Posts Tagged ‘NS CEO James Squires’

Squires Extols Benefits of PTC

May 18, 2018

Positive train control is the backbone of technological advances that are coming to the railroad industry said Norfolk Southern CEO James A. Squires this week at a shippers’ conference.

James Squires

Speaking to the American Rail Shippers’ 2018 meeting in Chicago, Squires said technology and free trade will bring major changes to the rail industry.

“We are on the verge of an exciting new era of innovation,” Squires said. “PTC is a big new communications network we can use for a variety of purposes. We are only just beginning to discover the many uses of data collected through the PTC network.”

Squires also said that a big data wave is already rolling across the industry and it will result in automation that will evolve to reduce human error.“

Automation in transportation is perceived as controversial, yet it happened long ago in aviation. He said a railroad in Australia has already demonstrated the benefits of automation.

Facing a Dec. 31 deadline under federal law to install PTC and its components, Squires said NS has completed 78 percent of locomotive installations, 93 percent of wayside unit installations, 97 percent of radio tower installations, and 87 percent of employee training.

“We’re gonna get it done,” he said.

As for free trade, Squires said the United States must not turn away from the North American Free Trade Agreement, which he said creates jobs for American workers.

“NAFTA remains one of the most successful free trade agreements ever brokered by U.S. lawmakers,” Squires said, adding that international markets “must remain open for business.”

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NS Leasing More Locomotives, Reopening Hump Yard

May 16, 2018

Norfolk Southern has continued leasing locomotives to handle traffic surges and alleviate congestion that has occurred in particular in the southern reaches of its network.

The Class 1 carrier leased 90 locomotives in the first quarter and has added another 50 leased units to its fleet

NS CEO James Squires said the additional motive power will help handle traffic growth and enable the carrier to convert 120 older six-axle DC units to like-new AC-traction locomotives as part of its ongoing DC-to-AC conversion program.

It has also hired 400 new conductors to keep its train and engine crew headcount up.

Speaking to the Bank of America Merrill Lynch 2018 Transportation Conference, Squires said congestion in the South prompted NS to plan to reopen a hump yard in Chattanooga, Tennessee.

Squires said the hump at DeButts Yard will be a hybrid operation, meaning it will be used to classify traffic for local customers. Block swapping will continue to be done in the yard as well.

In the past year NS has increased its building of large blocks of cars and swapping them en route to minimize handling and to speed shipments along.

NS had closed the DeButts hump in May 2017. Since them terminal dwell times in Chattanooga have risen sharply.

Dwell times in Chattanooga have increased from an average of 33.5 hours in the second quarter of 2017 to 49.5 hours in April and to 62.7 hours this month.

Squires did not say when the hump would reopen. It remains in place, but workers must re-install the retarders used in hump operations.

Dwell times have also risen in other yards in the South as have average train speeds.

Despite efforts NS has made since last year, the service metrics in that region have not improved.

“We’re holding our own against strong volume growth,” Squires says. “Volume on our network is at a 12-year high.”

The NS CEO said that humps allow resiliency and operational flexibility when traffic rises by absorbing surges in traffic and metering the flow of volume by holding cars until they are ready to be released to customers.

“Customer service is not where we want it to be,” Squires said. “I want our customers to feel fully satisfied with the service they are getting from us, and right now many of them don’t.”

Despite the problems it has experienced, Squires said NS had the strongest volume growth among the Class I railroads for the year to date and that demand for rail service is the strongest he’s ever seen.

NS CEO Squires Gives Upbeat View at Annual Meeting

May 12, 2018

Norfolk Southern CEO James A. Squires gave an upbeat assessment of the railroad’s business prospects this week during the company’s annual meeting in Norfolk, saying it is achieving key financial targets, improving operating efficiencies, and advancing sustainable growth.

“Our business is about movement, and I can tell you that we are moving forward,” Squires said. “The Norfolk Southern team’s continued success in executing our plan is driving long-term value, and that’s a good story for our shareholders.”

Among the achievements that Squires cited were a record best earnings per share and operating ratio last year and productivity savings of $150 million.

Squires said this progress came despite hurricanes and winter storms that disrupted rail operations.

He also singled out use of digital and remote-sensing technologies to enhance operating efficiencies and customer service, which will give NS a competitive edge.

