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November 2020



Rail News: Rail Industry Trends

RailTrends 2020: A virtual cornucopia — by Tony Hatch



Tony Hatch is an independent transportation analyst and consultant, and program consultant for Progressive Railroading’s RailTrends® conference. Email him at abh18@mindspring.com.

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We won’t be gathering in New York City on Nov. 19-20, and we’ll miss the meals, coffee and cocktail chatter that is always such a big part of RailTrends. And what we’ll really miss is you, the audience, which I have always thought is the best in the industry. We knew we were doing something right when top leaders stayed after they themselves spoke to listen to others, or when they dropped in from other duties to hear and see what was going on. We’ll get that back in 2021. 

But what we do have to offer this year, virtually, is pretty darn great — three Class I CEOs, two other C-level officers, five short-line CCOs, D.C. (and Ottawa and Mexico City) covered, our potpourri of analyst opinions and rail-car considerations, and more.

This has been a strange and bad year, saved only by a huge voter turnout in the United States (and maybe by the Dodgers!).  We — Progressive Railroading and myself — hope to help end it on a high note as we look to the post-pandemic world.

Our honoree. First and foremost, Jim Foote is the 2020 recipient of our Railroad Innovator Award. While we at RailTrends couldn’t be happier, Jim, in typical fashion, downplays the honor (“I am not sure if I am worthy as an ‘Innovator’ as I am focused on getting the industry back to where it was about 75 years ago” — albeit, I would add, via PSR). Now, it is clear that while he follows some great rail leaders, but it is Jim who has taken CSX to industry leadership. And that is no small feat. 

Wisdom from the North. We will hear from one former Railroad Innovator Award winner and one, I strongly suspect (and I have a vote), future one, when we hear from the CEO leaders of PSR 2.0 from up North: Canadian Pacific's Keith Creel (the 2014 winner) and JJ Ruest of the “mothership,” CN. I really hope the speeches of all three CEOs, each of whom has CN on their resumes, will be heard by those, some in (regulatory) power, who continue to say PSR is only about cost cutting, the “Cult of the OR”, and rails subservience to Wall (or Bay) Street. Four things the Canadians can show us: a focus on growth, their development of technology, their willingness to spend to support their approach, and the returns to back up that spending. I bang my head against the wall at times, saying “look to the North” (or even the south) when the anti-PSR platitudes are proclaimed. I expect that hearing directly from the generals in charge will better demonstrate their strategic command of the modern railway and its opportunity.

More Class I speechifying, more evidence of a developing PSR 2.0. It’s also happening among the new converts in the U.S. South. And not just Jim’s CSX — it's also the more recent PSR converts, Norfolk Southern, CSX’s big rival in the southern United States; and Kansas City Southern, so much of whose opportunities to show that “service begets growth” are south of the border down Mexico way. From the NS, we are pleased to have EVP/CMO Alan Shaw; from KCS, we’ll present VP-Treasurer Mike Walczak, who also serves as head of Network Planning. From Alan, we’ll hear about growth potential. And we always expect big things on the innovation front from KCS, as we have every year — including last year, when CEO Pat Ottensmeyer received the Railroad Innovator Award.

More than "trendy." Environmental, Social and Governance (ESG) as an investment strategy/requirement and as a corporate strategy is clearly here to stay. Union Pacific Railroad's Beth Whited has addressed the RailTrends audience from a variety of perspectives; now, as the Class I's EVP and chief human resource officer, she will discuss the ESG efforts at UP. ESG is only going to grow in significance, so we all should pay attention to what Beth has to say on the topic. 

Technology is always trending. We expect to hear about rail technology from just about all of our speakers, including the team at Rail Pulse, the new joint venture visibility project that will be a game-changer, in my humble opinion. It's really as much of diplomatic achievement, the Congress of Vienna of North American rail freight (bringing together railroads big and small, car owners, OEMs, shippers) as it also is in terms of technology. The new JV could/should/will be a VERY BIG DEAL; it recently received an FRA CRISI grant. Rail Pulse is led by consortium that includes NS, Watco Cos. LLC, Genesee & Wyoming Inc. (GWR), TrinityRail and GATX. The JV represents a real effort to finally gain true visibility by connecting all stakeholders via GPS. Congrats – Big “Macs” all around! Talking RailPulse at RailTrends will be NS VP of Strategic Planning Mike McClellan; TrinityRail VP of Railroad Leasing and Sales Robert DeGroot; and GATX SVP and COO Paul Titterton.

Short lines remain the entrepreneurial side of freight railroading, as well as the hot spot for PE/infrastructure investment. I am so glad once again to bring in the chief commercial officers of most of the largest short-line holding companies and regionals, including my college classmate Eric Jakubowski of Anacostia Rail Holdings, as well as fellow happy Dodger fan Stefan Loeb of Watco; Mike Miller of Brookfield’s GWR; Alin Campian of R. J. Corman; and Michael Bostwick of PanAm Railways. This panel has always been perhaps the most outspoken and interesting in a competitive bunch.

Regulatory issues will be a bigger story in 2021 I suspect, and as ever, we have that discussion covered. Our D.C./Ottawa panel is a fixture, led by the CEO of the Association of American Railroads (Ian Jefferies), and including the leaders of the trade associations representing the short lines (the American Short Line and Regional Railroad Association's irrepressible Chuck Baker); rail cars (OEMs and owners, the Railway Supply Institute's  Nicole Brewin); rail construction and contracting (the National Railroad Construction and Maintenance Association's Ashley Weiland); the view from up North (Railway Association of Canada's Marc Brazeau); and, this year, a view from south of the U.S.-Mexico border (Agencia Reguladora del Transporte Ferroviaro's Alejandro Alvarez Reyes). And in a separate session, Surface Transportation Board Vice Chairman Patrick Fuchs will offer a perspective that's not to be missed.

From shipping to rail-car counts. Meanwhile, we'll feature two additional stand-alone sessions: Oliver Wyman's Adriene Bailey will highlight research in non-commodity shipping; and Integrity Rail Partners' Richard Kloster will offer his annual take on the freight-car market.

And, last — not on the program, just in this description — but not least, you will hear from the “experts.” That is, the analysts and consultants (and I will exclude myself from that title, even if I do insist on speaking). Joining me will be Mister “Intermodal in Depth” Larry Gross, and the superbly cynical Rick Patterson of Loop Capital, the “Thunder from Down Under”! For more information and to register, visit railtrends.com.

 



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