Wednesday, July 29, 2009

How NS keeps stored power ready to roll

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Norfolk Southern is taking steps to ensure that its stored locomotives are ready to roll when needed.

"At the end of June, we had just over 600 locomotives stored, about 16% of our fleet," EVP and Chief Operating Officer Mark D. Manion said in a second-quarter earnings presentation Tuesday. "In June we started to reduce the number of locomotives stored from a high of 700 at the end of May. This reduction represents, in part, a need for more locomotives to handle an increase in coal trains from May to June, but more important, to support a new effort to cycle our stored locomotives."

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"In the past when storing locomotives it has been for periods of time less than a year," Manion noted. "With the uncertainty of the economy, we are taking additional preventative maintenance action to ensure that all of our stored power remains in good working order. So, when demand justifies their return to service, we can do so smoothly and with minimal delay."

Manion also said that at the end of June NS had 35,000 freight cars stored. "This includes about 28,000 cars owned or leased by Norfolk Southern as well as cars from Norfolk Southern's allocation of stored national pools managed by TTX for automotive and intermodal, as well as TTX flats and some boxcar equipment. It also includes about 900 cars stored under car-hire arrangements with various short lines."

When full demand for this equipment will materializes is still uncertain. But in another presentation, Norfolk Southern EVP and Chief Marketing Officer Donald W. Seale said that that while "the duration of the recession and the shape of the recovery are still question marks ... we are encouraged that the erosion of our traffic volumes that we have seen in the past eight or nine months seems to have stabilized. It does feel like we've reached a bottom."