“With them, we are helping customers better manage supply chains in this demanding era of e-commerce, and we are improving the way we monitor and manage things, from locomotive performance to rail wear,” Squires said.

Squires said operating and financial results in 2018 have been strong thus far with year-over-year growth in shipment volumes and revenue, and first quarter records in net income, earnings per share, and operating ratio.

“Favorable economic conditions and market trends point to continued business growth this year and Norfolk Southern is in an excellent position to grow, Squires said.

During the meeting, NS shareholders re-elected 12 directors, including Squires, for terms expiring in 2019.

They include Thomas D. Bell Jr., chairman of Mesa Capital Partners LLC; Wesley G. Bush, chairman and chief executive of Northrop Grumman Corporation; Daniel A. Carp, former chairman and chief executive of Eastman Kodak Company; Mitchell E. Daniels Jr., president of Purdue University; Marcela E. Donadio, former partner and Americas Oil & Gas Sector Leader of Ernst & Young LLP; Steven F. Leer, former chief executive and chairman of Arch Coal Inc.; Michael D. Lockhart, former chairman, president, and chief executive of Armstrong World Industries; Amy E. Miles, former chair and chief executive of Regal Entertainment Group; Martin H. Nesbitt, co-founder of The Vistria Group; Jennifer F. Scanlon, president and chief executive of USG Corporation; and John R. Thompson, former senior vice president and general manager of BestBuy.com LLC.

NS Sets 4 Quarterly Financial Records

April 26, 2018

Norfolk Southern said on Wednesday that it set four quarterly financial records in the first quarter of 2018.

The records included a new first quarter high or low for earnings per share at $1.93, up 30 percent year over year; net income at $552 million, up 27 percent; income from operations at $835 million, up 10 percent; and the operating ratio at 69.3, down 1.3 points.

In a news release, NS said that a lower effective income tax rate helped boost net income.

Railway operating revenue rose 6 percent to $2.7 billion and volume increased 3 percent to 1.9 million units compared with first-quarter 2017 results. The operating ratio was 69.3 percent, also a first-quarter record.

Intermodal revenue jumped 19 percent to a record $678 million and volume rose 8 percent to 1 million units.

NS said its intermodal business benefited from tightening truck capacity, rising truck prices, ongoing e-commerce growth and increasing rail/intermodal rates.

Coal revenue increased 3 percent to $343 million, although volume declined 4 percent to 249,100 units, and merchandise revenue inched up 1 percent to $1.6 billion while volume in the sector decreased 2 percent to 606,100 units.

Railway operating expenses increased by 4 percent to $64 million year over year due to $1.9 billion as higher fuel prices and increased costs associated with lower network velocity were offset by efficiency gains.

Fuel costs jumped 25 percent to $266 million as the price for a gallon of diesel climbed 21 percent in the quarter.

“We are pleased with the continued improvement in our financial performance and the growth in our business,” said NS Chairman, President and CEO James Squires in a statement. “We are focused on improving service for our customers to position us for future growth and efficiency that will benefit both our customers and shareholders.”

Squires said the outlook for the remainder of 2018 is promising.

“We are increasing our expected annual share repurchases to $1.5 billion, confident that we will deliver strong financial performance,” Squires said.

NS Outlines Plans to Improve Service

April 5, 2018

Norfolk Southern has acknowledged in a letter to the U.S. Surface Transportation Board that its service “is not where we or our customers need it to be.”

NS CEO James Squires said in the letter that restoring service levels is the railroad’s top priority.

Squires was writing in response to an STB request for Class 1 railroads to outline their service plans for 2018. The request came in the wake of persistent shipper complaints about deteriorating freight service.

In his letter, Squires said NS service challenges began in its southern network after a series of hurricanes last September and October.

Exacerbating the problems were snowstorms in December and January.

All of this resulted in the weekly average speed during the first 11 weeks of this year being down 16 percent compared with the same period in 2017.

It also fell by 11 percent in the first quarter of 2018 compared with the last quarter of 2017.

The average dwell time in terminals was 21 percent higher during the first quarter of this year compared with the same period in 2017 and 9 percent higher compared with the fourth quarter of 2017.

