Posts Tagged ‘Alan Shaw’

NS Sets Quarterly Income Records

July 28, 2022

Norfolk Southern on Wednesday reported setting records in operating revenue and income from railway operations in the second quarter of this year.

The carrier said operating revenue was $3.3 billion, an increase of 16 percent compared with the same period in 2021. That was a quarterly record.

The increase from the same quarter of a year earlier was due to a 20 percent increase in revenue per unit.

Income from railway operations was $1.3 billion, up 9 percent compared with the second quarter of 2021. That was a record for a single quarter, NS officials said in a news release.

Net income for the quarter was $819 million, about the same as a year ago, and diluted earnings per share of $3.45 were a 5 percent increase.

Railway operating expenses rose 21 percent to $2 billion. NS attributed that to higher fuel prices, lower property sales and increased costs from inflation and service issues

The operating ratio in the second quarter was 60.9 percent compared to 58.3 percent a year ago.

In a statement, NS CEO Alan Shaw said the Atlanta-based carrier had seen improvements in service.

“In the second quarter we stabilized service levels, expanded our pipeline of conductor trainees, and launched the next evolution of our operating plan, TOP | SPG, with our signature no surprises approach,” Shaw said during an earnings call. “Service is not yet where we want it to be, but I am encouraged by our progress.”

Freight volume during the second quarter was down 3 percent. Merchandise traffic fell 1 percent, while intermodal and coal were each down 4 percent.

Compared to the first quarter of 2022, though, average train speed and terminal dwell times were worse

NS Chief Operating Officer Cindy Sanborn tried to put a positive spin on that by saying “we are really encouraged by the improvements we are seeing here in July.”

She said so far in July, train speeds are up 6 percent and dwell times are down 3 percent.

Officials said crew shortages limited the number of trains NS could operate and those that ran were longer, heavier and more fuel efficient.

Sanborn said NS has been able to add new conductors at a rate that exceeds the attrition of existing workers.

NS now has 7,190 qualified train and engine workers, an increase of 224 over the second quarter average. There were 988 conductors in training during the second quarter.

Management expects 12 percent or better revenue growth for the year and projects that the operating ratio will increase a half point to one point.

NS CEO Shaw Pledges Service Improvements

May 16, 2022

Norfolk Southern CEO Alan Shaw pledged during the company’s annual meeting to make the firm more customer-centric and operations driven.

Shaw had made similar comments during meetings with NS employees that he held during his first weeks on the job as CEO after replacing the now-retired James Squires.

“My first priority, and the top priority of every member of the Norfolk Southern team, is to restore service to the quality our customers expect and deserve,” Shaw said in a statement.

The statement said this means accelerating the railroads’s TOP|SPG operating plan, hiring the conductors needed to execute the plan and making it easier for customers to do business with NS.

During the meeting, NS shareholders elected Amy Miles to serve as independent chair of the board of directors for a one-year term to expire in 2023. She is former chair and CEO of Regal Entertainment Group.

Also elected to the board were Shaw and 12 others, including Thomas Bell Jr., chairman of Mesa Capital Partners; Mitchell Daniels Jr., president of Purdue University and former governor of Indiana; Marcela Donadio, former Ernst & Young partner and oil and gas sector leader; John Huffard Jr., co-founder of Tenable Network Security Inc. and Tenable Holdings Inc.; Christopher Jones, former corporate vice president and president of the technology services sector of Northrop Grumman Corp.; Thomas Kelleher, chairman of UBS and former president of Morgan Stanley; Steven Leer, former chairman and CEO of Arch Coal Inc.; Michael Lockhart, former chairman, president and CEO of Armstrong World Industries Inc.; Claude Mongeau, former president and CEO of CN; Jennifer Scanlon, president, CEO and director of UL Inc.; Squires; and John Thompson, former SVP and general manager of BestBuy.com LLC.

New NS CEO to Visit Ashtabula

May 3, 2022

New NS CEO Alan Shaw plans to spend today visiting with maintenance of way workers in Astabula.

Shaw, who assumed the CEO role on May 1, is spending time visiting various NS facilities in its first few days on the job.

He replaces James Squires, who has retired. Shaw’s ascension to CEO was planned. He was named NS president last December.

Other locations that Shaw has visited or plans to visit include Debutts Yard in Chattanooga, the yard in Elkhart, Indiana; and an operations center in Roanoke, Virginia.

Shaw also has written to NS employees to lay out his goals as he talks over the railroad.

