Q&A: John Fenton, Patriot Rail & Ports

RailPrime: Congratulations on completing the Salt Lake Garfield & Western Railway (and Caballero LLC and Caballero 2 LLC) acquisitions in early January. What does this deal give Patriot Rail & Ports that you didn’t have?

Fenton: We are pleased to bring to the Patriot family the Salt Lake Garfield & Western (SLGW), a railroad that has served Salt Lake City for more than 125 years. The SLGW interchanges with both the Union Pacific and BNSF, and Patriot is now superbly positioned to support our customers and grow with the dynamic and expanding Salt Lake City economy.

Adding the SLGW is a multi-faceted win. The SLGW and its customers will both benefit from Patriot’s talent and expertise in short line operations across our other 12 railroads. Inclusion of the SLGW helps us de-risk with greater traffic diversity and enables more scaling across our organization for human capital investments and training, common capex procurement, and new digital infrastructure.

Our acquisition of the SLGW is the first “bolt-on” to the company’s portfolio now totaling 13 short-line railroads powered by our new owner, First Sentier Investors (FSI). Based in Australia, FSI manages approximately $160 billion of infrastructure and other assets worldwide. Having this deep capital support and expertise in the transport sector provides Patriot with a tremendous advantage as we drive new rail development and growth opportunities.

RailPrime: The pandemic has given many of us reason to pause some of our best-laid growth plans. For others, it's been a time push ahead, regardless. How would you characterize Patriot's approach to planning (and executing) growth plans during the past nine months?

Fenton: Let’s not forget how terrible the pandemic has been. Too many have lost loved ones, and everyone has seen families sickened and devastated financially. Not knowing what we were dealing with at the outset last year was stressful for us all, with huge burdens on our health care community, first responders, and critical infrastructure providers including railroads.

I am proud of the way the way our Patriot front-line team ― those who run our railroads and our port services every day ―c ame together to deliver for customers, always with a disciplined focus on safety. Working through the pandemic and the new unknowns demanded our leadership team’s foremost attention, as it should have and continues to do so, while we all navigated new ways of working together in-person and remotely. Everything was disrupted ― funerals, weddings, school plans ― but our people stepped up.

At same time, Patriot pressed forward with our focused growth plans. Our organization had to adapt to a new operating and business environment while also moving ahead ― and we did both.  Patriot added SLGW to our corporate family and we’re looking intently at other strategic opportunities now. We have the full endorsement of our FSI ownership, and we see the future brightly.   

RailPrime: As for 2021: What excites you about the year ahead? By contrast, what concerns you?

Fenton: CEOs manage risk, and today there is a great deal of risk. We’re concerned about the course of the pandemic, the impact of climate change with more hurricanes and floods, and especially the divided state of our nation. 

While we strive constantly to de-escalate risk, I am positive about the future. Though there will be dark days, as the COVID vaccine gets into more arms and our country pushes through the pandemic, we see recovery and growth with pent-up demand across our economy. Railroads are well-positioned to meet these transportation service needs, and in a green way. We see rail as a bridge that can help bring us together, if you like. I hope that we will see a new commitment to infrastructure investment in Washington, with an emphasis on investments that generate public benefits, such as reducing our carbon footprint and cleaner air. Rail is ideally suited to deliver these benefits, and with the support from FSI we are looking at commercial growth opportunities that can leverage new models of public-private partnerships. When I led the Metrolink commuter rail system in Los Angeles, I learned much about working with government. Building constructive relationships on the ground locally is essential for short line railroads such as Patriot woven so integrally into communities.

RailPrime: You've been with Patriot since May 2012. What's the biggest thing that's changed in the organization since then? And: What's the biggest thing that's changed in the freight-rail realm since then?

Fenton: We’ve all heard this before but it’s true ― the one constant in the railroad industry is change. Only now, with digital platforms and constant data immersion at home and at work, the velocity of change is even faster.  

Precision Scheduled Railroading (PSR) is rightly seen as the biggest shift in freight rail over the past few years. But PSR today is the logical extension of the management approach that the great Hunter Harrison introduced at CN when I worked for him 20 years ago. Data analytics has virtually turbocharged the concepts I learned with Hunter, and applying the core lessons of PSR to Patriot’s short-line framework is a foundational priority for us.

Patriot is well-positioned to leverage PSR and the larger forces of change across our global economy because of the tremendous support of FSI behind us. When I first joined Patriot we concentrated on optimizing our organization and getting our cultural foundation right. Now with FSI, we have the mandate to find and the ability to execute on select strategic opportunities to create new value, and I couldn’t be more excited for our company.  

RailPrime: If there was one technology you could implement across your organization, what would it be and why?

Fenton: We are all looking at many appealing and in some respects game-changing innovations for railroads. Perhaps what I’d most like to see is immediate implementation of a core digital backbone that enables safety and security assurance, performance optimization and dynamic customer interface, all in one seamless platform. That’s not coming tomorrow, even for our biggest Class I interchange partners. But we are making data and rapidly evolving analytics work for our railroad’s unique footprint, and we’re committed to the digital investments that will differentiate Patriot as a trusted transportation partner of choice.