“Our local performance is currently 7 percent below where we typically perform,” Squires wrote. “Terminals and yards in the southeastern portion of our network in particular are performing below historical norms. These metrics are not where we want them to be. But, we are committed to improving for our customers.”

NS outlined the steps that it plans to take to improve customer service, which include:

• Resuming through freight operations on the former Central of Georgia route. “While we never idled this line, we ceased through freight operations over the route in the first half of 2017. We restored full through freight service to help improve network fluidity,” Squires wrote.

• Removing 100 road locomotives from storage and leasing 90 road locomotives. “Through March 23, 2018, we have 27 of the anticipated 90 locomotives on our property and have deployed 22 of these 27 in active service,” Squires said.

• Increasing the number of operating crews.

• Using technological solutions to improve operations.

• Developing a new customer notification system when shipments are delayed.

NS Net Income Rose in 4th Quarter 2017

January 25, 2018

Norfolk Southern on Wednesday reported fourth quarter 2017 adjusted net income of $486 million, or $1.69 per diluted earnings per share compared with $416 million, or $1.42 per diluted share, in the fourth quarter of 2016.

For calendar year 2017, NS said it earned $1.9 billion in adjusted net income versus $1.7 billion in 2016. Adjusted diluted earnings per share were $6.61, an 18 percent increase over last year’s record diluted EPS of $5.62

Including the impact of the Tax Cuts and Jobs Act of 2017, NS had net income of $3.97 billion in the fourth quarter with diluted EPS of $13.79.

For all of 2017, net income including the impact of tax reform was $5.4 billion and diluted EPS were $18.61.

Other key fourth quarter metrics showed operating revenue rising 7 percent to $2.7 billion compared with 2016, NS said overall volumes increased 5 percent reflecting growth in intermodal, coal and merchandise traffic.

Operating expenses during the quarter fell 4 percent to $1.7 billion compared with the fourth quarter of 2016.

The effect of the tax change legislation cut operating expenses by $151 million, which more than offset increases that resulted from volume growth and higher fuel prices and incentive compensation.

Adjusted income from railroad operations rose 13 percent on a year-over-year basis to $863 million.

The fourth quarter operating ratio was 67.7 percent, a 170 basis point improvement over the operating ratio in the same period in 2016.

For the year, NS saw railroad operating revenue rise 7 percent to $10.6 billion compared with 2016.

NS attributed the increase to 5 percent growth in the major commodity categories of coal and intermodal traffic.

Railroad operating expenses increased 2 percent to $7 billion compared with those in 2016 with the increase attributed to higher diesel fuel prices, increased incentive compensation, higher inflationary costs and volume growth. Those higher costs were offset in part by efficiency savings and the benefit of tax reform.

For 2017, the operating ratio of 67.4 percent was a 150 basis point improvement over 2016’s operating ratio.

“Norfolk Southern is open for growth, and we are optimistic as we head into 2018 that the current economic environment will provide an opportunity for continuing growth,” said NS CEO James Squires.

During 2017, NS will spend more than $1.7 billion to maintain its infrastructure and support economic growth. In 2018, NS plans capital expenditures of $1.8 billion.

NS CEO Pledges Better Service in 2018

January 24, 2018

CSX is not the only eastern Class 1 railroad seeking to recover from service issues.

James Squires

During a speech at a shippers conference in Chicago, Norfolk Southern CEO James Squires pledged to work toward having a “more stable, resilient” network in 2018 in the wake of service issues in recent months

Squires made the remarks in response to questions about what was termed service volatility last year, some of it weather related.

“I am not here to make excuses. Yeah, it’s been tough,” Squires said. “When it gets cold in the south  . . . we struggle. It’s tough and it has been tough.”

Among the issues the NS has faced are periodic crew shortages, slower average train speeds and longer idle times of cars in yards.

NS’s average train speed fell to 20 miles per hour as of last week, versus 23 miles per hour a year ago, and the average time rail cars sat in terminals was 28.4 hours versus 24.7 hours a year ago.

“What you want from us is an action plan,” Squires said. “My commitment in 2018 is to a more resilient, durable, predictable, marketplace.”

Squires said the crew shortages were not a sign of a systemic problem and were localized and not system wide.

