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Rail News Home Rail Industry Trends

9/10/2004



Rail News: Rail Industry Trends

Class Is, shippers address service, slip-ups at AAR's fall peak forum


During the Association of American Railroads' (AAR) "Fall Peak Season" shipper forum held yesterday in Kansas City, Mo., AAR President and Chief Executive Officer Ed Hamberger was trying to usher attendees back into the meeting room after a morning break to keep the event on schedule.

"On time and on budget, that's our motto," he joked.

"If you were on time and on budget, we wouldn't be here," grumbled an attendee.

It's sentiments like that that prompted 470 people — including representatives from 340 rail shippers — to descend on the Kansas City Airport Marriott to hear Class I senior marketing officers outline their road's fall peak battle plan and respond to attendee's questions about service concerns. The event also included a speech by Surface Transportation Board Chairman Roger Nober and U.S. Department of Agriculture Deputy Secretary Floyd Gaibler.

Shippers already were well aware that the Class Is have been handling all-time-high traffic volumes, that some large roads — notably Union Pacific Railroad and CSX Transportation — have struggled to keep up, and all the roads have been adding train and engine-service workers, and locomotives and rail cars to move more freight. So, the Class Is' presentations offered few surprises.

However, one surprise was Canadian National Railway Co. officials' decision to withdraw from the presentations. When asked why by a shipper representative during a question-and-answer session, CN Vice President of Marketing Jean-Jacques Ruest said the Class I's scheduled railroad operating plan enables CN to focus on service on a year-round rather than seasonal basis, so the railroad doesn't have any specific fall peak plans.

"But when you're talking about the peak of the peak [season], we try to work with shippers and receivers to work seven days a week," he says.

During the presentations:
Burlington Northern Santa Fe Executive VP and Chief Marketing Officer John Lanigan said the Class I's traffic was up 9 percent so far in 2004 and had achieved three years' worth of normalized growth in a single year, and that the railroad was trying to balance its assets and create more efficient trains to minimize handlings;
Canadian Pacific Railway Executive VP of Operations and Marketing Fred Green said the road is moving heavier (17,000 tons vs. 14,000 tons) and longer (by 11 percent) trains with higher-capacity cars;
• CSXT EVP and Chief Commercial Officer Clarence Gooden said the first phase of the roads' new "ONE Plan" operating plan was implemented a month ahead of schedule in August and was helping to reduce terminal handlings, and that phase two will roll out in January;
Kansas City Southern Senior VP of Marketing and Sales Larry Stevenson said the road had completed its track maintenance program well ahead of the fall peak, and had enough manpower and equipment to handle the seasonal surge;
Norfolk Southern Railway Vice Chairman and Chief Marketing Officer Ike Prillaman said the road had seen a 340 percent increase in Internet bills of lading between second-quarter 2001 and second-quarter 2004 because of an online billing push, and "enjoyed some breathing room" for the peak but will need to continue to make capital investments to support traffic growth; and
• UP EVP of Marketing and Sales Jack Koraleski said the road was considering a directional running plan with BNSF — similar to CN's and CPR's in western Canada — to hasten moves on certain north-south routes.

Before beginning his presentation, Koraleski joked that he was going to use the portable microphone because "it's harder to hit a moving target."

During the Q&A, shippers were hardly throwing objects — but they weren't throwing many barbs, either. Many of their concerns involved switches and specific service problems in Houston and the Gulf Coast. A representative from ExxonMobil Corp. said one of the company's plants had only four on-time switches out of 14 during a recent two-week period.

Although there were plenty of "we'll get back to you on that" responses from the Class I officers, at least a few shippers seemed content with the railroad's explanations and their service plans. However, after the event, some shippers said they were expecting less of a "we have it under control" attitude from the railroads.

Overall, AAR and STB officials — commissioners W. Douglas Buttrey and Francis Mulvey also attended — were pleased with the turnout and the concerns voiced by shippers.

"The fact that we're all here in Kansas City shows how important this subject is to us all and that service is a top priority," said Nober.

Jeff Stagl


Contact Progressive Railroading editorial staff.

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