NS Launches New Operating Plan

Norfolk Southern launched on Monday a new operating plan that is largely focused on improving intermodal service although it will be applied to all types of freight shipments.

The plan, known as Thoroughbred Operating Plan|Service Productivity Growth was described as an evolution of its previous operating plan known as Thoroughbred Operating Plans 21.

TOP|SPG continues to build upon the elements of the precision scheduled railroading model with its emphasis on efficiency but also adding and more point-to-point intermodal service.

For example, NS will consolidate all intermodal traffic moving between Chicago and Harrisburg, Pennsylvania, at one terminal in Chicago, 47^th Street.

Under the previous operating plan, NS operated one train daily between 47^th Street in Chicago and Rutherford Yard in Harrisburg and one train daily between 63^rd Street in Chicago and Rutherford.

In the new operating plan Chicago-Harrisburg intermodal operations will be consolidated at 47^th Street and expanded to four daily trains between there and Harrisburg. The intermodal trains serving the 63^rd Street terminal will be eliminated.

NS officials said they are seeking to increase the number of miles per day that cars travel by reducing how often those cars are handled en route and how much time they spend sitting in yards.

The running time will be adjusted for more than half of all road trains. Schedules will be changed for 90 percent of all scheduled trains.

There will be changes to 39 percent of yard blocks. The officials said the new operating plan seeks to reduce network directional imbalance, and simplify operations of routes and terminals.

The carrier indicated it will increase the number of daily intermodal trains it operates systemwide from 79 to 85.

NS CEO Alan Shaw cautioned that implementation of the plan won’t occur overnight.

In a video created to announce the new operating plan, Shaw said the goals of the plan are reducing the complexity of the NS network by reducing train meets and how often cars need to be worked while en route.

In a social media post, NS said the new operating plan “isn’t a radical change in how we work with our customers, but a shift in how we execute our operations to move their shipments more directly and consistently.”

NS said there will be no operating changes for most customers and for those who are affected It has been working with them to ensure they are prepared for coming changes.

Above all, NS indicated, the new operating plan seeks to provide greater consistency in the service provided to shippers.

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 CEO Extols the Virtues of PSR

Norfolk Southern CEO touted the virtues of precision scheduled railroading this week during a presentation to investors, crowing about how the railroad is doing more with less.

That includes fewer trains, fewer employees and maybe soon fewer hump yard operations.

Squires said during the Morgan Stanley investor conference on Thursday morning that NS may idle more hump yards after closing humps at four classification yards this year.

NS has labeled its PSR plan as TOP21 and before it was implemented last year NS had 10 active hump yards.

But this year it has ceased hump operations in Bellevue; Sheffield, Alabama, Linwood, North Carolina, and Allentown, Pennsylvania.

Squires said that under the TOP21 operating plan NS has substantially reduced its dependence on major classification yards.

“Over the past year we’ve fundamentally changed the way we run our railroad to ensure the greatest efficiency across our operations,” Squires said.

“Step change is hardly adequate to describe the pace at which we’ve reduced resources and assets. And yet we’ve dramatically improved the service we’re providing to our customers and have created new capacity in the process.”

He said the potential exists for curtailing more hump operations.

NS has six hump yards still in operation including Elkhart, Indiana; Conway Yard near Pittsburgh; Enola Yard near Harrisburg, Pennsylvania; Chattanooga, Tennessee; Birmingham, Alabama; and Macon, Georgia.

Some changes NS has implemented were a response to falling traffic during the COVID-19 pandemic, including the end of dedicated auto rack trains due to auto assembly plants shutting down.

But once those plants resumed production, NS did not return to running auto rack trains but instead began carrying finished vehicles in the consists of general merchandise trains.

However, not all of the lost traffic is due to the pandemic. NS has seen its daily carloads fall 4 percent since TOP21 was fully implemented in July 2019.

Crew starts are 19 percent lower, train weight has increased 6 percent compared with last year, and the average train length has risen 11 percent.

NS has reduced its workforce by 24 percent since early 2019 and the active locomotive fleet is down 27 percent to 2,561 units as of July 31.

A surge in domestic containers has pushed NS intermodal volumes in recent weeks to fall peak levels as retailers seek to restock low inventories and e-commerce business and related parcel traffic has risen.