He called service restoration and developing a customer-centric company that is operations driven among the top priorities.

“My first priority, and the top priority of every member of the Norfolk Southern team, is to restore service to the quality our customers expect and deserve,” Shaw wrote.

“We’ll compete and win in the $800 billion truck and logistics market by being customer-centric and operations-driven.”

The letter cited Amazon and UPS as examples of the type of service-oriented company that NS must seek to become.

Shaw also went on to call for controlling costs and growing revenue.

Rail Passenger Funding, Running Amtrak on Time, New NS President Didn’t Impress Some Workers

January 17, 2022

Bit and pieces of insights into the workings of railroad world . . .

I recently received in my email inbox a message quoting Evan Stair of the Friends of the Southwest Chief group in which he suggested that the promise of new and expanded service contained in the Amtrak Connects US plan is largely a mirage.

Stair, whose group has been promoting additional Amtrak service along Colorado’s Front Range and extending the Heartland Flyer north of Oklahoma City to connect with the Chief in Kansas, was commenting on a Bloomberg News story in which Amtrak President Stephen Gardner said the plan to add 39 new routes will require state financial support.

Amtrak has estimated the plan will cost $75 billion to implement.

In his interview, Gardner characterized the federal government as the capital partner but the ongoing operating expenses are the responsibility of the states and Amtrak.

And Amtrak has made clear that it’s responsibility to pay operating expenses will only last at best for five years. After that states will be on the hook to pay operating expenses as is the case now with state-supported corridors on the West Coast, in the Midwest and along the East Coast.

“I frankly believe the Amtrak Connects US program will result in few, if any new routes,” Stair wrote. “States are unlikely to commit to long-term operational dollars without some federal operational matches.”

Stair is probably right about that but could have gone even farther. It may not be realistic to think that states that are not now and/or have never paid Amtrak for corridor service will do so in the future even with a short-term Amtrak funding match for operational expenses.

Yes, I’m talking about you, Ohio.

Speaking of Amtrak, Canadian Pacific CEO Keith Creel told a Midwest shippers conference in Chicago last week that he was “proud” of having reached an agreement with the passenger carrier to allow for the prospect of additional passenger service on routes operated by CP and it merger partner Kansas City Southern.

As reported by Trains magazine, Creel also talked about how CP has become one of Amtrak’s best host railroads in dispatching its trains on time. It wasn’t always that way.

“Five years ago, six years ago, we didn’t lead the industry in Amtrak service,” Creel said.

He went on to say that his 30 years as an operating officer taught him that it’s not easy for a freight railroad to coexist with passenger service.

“I understand the conflicts sometimes and the tradeoffs sometimes when you mix high speed passenger rail with what is, in comparative terms, low-speed freight rail,” Creel said. “I understand the track geometry challenges, I understand the speed challenges. But I also understand that if you prioritize right, and there’s tradeoffs, and balance in a partnership, you can succeed. And that’s the approach we’ve taken at CP.”

Creel’s comments suggest that having the right attitude is key to running passenger trains on time and if CP can do it so could the other Class 1 Amtrak host railroads.

Yet CP doesn’t host as many Amtrak trains as its Class 1 brethren and doesn’t host any long-distance trains over thousands of miles.

Perhaps the best that can be expected is that the host railroads could do better than they do, but dispatching is a balancing act and there will be times when a host railroad puts its own interests ahead of avoiding delaying Amtrak for what the host sees as a relatively short period of time.

Speaking at the same shipper’s conference, new Norfolk Southern President Alan Shaw told a story of how on his first day in his new post he decided to go out into the field and meet and greet NS operating employees in Toledo, which is the largest NS crew change point on the system.

 “I wanted to thank [the employees] for their dedication to Norfolk Southern and our customers, and I wanted to get their input into how we fix service and how we continue to improve our productivity,” Shaw said.

As reported by Trains magazine on its website, Shaw said he approached some workers sitting outside the crew room.

He was wearing khakis, boots and a collared shirt and the workers thought he was an operations supervisor.

 “So I walk up and introduce myself. They told me their names, and one of the guys said, ‘Well, what do you do?’ I said, ‘Well, I’m the president’. And he looks at me, and I’m like, ‘Not Joe Biden president, but president of Norfolk Southern.’ And the other dude pulls out his phone, and he’s like, ‘Oh, yeah, yeah, yeah, I see the announcement. Congratulations!

“So that made me feel good. And then the one guy looks at me and says, ‘What craft did you come from?  . . . Were you mechanical, or engineering, or a conductor, or an engineer?’

