ATLANTA — After the turmoil of Norfolk Southern’s proxy fight against an activist investor last month, the railroad’s Stefan Loeb says the shareholders’ vote showed confidence in management’s strategy.
While board chair Amy Miles lost her position, Norfolk Southern’s management mainly prevailed in the vote to retain control of the Class 1 railroad, with Ancora Holdings winning only three seats on the board of directors [see “Norfolk Southern shareholders back CEO Alan Shaw …,” Trains News Wire, May 9, 2024].
“What it showed us is the strategy of a better way. The vote and what the shareholders are asking us to do is to have the board hold us accountable for performance,” Loeb, Norfolk Southern’s vice president of business development and first and final mile markets, said Tuesday at FreightWaves’ Future of Supply Chain event.
Loeb was joined onstage by FreightWaves editor-at-large John Kingston.
Loeb said while the freight rail industry has historically been slow to grow its market share compared to commercial trucking and other modes of transportation, he sees the industry shifting to a focus on resilience and smart, sustainable long-term growth.
Atlanta-based Norfolk Southern has almost 20,000 route miles across 22 states and the District of Columbia, connecting 800 industrial sites, 175 warehouses and 43 ports. The company ships over 2,923 commodities, including automotive and metal products.
“When you look at the broader industry, I think coming off of 20 to 25 years of maximum cost efficiency, we’ve taken as much costs out of the network as we can,” Loeb said.
“You have to at some point look at the other part of the equation, which is growth. If you look at the numbers, this industry has not grown particularly in what we call the carload space, the bulk business, the non-intermodal trailer container business. With the strategy with Alan Shaw, our CEO, and Ed Elkins, our chief marketing officer, one of the reasons they brought me on about 14 months ago was to create this entity, first- and final-mile markets, to create solutions to make rail easier to bring that growth onto the network from a myriad of different places.”
Prior to joining Norfolk Southern in April 2023, Loeb spent 13 years at short line railroad Watco Cos. in various roles, the last of which was executive vice president and chief commercial officer.
Having worked in the short line railroad space for over a dozen years, Loeb said it gave him a broader view of the entire railroad landscape across the country and how it can be utilized.
“I am lucky in that I came from that space, so I got to see across all the railroads, what I liked and didn’t like as a short line,” Loeb said. “Then coming over to Norfolk Southern, we’ve done a really good job tailoring that relationship, so it works. We spend a lot of time on it.”
Norfolk Southern has more than 270 connections with shortline railroads.
“These are small railroads that extend our network, get us to shippers that aren’t on Norfolk Southern and have a tremendous history of growth,” Loeb said. “In creating a program in our department that tracks 40 different interchanges where we have identified substantial growth, and making sure that we interchanging every single day per the plan, and that we’re tracking it and fixing it as quickly as possible, leading to tremendous growth has shown that that’s an efficiency gain, to focus on consistency to drive growth.”
In April, Norfolk Southern merged two of its wholly owned subsidiaries, Triple Crown Services Co. and Thoroughbred Direct Intermodal Services. The newly formed entity operates under the name Triple Crown Services Inc.
Loeb said Triple Crown offers brokerage and trucking services to customers.
“It’s about trying to make it easier for customers to be able to use Norfolk Southern rail products in a bundled solution — to try and grow our business,” Loeb said.
— Note: This article originally appeared on FreightWaves, a sister property of Trains owner Firecrown Media. Updated at 9:40 a.m. CT to update lead to better reflect Loeb’s comments, and to correct number of shortline connections.
About two months after I started working for Santa Fe in 1990 I heard Mike Haverty say in a staff meeting, “You can’t starve a railroad into prosperity”.
In 1990 Santa Fe had a main line that was double tracked most of the way between Chicago and Los Angeles. At the time we did not have enough profitable traffic to utilize both mains efficiently. So rather than tear up the second line and sell the rail for a quick buck, we decided to fill it up as quickly as possible with VERY profitable traffic and by 1995 were pretty much out of main line capacity.
Jim, Thanks for your great career on a great railroad. Everyone knows that ATSF always performed above expectation.
All the other railroads can talk the talk all they want to talk. ATSF delivered, as does successor BNSF.
The old adage goes, “It takes money to make money.” However, spending money to make money increases the O.R.
I know I am being cynical. We’ll see how long Wall Street waits for Loeb’s strategy to work. I do not believe they will wait very long.
Well, he’s working against whatever headwinds John Orr creates by PSR-ing this railroad into the dirt, which is a shame because the $25 million price tag for Orr will almost certainly mean Loeb or others will be fired if the OR is still 70 after a couple quarters pass
I think you guys must have missed the vote that NS won by a large margin over the Ancora short term strategy. Share holders appreciated the long term view although they did see a need for some improvements. The shareholders spoke loud and clear what they would like to see, and the only Ancora people that got elected were people who actually had transportation AND RAILROADING background. I think that speaks volumes. I think saying they will all be fired after a few quarters if they don’t deliver right away does not allow for any time to continue the implementation of the whole program. That is pretty short term if you ask me.
You must have been backing Ancora and now its just sour grapes from the minority. That’s what you get when you back lame horse. no pun intended.
Vincent, you’re 100% off the mark. The current management caved to shareholder pressure to engage in the same strategy Ancora had proposed. You seem to forget that 15% of NS’s intermodal lanes were axed before any vote was cast. Also, it wasn’t a “landslide” as the NS press release likes to claim.
Alan Shaw is still a clueless CEO and I doubt he’ll push back on anything Orr tries to “rationalize” operations.
Sure looked like a landslide to me. Ancora proposed 7 new board members and they got three. Their proposals for CEO (Barber) and by default, COO (Boychuk) were FAR down the line of results. I could argue how far off the mark you are but I will let the results, published in this fine magazine, do the talking. In the end, the railroad leadership and shareholders (the vast majority anyway) got what they wanted, a long term strategy versus a “take it down to the studs…” start over plan relying on a mode of freight rail (carload/LTL) that continues to lose market share. Only idiots would have wanted that plan, no matter how Ancora tried to buy the vote…. I supported the majority… I say no more.
Mr.Loeb is on the right track. It’’s time for growth!