Shaw to Shareholders: NS Committed to ‘Customer Centricity,’ Being ‘Operations-Driven’

Written by Marybeth Luczak, Executive Editor
Norfolk Southern (NS) President and CEO Alan H. Shaw

Norfolk Southern (NS) President and CEO Alan H. Shaw

Norfolk Southern (NS) President and CEO Alan H. Shaw on May 12 discussed his railroad’s top priority—the restoration of service “to the quality our customers expect and deserve”—at an annual meeting of shareholders, held just one week after the Surface Transportation Board (STB) issued updated, more-comprehensive rules for reporting performance and employment metrics that mostly affect the “Big 4” (NS, BNSF, CSX and Union Pacific), and just two weeks after the STB’s “Urgent Issues in Freight Rail Service” hearing, which stemmed from widespread rail service-failure complaints.

A Railway Age Readers’ 2022 Influential Leader, Shaw’s first day at the NS throttle was May 1—a day spent with employees at Debutts Yard in Chattanooga, Tenn. On May 2, he issued to all employees an open letter, comments from which were echoed as he presided over the NS annual shareholder meeting on May 12. Shaw’s remarks focused on NS delivering long-term value by becoming more “customer-centric” and “operations-driven.” Railway Age reproduces those remarks in their entirety below:

“Thank you, Amy. I appreciate your leadership and dedication to Norfolk Southern. [Based on preliminary results, NS shareholders have elected Amy E. Miles, former Chair and CEO of Regal Entertainment Group Inc., to serve as independent Chair of the Board for a one-year term expiring in 2023.] I, and the entire management team, value working with you and our Board to serve our customers, engage our employees and deliver attractive returns for shareholders.

“I’m humbled by the opportunity to lead Norfolk Southern, a company with a rich history, an important purpose, and a bright future.

“Our company has an unbeatable value proposition.  It starts with our powerful network, which reaches more than half of the U.S. population and manufacturing base.

“We have a best-in-class portfolio of customers, with deep strength across consumer products, automotive, steel, agriculture, and many more.  Every day, we move the American economy.

“We have a robust Intermodal franchise with the best channel partners in the industry, and we look forward to succeeding and growing together by creating a seamless service experience for our shared customers.

“And we have an exceptional team of railroaders.  I’ve spent the last 28 years traveling our network.  I’ve seen the skill, dedication, and pride my colleagues demonstrate every day, and I share their commitment to the work we do.

“I’m excited about our future.

NS on May 1 posted on Twitter that “Alan Shaw spent his first day as CEO working from our Debutts Yard in Chattanooga, where he joined local leadership in the main tower for a birds-eye view of operations on a typical Sunday, and to watch our railroaders moving America’s economy. #ThoroughbredPride” (Images Courtesy of NS via Twitter)

“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.  We have a great team and we’re taking the right steps: accelerating our new TOP|SPG operating plan and hiring the conductors we need to execute the plan reliably. 

“I’ve been in the field with our Operations colleagues frequently over the last few months.  I want to see their challenges, hear their ideas and express my appreciation for their efforts.  On my first day as CEO, I spent the Sunday at our Debutts Yard in Chattanooga, Tennessee, where we talked about service restoration and the culture we are building at Norfolk Southern.

“I’d like to share a brief video from that day….

“We are going to compete and win in the $800 billion truck and logistics market by being customer-centric and operations-driven. That’s our goal. 

“Being customer-centric means that although we are in a business-to-business industry, the expectations of our customers are shaped by their personal experiences with service-oriented business-to-consumer companies that deliver world-class customer satisfaction. Being customer-centric also means making it easier for our customers to do business with Norfolk Southern, and delivering innovative solutions to help them compete and grow.

“It also means helping customers achieve their business goals in areas such as sustainability. Many of our customers have set public goals for carbon reduction.  As they reduce the environmental footprint of their operations, they will seek new ways to improve—and Norfolk Southern will be there. Shifting their business from truck to rail is one of the most powerful ways for our customers to reduce carbon emissions. Every time a customer chooses Norfolk Southern over truck, we lower carbon emissions, ease congestion, and reduce wear on the nation’s publicly funded highway system.

“Complementing our commitment to customer centricity is our focus on being Operations-driven, which means that our success depends entirely on our ability to run a safe, reliable, and resilient railroad. Every department at Norfolk Southern is aligned with Operations as we serve our customers.  Service is the only product we manufacture and the only product we sell. 

NS on May 2 tweeted the picture above and these comments: “Alan Shaw visited our yard in Elkhart to catch up with the team on the front lines of an NS intermodal nexus. Indiana is the ‘Crossroads of America’ where we operate 1,440 miles of track, providing our customers with flexible transport options, especially intermodal.”

“Today our Operations team is talking about customer-centricity and service more than I have ever heard in my career. The entire Norfolk Southern organization is focused on what it can do to support Operations’ success, and that’s alignment we will continue to cultivate. 

“On May 2, my second day as CEO, I visited our operations in Conneaut, Ohio; Roanoke, Virginia; and Elkhart, Indiana. I had valuable conversations with our supervisors and craft employees, soliciting suggestions about how we can improve Norfolk Southern.  It is important to me that I personally engage with our Operations team to thank them for their dedication to Norfolk Southern and our customers, while demonstrating my support for their efforts.

“Here’s a look from that day at the people who keep the economy moving…

“Our company is powered by talented railroaders who are leading the way with their dedication.

“Already, we are off to a strong start for the year. First-quarter financial results included quarterly records for revenue, net income, and earnings per share. We also marked year-over-year productivity improvements in important categories such as train weight, train length, and fuel efficiency. Our operating ratio is now competitive with our industry peers. Those are significant achievements, but we’re not yet where we want to be. We have more work to restore service and create capacity for growth.

“The upcoming launch of TOP|SPG, which is the evolution of our PSR-based TOP21 operating plan, will be critical to the future of Norfolk Southern. TOP|SPG stands for the balance between service, productivity and growth, and will focus on:

“• Enhancing service resiliency by simplifying and balancing our operations;

“• Improving train productivity through increased train size and fuel efficiency; and

“• Providing customers with a platform for growth, helping our best-in-class customers compete in a dynamic supply chain environment.

“Delivering safe, reliable and resilient service with competitive pricing, helping our customers achieve their sustainability goals, and making it easier for our customers to ship by rail will enable Norfolk Southern and our partners to capitalize on market conditions that remain favorable for truck to rail conversion.

“The resulting growth will be good for customers, shareholders, and the communities we are privileged to serve. This is my focus and the focus for our team.  Thank you for taking the time to join us today and for entrusting Norfolk Southern with your investment.”

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