“And I was like, ‘No, I started in finance.’ He was really not impressed with that. He goes, ‘Man, at some point, we’re going to have a craft employee running the railroad.’

“It is somewhat humbling when you go out there and talk to them, because they’ve got their own expectations.”

Shaw is right about that, but expectations are not reality. It’s possible that a future railroad president might have worked as a craft employee at an early point in his or her railroad career, but it is not realistic to think that C suite executives will be pulled from the ranks of operating or maintenance employees.

If you want to be a railroad president you need to have spent extensive time in such areas as finance, law or marketing and moved up the ranks in those departments.

Operating employees are not the only railroad stakeholders who have expectations and the expectations of some stakeholders carry more weight than those of others.

Shaw told another story about his first conversation with members of the railroad’s board of directors.

 “Their primary message to me was, ‘Don’t mess up,’” Shaw said. “Now, it was a little more forceful than that. I’ll let you use your imagination what the real verb was that they used.”

I think we can easily figure that one out.

NS Head Concedes Service Not Good Now

January 13, 2022

The new president of Norfolk Southern acknowledged at a shippers convention that his railroad isn’t doing a very good job right now of serving them.

“We don’t have a good product right now,” Alan Shaw said in remarks to the Midwest Association of Rail Shippers as reported by Trains magazine on its website.

“That’s unacceptable to me, that’s unacceptable for our employees, and it’s unacceptable to our customers,” Shaw said in Chicago.

Shaw attributed the lackluster service in part to labor shortages and the effects of the COVID-19 pandemic.

Among the steps Shaw said NS is taking to improve service include increased hiring of new workers, offering financial incentives to existing employees in an effort to increase crew availability and having supervisors fill in on some jobs, such as ferrying crews to and from train assignments.

Among the incentives being offered to workers are buying back vacation time and paying retention bonuses. Employees can also earn a bonus by making referrals to the NS training program.

Although he didn’t offer a timeline for how long it will take to improve service, Shaw pledged that NS will get things fixed and denied that the service issues are linked to the precision scheduled railroading operating model that it adopted in 2019.

“I’m not in position to tell you when we’ll get all the pieces in place,” he said. “But we will, fairly soon, be in a position to tell you that. And then we’ll have very candid and very direct conversations with our customers. Because you need to know that.”

To read more of Shaw remarks, visit https://www.trains.com/trn/news-reviews/news-wire/new-ns-president-admits-problems-promises-solutions/

NS Details Service Issues in Letter to STB

December 14, 2021

Norfolk Southern President Alan H. Shaw acknowledged in a letter to the U.S. Surface Transportation Board that its service quality is not where it should be.

The letter, dated Dec. 10, outlined the steps the Class 1 carrier is taking to improve its performance.

Shaw’s latter came in response to an inquiry from STB Chairman Martin Oberman who had written in November to then NS President James Squires to ask the railroad to address the deterioration of “key operating metrics” and an increasing number of shipper complaints about NS service.

Shaw blamed high workers attrition and a tight labor market for the service issues, noting that the company has been actively seeking to hire new conductors.

The service issues have been particularly acute in the Cincinnati-Chattanooga, Tennessee, corridor; in Birmingham, Alabama; and on the former Southern Tier line east of Buffalo, New York.

NS has taken such steps as redeploying personnel, reworking crew districts on the former Cincinnati, New Orleans & Texas Pacific line, and taking advantage of reduced activity during the Thanksgiving holiday period to alleviate yard congestion in Birmingham and Chattanooga.

However, Shaw said similar progress has remained elusive for the Southern Tier.

As for hiring new conductors, Shaw said that through Dec. 6 NS had 285 employees in conductor training with another 939 prospective employees in the pre-employment process.

The company has offered economic incentives to prospective new hires and existing workers to encourage them to continue working for NS.

Shaw said it will take time to get its new hires into position and to address the service issues it has experienced.

The letter from Shaw to the STB can be viewed at https://www.stb.gov/wp-content/uploads/NS-Response-Letter-to-Chairman-Oberman-Regarding-Service-Issues_December-10-2021.pdf

Squires to Retire in 2022 as NS CEO

December 3, 2021

Alan Shaw (left) will replace James Squires as NS CEO in 2022.

Norfolk Southern CEO James A. Squires plans to retire on May 1, 2022.

He will be succeeded by Alan Shaw, who is currently an NS executive vice president and the chief marketing officer.

Shaw will assume the position of NS president immediately as part of the transition plan. In a news release, NS said its top managers will report to Shaw.

