Not that long ago, E. Hunter Harrison’s methods and strategy for CSX were subject to close scrutiny, tough questioning, much doubt, some head scratching (close 8 of 12 hump yards, anyone?), customers complaining, labor opposition and STB inquiries. All of that and more was in response to Hunter’s trademarked program of “Precision Scheduled Railroading.”
Then, unfortunately, Hunter died, and much of the heat disappeared from the scrutinizing, inquiring, complaining, Hunter being what was known in polite circles as a “polarizing figure.”
Stripped of its bells and whistles, PSR isn’t really all that new. PSR is exactly what railroads have done, or tried to do with greater and lesser success during the past 150 years—and that is to operate to schedule. The schedule in this case is written to maximize asset utilization, some of those assets being locomotives, crews and track.
Time of use, hours of and in operation and turnaround availability of assets are the drivers and measures of railroad efficiency. In yards, we can condense all of that and more into two measures: (1) connections made from trains received to trains dispatched and (2) the elapsed time, the terminal dwell, of the cars in the yard.
In main line operations the precision of the railroad can be measured by the variance of actual train performance to the schedule written to maximize asset utilization, and most important, to utilize the track capacity, to fill all the track slots with revenue-rich train movements.
It’s what we’re supposed to do with and on a railroad. Commuter railroad operations were organized around these principles—a dictatorship, so to speak, of the schedule, in order to offset the intrinsic imbalances of the operation generated by providing sufficient service during the “revenue rich” peak periods.
Those of us who suffered or enjoyed or just persevered through the crucible that was Conrail (pre-split) practiced optimal asset utilization, even if we didn’t call it that. We all kept a picture in our heads. We knew at any moment where every train had to be at that minute, and in the next hour, if the schedule, the operating template, the service plan, was to be fulfilled.
Now, I didn’t know Hunter, but it seemed to me that, in the short term, he was determined to make CSX an attractive target for merger or acquisition that would establish a transcontinental operation where efficiencies of scale, schedule and asset utilization could be maximized. Behind that short-term goal, however, was a recognition for the long term—that “things” had changed after 2008. Carloadings, tonnage, had peaked in 2008, and that peak was not going to be exceeded by any recovery. Why? In a word, coal. Coal tonnage accounted for about 45% of Class I railroads’ total in 2008. Since then, coal tonnage has dropped to 32% of rail traffic, with the expected impact on overall tonnage—which is down by 30% from its 2008 peak.
This is not merely a “cyclical” moment in rail traffic. We are, after all, 11 years into the recovery from the big contraction in the economy. This is a structural, permanent change, precipitated by the replacement of coal by natural gas as the power source for electricity generation. It is a structural change that leaves railroads with locomotives, yards, cars—assets—designed to service a peak that no longer exists.
Locomotives can be retired, and more efficient locomotives can be deployed, but effective asset utilization means lots of locomotives have to be retired.
Speaking of retired, the concentration of retirements of railroaders born after World War II can reduce the work by attrition rather than compulsion, but that reduction will have to occur.
To be sure, intermodal traffic can fill some of the open track slots. Still, we face a future where the industry is “over-equipped” for service needs. Asset optimization gives way to asset reduction.
The need for PSR becomes acute when traffic volumes have been radically and permanently altered, when the “cyclical downturn” transforms itself into a structural condition. Then it becomes the business plan for the future.
David Schanoes is Principal of Ten90 Solutions LLC, a consulting firm he established upon retiring from MTA Metro-North Railroad in 2008. David began his railroad career in 1972 with the Chicago & North Western, as a brakeman in Chicago. He came to New York in 1977, working for Conrail’s New Jersey Division. David joined Metro-North in 1985. He has spent his entire career in operations, working his way up from brakeman to conductor, block operator, dispatcher, supervisor of train operations, trainmaster, superintendent, and deputy chief of field operations. “Better railroading is 10% planning plus 90% execution,” he says. “It’s simple math. Yet, we also know, or should know, that technology is no substitute for supervision, and supervision that doesn’t utilize technology isn’t going to do the job. That’s not so simple.”