Duncan to be NS Chief Operating Officer

Norfolk Southern has named Paul Duncan as its next chief operating officer.

He will assume the post on Jan. 1, following the retirement of Cindy Sanborn. Duncan is currently senior vice president of transportation and network operations at NS.

He joined NS in March as vice president of network planning and operations.

During his time at NS, Duncan has led implementation of the TOP|SPG operating plan and has played a central role in the company’s service recovery efforts, NS officials said.

Before coming to NS, Duncan was vice president of service design and performance at BNSF. He has more than 20 years of experience in railroad operations.

Sanborn has worked in the railroad industry for 35 years. She came to NS from Union Pacific and previously worked at CSX for 30 years, including a stint as chief operating officer.

She was named chief operating office and executive vice president at NS on Sept. 1, 2020.

NS Sets Quarterly Income Records

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 Revising its Operating Plan

Norfolk Southern has given its operating plan a new name.

During a fourth quarter earnings call with investors this week, company officials said the new plan, known as TOP SPG, involves a reworking of the railroad’s merchandise operating plan.

TOP, which denotes Thoroughbred Operating Plan, is the NS version of precision scheduled railroading, which the company implemented in summer 2019.

SPG stands for service, productivity and growth, which Chief Operating Officer Cindy Sanborn described as the three facets of the plan.

The operating plan covers all types of trains and freight. The plan calls for long trains and a more balanced train plan that NS President Alan Shaw said seeks to improve efficiency and service.

The new operating plan will be implemented this spring as NS places into service a new wave of conductors who are going through training.

Sanborn acknowledged that during the fourth quarter service quality was not where the company wanted it to be, which she attributed in part to crew shortages in some regions of the NS network when the number of operating personnel fell by 8 percent.

NS has sought to compensate for this by boosting its locomotive fleet by 5 percent by putting back into service idled units. It also has been operating fewer but longer trains.

During the fourth quarter average train speed declined 17 percent compared with the same period in 2020. Terminal dwell increased 24 percent.

Sanborn said both metrics have improved this month but NS remains hindered by crew shortages stemming from COVID-19 infections and quarantines.

NS plans to continue to convert locomotives from DC to AC traction operation. Sanborn said the motive power fleet is now 60 percent AC traction and two-thirds of it is capable of being used as distributed power.

During the fourth quarter NS completed one siding project and plans eight additional siding projects in the Southeast where many routes are single track.

Adding siding capacity is key to being able to operate longer trains.

NS Focusing on Longer Trains

You can expect to see even longer trains on Norfolk Southern in the coming months.

NS Chief Operating Officer Cindy Sanborn said this week during an investor’s call to discuss 2020 fourth quarter financial results that NS is seeking to lengthen its trains.

The objective is to reduce its operating ratio, which NS said lags other Class 1 railroads.

The operating ratio reflects the percentage of revenue that is used to cover expenses.

Over the past two years NS has sought to cut operating costs by shifting to the precision scheduled railroading operating model.

It has ceased humping cars at six classification yards and sought to reduce its fuel, labor and locomotive-related costs.

Sanborn said NS is seeing more business but at the same time reducing resources and improving productivity.

“Our push for efficiency led to record train weight and record train length in the [fourth] quarter,” she said.

“These larger trains, combined with our strategy of better matching train size and locomotive horsepower, drove us to record fuel efficiency and enabled us to get the job done with a smaller workforce and a record low count of locomotives.”

NS is now moving freight with 16 percent fewer locomotives and 15 percent fewer crews.

The length and weight of its trains has grown by 10 percent.

That resulted in an 8 percent cut in operating expenses during the fourth quarter.

“Traffic coming back is both our challenge and an opportunity,” Sanborn said. “We can and will add resources to meet customer needs, but first we must explore every option to fully utilize our existing crews and locomotives.”

That will mean that ncreased traffic will be accommodated on existing trains.