In addition to his CEO duties, Squires serves as president and chairman of the board of directors.

NS also said Ed Elkins, vice president of industrial products, has been promoted to the positions of executive vice president and chief marketing officer.

Shaw has worked at NS for 27 years in marketing, operations and finance. He was been chief marketing officer since May 2015.

Squires was appointed CEO by NS in 2021 to replace the retiring Charles “Wick” Moorman.

He was named chairman of the NS board in October 2015.

Previously Squires served at NS as executive vice president administration, executive vice president finance and chief financial officer, senior vice president finance, senior vice president law, and vice president law.

Class 1 Executives Tout Pivot toward Customer Service

November 25, 2020

Customer service is the new mantra from Class 1 railroad executives.

Leaders of Canadian National, Canadian Pacific, CSX and Norfolk Southern said at a recent conference that they are focusing on customer service as a way to compete with the trucking industry for business.

Speaking to the RailTrends 2020 conference, Norfolk Southern Chief Marketing Officer Alan Shaw said railroads must offer more robust online tools that make it easier to do business with them.

Those tools will enable shippers to more efficiently order cars and monitor shipments in transit.

“We need to design more of our business around our customer,” he said.

“We need to deliver a consistent, reliable service product. And then you layer on top of this product quality a best in class customer experience.”

Shaw reiterated that he was talking about not being the best railroad but being the best in customer experience in logistics.

Those changes would make it easier for shippers to do business with railroads.

“And we need to deliver service and logistics solutions in order to become relevant to our customers,” he said.

He cited a project involving NS to develop better service and improved online tools through the new Rail Pulse GPS-based car location and health monitoring system that is under development.

“As we improve our service product and provide a more trucklike product into the growing consumer economy, it creates broader opportunities for the rail ecosystem,” Shaw said.

Shaw said the COVID-19 pandemic has led to changes in business practices that will benefit railroads.

These include retailers holding more inventory and keeping it closer to consumers; bringing more production closer to North American; tighter service requirements; an increased focus on transportation costs; and rising interest in environmental sustainability.

CSX CEO Jim Foote touted his railroad’s use of precision scheduled railroading as having led to improved reliability.

“We have improved the reliability dramatically so that many of our customers . . . refer to our service today as truck-like,” he said.

Foote said that after years of decline CSX is now seeing growth in its merchandise network.

“We should be able to grow the business at above historical rates,” he said. “But it’s a slow process of proving yourself to the shipper community that we can be trusted and earn back that business.”

Canadian National CEO Jean-Jacques Ruest said he would rather have volume and revenue growth than to focus on gaining the last point or two of improvement in the operating ratio.

“In many ways that’s an existential question for the rail industry as you look out over the next decade,” he said.

“We want to be a growth company – a company that’s even more relevant to the economy of North America.”

Reuest said that will require CN linking itself more closely to the consumer through a focus on intermodal traffic.

He acknowledged CN needs to do more to provide full visibility of shipments, but said becoming more customer-centric is part of CN’s long-term strategy.

NS Revenue, Profits Fell in 3rd Quarter

October 29, 2020

As expected Norfolk Southern reported this week that its revenue and profits sank during the third quarter due to traffic declines that the railroad tied to the COVID-19 pandemic.

Operating income fell 6 percent to $939 million while revenue dropped 12 percent to $2.5 billion.

Adjusted  earnings per share rose 1 percent to $2.51.

During the period NS posted an adjusted operating ratio of 62.5 percent.

During the quarter NS reduced expenses by 15 percent while its traffic volume fell by 7 percent.

Intermodal volume grew 1 percent during the quarter, but merchandise traffic and coal combined fell 11 percent.

Domestic intermodal was up 9 percent while international intermodal volume fell 11 percent.

Coal volume alone fell by 32 percent, which represented most of the volume declines said NS Chief Marketing Officer Alan Shaw.

NS CEO James Squires said the railroad plans to pick up the pace of precision scheduled railroading changes, including closing hump operations in Macon, Georgia, and revising its southern service plans.

“As we continue rolling out PSR, our team sees additional opportunity for efficiency and growth that will close the [operating ratio] gap with the rest of the industry,” Squires said during an investor’s conference call.

The carrier said it is aiming to reach an operating ratio of 60 percent in 2021.

Chief Operating Officer Cindy Sanborn said the change NS is making to its operating plans are more than tweaking.

She said there will be longer trains that will move faster. Train length was up 12 percent this quarter compared to 6,600 feet a year ago.