The carrier is working with such freight companies as J.B. Hunt, Hub Group, FedEx, and UPS to bring increase intermodal volume.

NS Has Started Redesigning its Intermodal Network

Norfolk Southern has begun to design a revamp of its intermodal network part of the process of implementing its TOP21 operating plan.

Jeffrey Heller, NS vice president of intermodal and automotive, told an intermodal conference this week that the goal of the revamp is to find efficiencies, cut costs, and improve operations and service.

NS began implementing TOP21 in its merchandise network this past July and will follow the same process in intermodal that it did with merchandise traffic.

The carrier will improve terminal operations before making sweeping changes to road trains. NS has 50 intermodal terminals.

Heller told the annual expo of the Intermodal Association of North America that NS will seek to combine shorter intermodal trains into longer ones.

It might move anchor blocks of intermodal traffic into the consists of merchandise trains.

Those merchandise trains are fewer in number, longer, heavier and rely on distributed motive power.

Any changes to the intermodal network will likely be made early next year after NS has had the opportunity to collaborate with its shippers, Heller said.

Heller said that in the long term, railroads need to become more efficient as truckers move toward platooning and autonomous operations.

Although NS service is not where the carrier wants it to be, Heller said it has improved.

He said that TOP21, which is the moniker NS has given to its version of precision scheduled railroading, has enabled NS to become a faster, more fluid railroad with less terminal dwell times and faster average train speeds.

NS has seen a decline in its domestic intermodal business due in part to falling truck rates,.

Heller said trucking companies ordered a record number of new rigs last year and are now scrambling to find business to keep those rigs rolling.

“We are now at a decision point, where we could either chase the business or wait for the growth to come back,” Heller said.

NS Plans to Add Some Bulk Traffic to Merchandise Trains

Mixing some bulk traffic into the consists of merchandise trains is the next step that Norfolk Southern plans to take as it implements the next phase of its TOP21 operating plan.

NS Chief Marketing Officer Alan Shaw said at an investor’s conference held this week in Boston that the move will be made in 2020.

The TOP21 plan is the NS version of precision scheduled railroading and thus far it has meant cutting the number of through trains by 10 percent.

Fewer trains are moving more tonnage using distributed locomotive power.

NS also is seeking to increase the productivity of yard and local crews.

Implementation of TOP21 comes at a time when NS traffic volume is down in the third quarter year by 3 percent overall.

Intermodal traffic is off 5 percent and coal has fallen by 15 percent. The only merchandise sector, which includes agriculture, chemicals, forest products, and metals and construction, to post an increase is the automotive business, which is up 3 percent.

Shaw indicated that NS management expects third quarter traffic to be down but projects flat traffic results in the fourth quarter when intermodal and automotive shipment are expected to improve.

All figures and projections are in comparison to the same periods of 2018.

Shaw said NS is not chasing volume or reducing intermodal rates in the face of falling trucking rates.

He said intermodal pricing has been the strongest it has been in eight years.

In the meantime, NS continues to construct its new corporate headquarters in Atlanta and expects to relocate there from Norfolk, Virginia, in summer 2021.

The finance department and executive team has already moved to Atlanta to leased office space.

NS Planning Next Phase of TOP21

Norfolk Southern said it is planning the second phase of its TOP21 operating plan after declaring a success the implementation of the first phase a month ago.

NS began to switch some of its merchandise traffic to the TOP21 plan during the first week of July.

The next phase of TOP21 will include other parts of its carload network and, possibly, intermodal traffic.

TOP21, which is the NS version of precision scheduled railroading, was implemented during the first week of July.

NS said that the first phase of TOP21 focused on carload and automotive business.

In a news release, NS said the impact on customer service and network operations has been minimal.

Although NS sought to put its own stamp on the PSR operating model, like other railroads it is now running fewer trains with less car dwell time in terminals.

As part of the implementation of TOP21, NS engaged in an extensive planning process that it dubbed “clean sheeting.”

It hosted 19 town hall meetings across its network for employees and shippers. Marketing department employees met with hundreds of key customers in May and June to prepare them for the plan and share transition expectations.