It doing this, NS plans to re calibrate operations by re-balancing traffic among existing trains. Extra section trains will operate only when necessary.

Sanborn said doing this will involve seeking to optimally match train size with the pulling power of locomotives while minimizing the number of crew starts.

This is expected to result in an increase in mixing different types of traffic in the same train. It will be done by blocking traffic for the most distant points on the NS network.

“We will continue to look at yards and see how we can speed up cars,” Sanborn said. “The real mission around terminal capability and terminal footprint is around keeping cars moving, or not pushing cars into terminals, moving cars faster. So I think there’s still quite a bit of room there.”

NS expects its workforce size to hold steady or only decline slightly this year.

However, it will recall and retrain furloughed employees for work in other crafts rather than hire new employees.

NS did suffer some increase in terminal dwell times and lower trains speeds as volume picked up around the late 2020 holiday season.

Service also took a hit at time due to high numbers of workers having to quarantine due to the pandemic.

During the fourth quarter, cars spent 16 percent more time in yards while average train speeds fell 5 percent.

“We’ve gotten a lot better. We’re not at 2020 levels, but we are much, much better,” Sanborn said.

NS Revenue, Profits Fell in 3rd Quarter

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 Names Cindy Sanborn as EVP, COO

Norfolk Southern has appointed Cindy Sanborn as its executive vice president and chief operating officer effective Sept. 1.

She will replace Michael Wheeler who plans to retire on that date. Wheeler has worked at NS for 35 years.

Sanborn is now working as vice president network planning at Union Pacific and previous served at CSX in the same post that she will occupy at NS.

Her time at CSX ended in 2017 following a management shakeup initiated by the late E. Hunter Harrison after he became CEO of the railroad company.

During her 30 years at CSX, Sanborn held various positions including vice president and chief transportation officer, and vice president northern region.

Sanborn earned an undergraduate degree from Emory University and an MBA from the University of Miami.

“When we began the search for our next chief operating officer, we looked for an experienced executive who could lead our operations and build on our successful implementation of precision scheduled railroading,” said NS CEO James Squires in a statement.

Ex-CSX VP Lands Job at Union Pacific

A former CSX high-ranking executive who was forced out of her job as vice president and chief operations officer had handed a VP job with Union Pacific.

Sanborn

Cindy Sanborn, the first woman to hold a senior operating executive role at a Class I railroad,  was among three CSX executives who left the carrier last November during a management shakeup instituted by then-CEO E. Hunter Harrison.

Sanborn will become regional vice president transportation-western region at UP on Feb. 16.

She will replace the retiring Richard Castagna and lead rail operations in Washington, Idaho, Oregon, California, Nevada, Utah, Arizona and New Mexico from a base in Roseville, California.

Sanborn had held various management positions during her 30 years at CSX.

CSX Says 2nd Quarter Profits Fell 20%

A 34 percent decline in coal traffic played a major role in CSX seeing its second quarter profit drop by 20 percent.

Earnings per share for the quarter declined 16 percent to 47 cents on revenue of $2.7 billion. The net earnings of $445 million is a 20 percent decline from the second quarter of 2015.

“This continues to be a challenging environment,” CEO Michael Ward said during the company’s earnings call.

CSX saw a 9 percent decline in overall traffic volume with every traffic category posting losses except for minerals and automotive, which were up 13 percent and 1 percent respectively.

CSX did manage to reduce expenses by 9 percent during the second quarter, but its revenue fell by 12 percent.

The railroad said it had efficiency gains of $96 million for the period, lower volume-related costs of $86 million, and $56 million from reduced fuel prices.

The operating ratio was 68.9 percent compared with 66.8 percent for the second quarter of 2015.

Chief Financial Officer Frank Lonegro said during the call that CSX expects to produce nearly $350 million of efficiency savings this year, which is an improvement of the original target of more $250 million.

Lonegro said CSX will continue to “turn over every rock” in an effort to bring expenses in line with revenue.

