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September 2010

Rail News: Rail Industry Trends

Union Pacific and the importance of being nimble; rails and recovery and indicators of same (Pat Foran, Context, September 2010)


— by Pat Foran, Editor

Greater expectations at (and for) Union Pacific

I've heard it since I started covering this industry in 1996: Given their sheer size and variety of cultural inclinations (and the corresponding snags and drags that accompany them), big freight railroads aren't nimble enough to make meaningful service-performance improvement strides. I've heard that sentiment from execs at those very same big freight railroads.

Refreshingly, we've been hearing something a bit different of late. Service-sensitive CEOs and process-oriented strategic planners aren't as willing to give up the ghost on big-road nimbleness. For example, the powers that be at Union Pacific Railroad say they've learned some hard lessons during the past decade: North America's largest freight railroad must be "agile, resilient and have recoverability," as UP Chairman, President and CEO Jim Young told Managing Editor Jeff Stagl (see this month's cover story).

What's more, UP must do "extraordinary things" in order to meet shippers' service expectations.

The performance metrics and customer satisfaction ratings UP execs point to suggest the Class I's customers believe, at the very least, that the railroad is on its way to becoming a better service provider. Making "extraordinary" part of the expectation mix will take some doing; it starts with a commitment, and UP officials have made one. They've put themselves out there, declaring: "We expect greater things from ourselves, and customers should, too."

Accordingly, we, too, will expect more from UP — and, for good measure, customer-focused execs at other Class Is — in the months ahead.

Confidence amid the sustained lethargy

What's your economic indicator of choice telling you about the recovery these days? This month, I'll hang with comments BNSF Railway Co. Chairman, President and CEO Matt Rose offered up during a conversation we had Aug. 18 in his office in Fort Worth, Texas. Although he is concerned about "this sustained period of lethargic growth" that we've been slogging through, Rose told me he and his chief lieutenants don't see a double-dip recession on the horizon. He expects BNSF to be "really busy" this fall, citing increases in grain, coal, intermodal and industrial products traffic.

"There are some interesting things happening out there," Rose said, noting the array of oil, crude and frac sand moves associated with the Bakken Shale in western North Dakota, the largest continuous oil deposit in the lower 48 states.

And although the burgeoning activity in Bakken Shale communities has helped drive unemployment in North Dakota to stunningly low levels, the lack of jobs is a concern just about everywhere else. It's certainly wreaking havoc with consumer spending, although there was a bit of positive news on that front late last month.

The Consumer Confidence Index, which had declined in July, "posted a modest gain in August, the result of an improvement in consumers' short-term outlook," even though "employment concerns continue to weigh heavily on consumers' attitudes," said Lynn Franco, director of The Conference Board Consumer Research Center, in an Aug. 31 prepared statement. Overall, though, consumers "remain pessimistic," Franco said.

I'll stick with Matt's half-full take on the near term. Meanwhile, we'll track confidence levels as they surface or submerge, be they indices, anecdotes or front-line opinions.

Morgan joins Progressive Railroading sales team

Last month, Jimmy Morgan was named Progressive Railroading's western regional sales manager. He's based in Jacksonville, Fla.

Morgan's rail-industry experience includes stints at 10East Corp., which provided Software-as-a-Service (SaaS) applications designed to support North American railroads' signal and communications infrastructure needs; and RMI, a provider of transportation management software for carriers and shippers that acquired 10East last year.

After joining 10East in 2007, Morgan helped establish a new video production department to develop interactive training material supporting 10East services. He then was named the company's director of sales and marketing. More recently, he served RMI as a solutions consultant.

Morgan's contact information: Jimmy Morgan IV, 6157 Eclipse Circle, Jacksonville, Fla., 32258; phone: 904-718-1008; fax: 866-781-9598; email:


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