“We think that we have adequate resources to handle foreseeable demand, but we’ve got to get that resources equation right in each and every place we operate,” he said. “That can be a challenge.”

Some Shippers Question Value of Railroad Metrics

October 30, 2017

When it comes to the service metrics that CSX has been providing the U.S. Surface Transportation Board, the value of that data depends on who is reading it.

During a U.S. Surface Transportation Board hearing earlier this month, CSX said that it is now operating as well as or better than it did in 2016 and it has the numbers to prove.

The carrier cited statistics on declining terminal dwell time and an increase in average train speed.

CSX is not the only railroad that tracks those things. Many railroads use terminal dwell time and average train speed as a way of measuring how well they are doing.

Such numbers are given prominence in quarterly and annual reports because they are said to indicate how efficient and fluid that a railroad is.

That is a railroad perspective. Some shippers, though, say that what matters to CSX doesn’t matter as much to them.

Bruce Ridley, a vice president with Packaging Corporation of America, wrote to the STB last week to say that on-time arrivals, re-crew rates, terminal dwell times, and car-order fulfillment figures are “misleading metrics in CSX’s weekly reports to the Surface Transportation Board.”

PCA, one of the nation’s largest producers of container board and corrugated packaging, argues that on-time figures measure yard-to-yard performance of road trains and do not include local service.

“Even at 64 percent, which is dismal for any supply chain, it can be expected to be much worse if the first and last miles are considered,” Ridley wrote to the STB.

As for re-crew statistics, Ridley said they can be misleading because they do not appear to count a train that died and did not get a new crew right away because no crew was available.

An analysis published last week on the Trains magazine website said that Ridley’s point is similar to one that other shippers have made about service metrics publicized by CSX and the Association of American Railroads. Shippers say those metrics do not necessarily reflect the service that rail customers actually experience.

Some railroad executives recognize this. NS CEO James Squires noted last May that there is a difference between network performance and customer service.

Squires said that network performance measures — like average train speeds and terminal dwell time — may be important to railroad management, but customers have their own set of metrics that they value.

“What we’re trying to do with our customers is measure performance in the entire supply chain,” Squires said. “That’s different than merely measuring terminal-to-terminal train performance.”

Trains reported that Canadian National has taken this approach since 2010, after it noticed that its operating metrics, which were among the best in the railroad industry, didn’t necessarily match the service that shippers were receiving.

Some have said that trip-plan compliance should be the key measuring stick when it comes to service.

“Customers really only care about the first and last mile, pick up and drop-off on time; [it] doesn’t matter so much [what happens] in between,” said Linda Bauer Darr, who heads the American Short Line and Regional Railroad Association.

Bauer Darr said short lines and regional railroads need to work with their Class I railroad connections to do a better job of using data and presenting meaningful, accurate information to shippers in real time.

AAR head Ed Hamberger said during the STB’s CSX hearing that performance metrics need to be retooled, but he has yet to say how.

In his letter to the STB, Ridley raised doubts about whether terminal dwell figures for Avon Yard near Indianapolis actually have improved. He said some of his company’s cars have sat in Avon for seven to 14 days.

What PCA wants the STB to do is help resolve ongoing car-supply issues by measuring how many cars were ordered, how many were delivered, and how many were loaded.

Ridley said this would be more accurate and allow CSX to identify shippers who are ordering more cars than they need.

NS 3rd Quarter Income Up 10%

October 26, 2017

Norfolk Southern on Wednesday reported that third quarter income was up 10 percent over the third quarter of 2016 to $506 million.

Income from railroad operations rose 11 percent from the third quarter of 2016 to $911 million while the operating ratio declined to a quarterly record 65.9 percent. Earnings per share totaled $1.75, up 13 percent from the previous year.

The operating ratio in the third quarter of 2016 was 67.5 percent.

Railroad operating revenues of $2.7 billion gained 6 percent as overall volumes were 4 percent higher due to growth in the major commodity categories of coal and intermodal.

Operating expenses increased $55 million, or 3 percent, to $1.8 billion as targeted expense reductions and gains from the disposition of operating property helped offset volume and inflation-related expenses and higher incentive compensation.