Two command centers that are manned daily around the clock were set up to monitor network status and address customer concerns throughout the implementation.

NS Implementing New TOP21 Operating Plan

Norfolk Southern became a full-fledged member of the precision scheduled railroading club today when it implemented its TOP21 operating plan on Friday.

TOP21 is said by the carrier to be based on the principles of precision scheduled railroading and was the subject of an 18-month planning process.

The initial implementation of TOP21 will affect merchandise traffic. Intermodal traffic will be switched to TOP21 in 2020.

In a service alert, NS said it does not expect any service disruptions, but has created a command center to address any operating issues that may arise.

As has been the case with other railroads that have implemented precision scheduled railroading, NS expects to operate longer and heavier trains as well as may greater use of distributed motive power.

With fewer trains operating, NS expects to have fewer train starts.

It will also favor more pre-blocking of cars at customer locations and local service yards.

TOP21 has already been implemented in areas that NS expects to see increases in traffic, including Harrisburg, Pennsylvania; Elkhart, Indiana; and Chattanooga, Tennessee.

However, some major classification yards are expected to play a lesser role in the new operating model.

NS to Implement PSR Plan Next Month

Norfolk Southern said this week in a news release that it is on the verge of implementing its version of precision scheduled railroading.

The next phase of the new operating plan, known as TOP21, will focus on the general merchandise market. It is expected to be implemented in July.

To get ready for the new operating plan, NS has been holding town hall meetings involving customers as well as train and engine crews to brief them on what lies in store.

Those meetings have been conducted by NS personnel in operations, marketing and customer service.

NS officials have described TOP21 as the second phase of the implementation of the new operating model.

The first phase, which got underway earlier this year, was dubbed “clean sheeting,” which involved marketing, shippers and yard employees working to determine where capacity could be freed in NS freight yards.

NS said in its news release that it began developing the TOP21 plan last year using computer modeling and simulation tools to analyze data and train flows to achieve optimum network fluidity and velocity.

TOP21 seeks to reduce the circuity of freight-car movements to and from customers, and balance network flows, both of which are central tenants of precision scheduled railroading.

The carrier has said the objective is to operate fewer and heavier trains, use operating assets more efficiently, and create capacity for growth.

It also is eyeing closing some classification yards and reducing its workforce in the belief that faster velocities will mean lesser needs for recrews.

NS expects to make greater use of distributed motive power and some unit train business will be folded into merchandise trains.

The top speed for some merchandise trains will rise to 60 mph so that NS can “co-mingle” its intermodal and merchandise networks.

“As we co-mingle traffic on trains, a train becomes a train, and we really don’t want to have an intermodal speed and a merchandise speed out there,” said NS Chief Operating Officer Mike Wheeler said. “So we’ve raised them up where appropriate to all run at 60 mph and take advantage of the velocity improvements and keep everything moving.”

Wheeler said NS has already stopped using some of its smaller local yards, including Motor Yard in Macedonia.

“On the large terminals, as we implement the new train plan, the work will go away at some terminals. And as that work goes away, then we will rationalize those assets,” Wheeler said.

As for traffic growth, NS expects growth in its intermodal business although the rate of growth will be less than what the carrier saw last year.

“We’ve been able to grow our intermodal franchise in tight truck conditions and in loose truck conditions,” said Chief Marketing Officer Alan Shaw. “Right now, the truck market is not nearly as tight as it was last year, but it’s still tighter than overall balance. And there is an inherent advantage to intermodal relative to truck in terms of cost structure.”

If all of this sounds familiar it is because CSX did the much the same things when it switched to precision scheduled railroading in 2017.

However, NS is hoping to avoid the service disruptions that CSX experienced when it quickly implemented PSR.

“As we have promised, we will work closely with customers before and after we implement TOP21,” said Chairman, President and Chief Executive Officer James Squires in a statement. “Our goal is to achieve mutually beneficial results that include reliable and consistent service as well as growth opportunities. We want to grow our business and our customers’ business, all while operating more efficiently and safely.”

“TOP21 will improve our network fluidity and velocity, reduce our circuity and train miles, make our railroad more resilient, and give us greater capacity for growth,” said Chief Marketing Officer Alan Shaw.