PSR Dominates Shippers Meeting Presentations

Precision scheduled railroading was a major topic of discussion at the recent meeting of the Midwest Association of Rail Shippers where one short line railroad executive called for the Class 1 railroads that are implementing the model to do more collaboration with their short line partners.

Eric Jakubowski, the vice president and chief operating officer of Anocostia Rail Holdings, which owns six short lines, said short line railroads could hold equipment that the Class 1 railroads don’t want on their networks.

Jakubowski said that although PSR is the art of keeping operations simple, reliable and predictable, some Class Is have not yet created door-to-door trip plans.

“Some touch points are not under discussion,” Jakubowski said.

PSR will not necessarily create traffic growth for short line railroads, but Jakubowski does believe it will prompt real-time decision making at the local level.

“PSR is foundational, and I do think it will create capacity,” he said.

Seven of the nine speakers addressing the conference, which was held in Lake Geneva, Wisconsin, discussed PSR heavily in their remarks.

That included Norfolk Southern CEO James Squires, who touted PSR as helping to improve service consistency and reliability, and create more capacity for business growth.

“For NS, PSR is something we do with our customers and not to our customers,” he said. “It’s a platform for growth.”

Squires said that NS through its TOP21 operating plan is implementing PSR cautiously and methodically.

“We’re not doing the ‘chainsaw method,’ to have at it and just make it work. That can be disruptive for customers,” said Squires. “We are taking time to improve service.”

Matthew Wallin, GATX Corporation vice president of structured finance, said PSR could affect car ownership percentages by lowering the railroads’ share of car ownership while increasing the percentage for rail-car lessors.

Wallin also said that PSR also could negatively impact the number of high-mileage cars in fleets, such as centerbeams, intermodal cars and box cars.
He said that will make it a challenge for car leasing companies to to maintain the diversity of its fleet across car types and commodities.

U.S. Surface Transportation Board Vice Chairman Patrick Fuchs said his agency is engaged with the railroads that use PSR by making weekly calls to receive operational metric updates.

“We aren’t making any sweeping statements about PSR,” he said. “We’re in oversight mode now, closely monitoring it and looking for feedback from shippers.”

From a shipper’s perspective, PSR isn’t very precise when it comes to the first and last mile at an origin and destination, causing inconsistent transit times, while box-car management is challenging at best, said Bruce Ridley, senior vice president of environmental health and safety and operational services for Packaging Corporation of America.

“Railroads need to make the first and last mile a priority, but they aren’t measuring it, so it’s not a priority,” said Ridley.

Ridley said another issue is that Class 1 railroads have fewer fewer customer service representatives and not all of them are familiar with new processes and changes brought on by PSR.

Rob Cook, senior manager of rail operations at Bunge North America, said his company is coping with PSR by acquiring more cars to cover transit time variations.

“Railroads want to run a tight pipeline, but they don’t know what that looks like. It’s all unknowns,” Cook said. “What’s the new normal with a fleet? We’re trying to stay consistent in the new normal.”

But he said that Class 1 railroads are getting better at PSR and viewing it as an opportunity to reduce car fleets and improve transit times.

Gail Wernette, manager of rail rates at Nutrien, said assessorial charges have become an issue with PSR. The charges cover such services as diversions, reconsignments and car storage.

“Railroads are not so good at paying or tracking assessorial charges. That causes friction,” Wernette said.

Wernette said  unit trains are not considered favorably by PSR. “Shippers can get 65-car trains but if they want 120-car trains, “not many [railroads] will listen to you,” he said.

Wernette said his company is not opposed to PSR but it wants to give feedback as the operating model is implemented.

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