposed enhanced monitoring on CSX this summer and on the industry during the winter of 2013 to 2014, when extreme cold and snow clogged Chicago and congestion spread throughout the rail network.
The extra monitoring in these cases indicates that the board believes that the usual performance metrics are insufficient when service falters.
The AAR is discussing changes to performance metrics, CEO Ed Hamberger said at the STB’s Oct. 11 listening session on CSX’s service problems. The AAR did not respond to a request for additional detail.
Railroads use terminal dwell and average train speed metrics as a proxy for the health of their networks. They highlight the figures each quarter and in annual reports, as well as provide weekly updates to the STB. The metrics are closely watched and are considered one indicator of efficiency and fluidity.
But like other shippers, Packaging Corporation of America says the metrics fall short as a measure of service. The company is one of the largest producers of containerboard and corrugated packaging in the U.S.
On-time performance figures measure yard-to-yard performance of road trains and do not include local service.
“Even at 64 percent, which is dismal for any supply chain, it can be expected to be much worse if the first and last miles are considered,” Ridley wrote regarding the Oct. 17 CSX report to the STB.
Re-crew figures also can mislead.
“It does not appear to count a train that died and did not re-crew because no crew was available,” he wrote.
And the company questioned the improved terminal dwell figures for Avon Yard near Indianapolis, where it knows some of its cars sat for seven to 14 days.
Packaging Corporation of America has asked the board to help resolve ongoing car-supply issues by measuring how many cars were ordered, how many were delivered, and how many were loaded. This would be more accurate and allow CSX to identify shippers who are ordering more cars than they need.
CSX did not respond to a request for comment.
WSJ, Thursday, 12 Oct: Shippers confront CSX on service…CSX H Harrison says his railway has never run more smoothly. Some of his largest customers disagree. Cargill said as recently as Monday, it had to shut down a Lafayette, ind. plant because local train crew members exceeded hours…Earlier, a Cargill plant in Sidney, Ohio shut down for 2 days for lack of cars. B. Hildebrand, a Cargill VP, said service levels haven,t improved from last year…Hildebrand said Harrison,s PSR has resulted in worse service. Harrison defended the strategy…Other shippers were anxious to share their experiences. Chemical maker Chemour said CSX failed to provide service on schedule during the summer incurring $1.3 million in excess costs. The last 5 months have been a costly disappoint,ment for us said K acker, relationship manager, rail. If anything, it has gotten worse in Sept and Oct said L Powers, district manager of chemical co. Cristal. Kellogg co.detailed problems at its Jackson, Tenn. factory said cars shipped from Illinois wound up in Idaho. The plant was able to stay open by using trucks–at 3 times the price. The co. had to shut some production at a N. Carolina plant. These are statements made by shippers to the STB. More Harrisonite PSR anyone?
One tangential metric often overlooked is the quality of equipment provided. Customers will continue to order more cars than they actually need because of poor eqyipment quality. Customers do not want to use defective equipment. It drives up their costs through claims, delays, and lost business due to customer dissatisfaction. Many times over my career, we were faced with perceived car shortages because of crap equipment.
Warren Buffet is looking much, much, much harder at bringing into his portfolio that service based railroad named NS than ever before. Sorry Mantle Ridge, he really is smarter than you fools will EVER be.
Railroad front offices and the corporate bean counters still fail to recognize “It takes years to develop good customers and only minutes to lose them”.
His head is in the freezer and feet are in the fire, but his average temperature is 98.6F… The patient died.
That is all you need to know about how misleading performance metrics can be.
2010…isn’t that about when the legendary EHH left CN?
What’s crazy is that customers already see the important service metrics from where they sit – on-time delivery, orders for empties filled when needed, tracks switched and loads picked up when expected. When you can’t measure what your customer already knows, that leaves a lot to be desired. The tools to do so have existed since the 70s at least.
The nerve of somebody to come up with an idea to measure customer and maybe even employee satisfaction instead of only the stockholders. What a great idea to put some clothing back on the emperor himself, EHH!
The move to unit trains a few decades back meant RR’s had to deal with many fewer individual customers. Now, it has become harder for RR’s to deal with more customers shipping fewer cars each. Especially in a just-in-time economy.