Among the measures CSX has taken to cut costs are mothballing 350 locomotives.

It still plans to take delivery of 65 new locomotives this year, which means additional active engines are likely to be placed in storage. The new locomotives were ordered in 2014.

CSX Chief Operating Officer Cindy Sanborn said the CSX active locomotive fleet has been reduced by 10 percent, which she said is in line with the decline in gross ton miles.

“I doubt you would see us in the market for new locomotives” in 2017 and 2018, Lonegro said.

Lonegro said CSX will probably rebuild some of its four-axle units used for switching and local service.

The employee head count for the quarter was on average 4,489 less than it was in 2015 for the same period.

Railroad executives said operational performance improved with on-time originations hitting 88 percent during the second quarter, which they said is a 33 percent improvement. On-time arrivals were 69 percent, a 44 percent improvement.

Ward said that “service continued to meet and exceed customer expectations.”

Fredrik Eliasson, chief sales and marketing officer, said that in a lower volume business climate improving service is critical to maintaining strong pricing.

Sanborn said CSX is trying to strike a balance between maintaining service levels and cutting costs by implementing such measures as running longer trains and using variable scheduling, Sanborn said.

“We are making the right tradeoffs between productivity and service,” Eliasson said.

CSX expects to see full-year volume and earnings declines with the third quarter presenting major challenges.

CSX Idles Locomotives, Extends Sidings for Longer Trains, Seeks Cost Savings and Price Increases

CSX has taken 400 locomotives out of service and plans to lengthen some sidings to allow longer freight trains.

It is all part of the company’s efforts to save $250 million in the face of falling traffic, particularly coal traffic.

CSX expects its coal traffic will fall by 25 percent in 2016 for a revenue loss of $500 million.

CEO Michael Ward said during a first quarter earnings call that the railroad is seeking to offset the loss of coal revenue by focusing on pricing, efficiency gains, and closing lines and facilities.

For several months, CSX has sought to reduce operating costs by running longer trains.

Cindy Sanborn, executive vice president and chief operating officer, said that train lengths have increased by 16 percent to an average of 6,400 feet

“We’re bumping up against challenges in single-track territory where siding length is an issue for us,” Sanborn said.

She cited as an example the Nashville-Cincinnati route where CSX is extending sidings that limit train length to 6,500 feet.

Sidings are being lengthened in Kentucky at Cave Creek and Morgantown and in Tennessee at Mitchellville. The longer sidings are expected to go into service this summer.

“These extensions will support strong current and future volume on the corridor, especially for our automotive market,” said CSX spokeswoman Melanie Cost.

Sanborn said that although overall train speeds on CSX trail those of other Class 1 railroads, “we’re never satisfied with where we are.”

She noted that the service quality that CSX is providing over double-track routes has enabled it to increase prices.

CSX is seeking a balance between productivity and efficiency, Sanborn said. Adding density on its primary routes will enable the railroad to find opportunities for additional savings.

“These siding projects are being driven by business needs and future opportunities rather than any specific ‘target’ train length,” Cost said in an interview with Trains magazine. “CSX’s work to build longer sidings is part of the company’s overall strategic investment to match network resources to the changing business mix we see – as we manage through the decline in coal and make decisions now to maximize long-term opportunities in merchandise, including automotive and intermodal.”

Sanborn insisted that the changes that CSX is making are not short-term reactions to temporary economic conditions.

Asked if CSX plans to cut its coal branch network further, Sanford said the company will continue to look at demand and take steps to reduce costs as needed.

“We’re never done any of this,” Sanborn said in reference to the cutbacks the railroad has made in its Appalachian coal field territory.

CSX is now operating with 10 percent fewer locomotives than it had in the first quarter of 2015.

Sanborn said 275 locomotives are in storage and the railroad will return 96 leased units in the second and third quarters.

However, CSX still expects to take delivery of 100 new locomotives this year.