“Norfolk Southern continues to deliver strong financial results through execution of our strategic plan. We are unwavering in our commitment to improve productivity as demonstrated by seven consecutive quarters of year-over-year improvement in our operating ratio,” said NS CEO James A. Squires, in a statement. “Our balanced approach focuses on increasing efficiency and delivering a strong customer service product, giving us the ability to achieve our goals and deliver sustainable shareholder value.”

For the first nine months of 2017, net income was $1.4 billion, up 15 percent when compared to the same period in 2016. Record diluted earnings per share was 17 percent higher at $4.93. Operations income grew 11 percent while the nine-month operating ratio fell to a record 67.4 percent.

Although a number of factors contributed to the railroad’s performance, Wall Street analyst Jason Seidl told Railway Age magazine that NS gained market share from CSX, which experienced service issues last summer.

Although CSX has shown signs of finding its footing in the past month, Seidl believes that “it will be some time before [CSX] service returns to optimal levels.”

In the meantime, NS “is likely to continue to have a more competitive service product in the East for the foreseeable future. Traffic results lend support to the notion that NS has been taking market share.”

In doing this, NS has been selective in the new business it took on and demanded longer-term commitments from some customers.

“A key point here is that we believe the percentage of the rail network in the East that is peer- and truck-competitive is materially greater than that north of the U.S. border where [CSX CEO] Mr. [E. Hunter] Harrison achieved two of his big successes,” Seidl said. “That said, conversion from the highway remains its biggest market share gain opportunity.”

Seidl also noted that NS has been aggressive in cutting costs, by implementing such plans as consolidating division headquarters, and streamlining its network by reducing tracks and yards.

NS Net Profit Up 23% in 2nd Quarter

July 27, 2017

Norfolk Southern said this week that its second quarter 2017 net profit was up 23 percent and revenue had risen by 7 percent to $2.6 billion.

The railroad said traffic and revenue growth combined with productivity gains enabled it to achieve a record operating ratio of 66.3 percent. That compared with 68.6 percent during the same period in 2016.

Citing gains in coal and intermodal traffic, NS said it posted a 6 percent increase in volume. Income from operations was up 15 percent, to $888 million.

Intermodal traffic increased by 6 percent overall during the quarter with domestic business up 6 percent due to highway conversions and new service offerings.

International intermodal business rose 5 percent due partly to a 13 percent increase in volume from East Coast ports.

The company said it continues to see international volume shift from West Coast ports to the East Coast as a result of the expanded Panama Canal.

Coal traffic was up 27 percent with utility and export metallurgical coal both posting increases in traffic. Some of the traffic came from a 23 percent rise due to lower utility stockpiles and higher natural gas prices.

Export coal volume skyrocketed by 78 percent due to constrained Australian supply and increased steel making in China.

Merchandise traffic was flat with metals and construction the only categories seeing increases. There were declines in chemicals, automotive, agriculture, paper, clay and forest traffic.

NS reported earnings per share of $1.71, which beat the forecast of Wall Street analysts of $1.65 per share, according to Thomson Reuters I/B/E/S.

“Norfolk Southern’s strong financial results and all-time record operating ratio reflect the power of our team, successful execution of our dynamic plan, and focus on operating even more efficiently while providing high quality service to customers,” CEO Jim Squires during an earnings call.

NS Chief Marketing Officer Alan Shaw said the railroad has seen some traffic come its way from CSX, but it is a small amount. Trucks remain the chief competitor of NS, Shaw said.

Some key operating metrics suffered during the quarter due in part to flooding near the Cincinnati terminal and on its line linking Louisville, Kentucky.  There was also flooding near Kansas City and operating issues related to fires in northern Florida.

Average train speed decreased, while terminal dwell grew. “We’ve turned the corner on that,” Squires said. Train speed has increased 10 percent and terminal dwell bounced back to previous levels.

NS expects to achieve $100 million in productivity gains in 2017. It has retired 100 locomotives and cut the work force by 10 percent compared with 2015.

Chief Operating Officer Mike Wheeler said NS set quarterly marks for locomotive productivity, fuel efficiency, and train length,

In looking toward the rest of 2017, NS management expects continued growth in intermodal and coal traffic while merchandise traffic is likely to decline slightly due in part to slowing auto production and assembly plant downtime.
NS plans to increase its share buyback program by 25 percent to $1 billion for the year.