Increases in intermodal and merchandise traffic have been added to existing trains.

Crew starts in August and September did not increase even though traffic volume rose.

The NS workforce in the third quarter was 18 percent below what it was a year ago.

Shaw predicted a rebound in consumer-related traffic, including intermodal and automotive, but expects anything connected to energy to recover more slowly.

He said there is no hope for coal traffic to improve so long as natural gas prices remain low and utility stockpiles stay 45 percent higher than they were at this time last year.

Sanborn said NS still has the ability to increase train length because only 9 percent of merchandise trains at at the maximum of the horsepower of their locomotive consists.

Just 10 percent of NS intermodal trains are longer than 10,000 feet.

NS in September closed its hump at Enola Yard near Harrisburg, Pennsylvania.

The closing of the hump in Macon next week will mark the sixth hump that NS has idled since 2019.

 “A lot of these hump conversions that you’ve seen  . . . actually improves car speed,” Sanborn said. “And at a system level what we want to do is avoid touches all together if at all possible. If we can speed the cars up, that’s good for us in terms of asset intensity and it’s also good for our customers. It provides them a more timely service product.”

As part of its redesign of southern operations, NS also plans to close several local yards around Atlanta.

As other railroads practicing PSR have done, NS is pre-blocking more traffic at origin and focusing on block-swapping en route.

NS will still have jump yards in Elkhart, Indiana; Conway (Pittsburgh), Pennsylvania; Birmingham, Alabama; and Chattanooga, Tennessee.

NS Net Income Down 5% in 4th Quarter

January 31, 2020

Norfolk Southern said this week that during the fourth quarter of 2019 its net income fell 5 percent to $666 million, or $2.55 per diluted share, compared with net income of $702 million, or $2.57 per share in the fourth quarter of 2019.

Operating revenue dropped by 7 percent to $2.7 billion as a result of a 9 percent decrease in total volume.

In a news release, NS said operating expenses were $1.7 billion, which was down $90 million compared with the same period of 2018.

Lower compensation and benefits, fuel costs, equipment rents and materials usage were partially offset by lower gains on operating property sales and increased purchased services expense.

Income from railway operations was $1 billion, down $116 million year over year.

NS posted an operating ratio of 64.2 percent for the quarter and 64.7 percent for the full year, both of them records.

For calendar year 2019, NS reported net income of $2.72 billion, or $10.25 per share, compared with $2.67 billion, or $9.51 per share, a year earlier.

On a year to year comparison between 2018 and 2019, NS said its railway operating revenue fell 1 percent to $11.3 billion on a 5 percent decrease in overall volume. Carloads declined in all major commodity categories.

NS reduced operating expenses by 3 percent to $7.3 billion. Income from railway operations rose 1 percent to a record $4 billion.

“Norfolk Southern’s strong financial performance in a year of macroeconomic headwinds is underpinned by the hard work of our team to expeditiously implement productivity initiatives throughout the year,” NS CEO James Squires said in a statement.

During the fourth quarter of 2019 NS saw its coal traffic fall by 21 percent.

Company officials attributed that to low natural gas prices putting pressure on coal for use in electricity generation, and reduced steel production and a weakening market for export coal.

Squires said the annual operating ratio improvement was “particularly impressive against the backdrop of declining volumes.”

NS Chief Operating Officer Mike Wheeler said the carrier set records last year for on-time performance records for merchandise and automotive traffic and posted its best intermodal on-time performance since 2009.

“Our network is running fast and on time,” Wheeler said, citing a 17 percent improvement in average train speed and a record low terminal dwell that was 30 percent below the levels of 2018. He said crew starts were down 15 percent.

During 2019 NS cut its locomotive fleet size by 20 percent and ended 600 mechanical positions.

It expects to eliminated another 135 positions this year.

NS’s merchandise volume dropped 6 percent in the fourth quarter due to a slowdown in the industrial economy. Intermodal volume was off 8 percent.

Chief Marketing Officer Alan Shaw says coal traffic is expected to continue lagging this year but intermodal volumes should resume growth in the second half of the year.

He said uncertainty in the industrial economy means the outlook for merchandise traffic is cloudy.

Squires said NS expects flat revenue this year but should shave 2.35 points off its operating ratio as it continues to cut costs. The carrier is targeting a 60 percent operating ratio by 2021.

Shaw said the fourth quarter of 2019 was the 12 consecutive period in which NS has enjoyed growth in revenue per unit for all three of its business segments.