As part of a special series in Railway Age’s March 2022 issue, 11 North American railroad CEOs address what must be done to grow and gain market share from competing freight transportation modes. Together, Peter Gilbertson, President and CEO of Anacostia Rail Holdings, and Eric T. Jakubowski, Chief Commercial Officer, share their perspective, in this 8th edition of the series.
For this industry to thrive in the 21st century, the “pivot to growth” needs rapid acceleration, exploitation of the capacity dividend that PSR has yielded, commercial—not just technological—innovation, and new approaches to recruitment and training of employees.
Not since the dawn of deregulation has there been more anticipation by shippers and railroads alike. For the past several years, with pressure exacerbated by supply chain disruptions, we are in a period where railroads are under consideration to handle the business of customers who have primarily or solely relied upon trucking. There are also new firms that are open to considering the railroad value proposition. This period is ripe with potential for modal-share shift, but will require a robust effort on many fronts to succeed in true growth for this industry.
Growth requires capacity, innovation, flexibility, and a coordinated approach to re-engage customers. After nearly a decade of PSR implementation, we should indeed have a collective capacity dividend. Efficiency and capacity were certainly PSR’s objectives, and it is within that context that most customers remained patient throughout the disruption. Wall Street, the industry regulators, customers big and small, and every single railroader voiced the same goal: Now is the time for growth.
People are the key, and the way we recruit, support, train and create incentives needs to change. Sustainable growth in business is dependent on trust and relationships; trust that the services promised by the railroad are reliable. Relationships are nurtured through timely exchange of information and the opportunity to develop solutions for consideration.
Relationships are under duress now with the prevailing conditions. Shippers are facing service interruptions, pricing pressure not seen in decades, and uncertainty. They are anxious. Railroads have reduced their touchpoints to streamline decisions. Fewer salespeople and trainmasters with territories that have multiplied in scale, all beg the question: Do we have enough people to pursue the work of securing traffic? While adding more people may be a logical course of action, this is neither sufficient nor easily attainable.
The great resignation may be a passing trend, but it has drained railroads of experience and front-line managers. The demographics indicate this will continue. We need to replace employees, and this has proven to be very difficult. While many other enterprises confront this reality, railroads have rarely faced this challenge to the magnitude we have in 2022.
That is the real opportunity: To redefine roles in customer-facing positions, to reconsider the need for critical skill sets, and to be intentional about the type of people we need to promote relationships and growth. We need diversity of ideas, perspectives and life experiences. Critically, we need innovation and entrepreneurial skill sets. We need people who thrive on interaction and relationship building. Perhaps the biggest opportunity is to develop a mindset that every single manager must understand the basic prerequisites for success in a transportation service business. We need to reward and encourage well-intentioned risk taking. Artificial lines between operations and marketing are obsolete.
Perhaps no more impactful example is the role of trainmaster. A most difficult job; it is the linchpin of decision-making. PSR principles teach that pushing authority lower in the organization chart results in timely decisions, more accountability, and less waste of resources. As a career, we have made these positions extremely difficult to fill and equally difficult for the individual to thrive. When they do succeed, it is often at a huge personal sacrifice. I propose that trainmasters should have different training that supports and rewards a growth bias. We need the “strategic trainmaster.”
To support growth, trainmasters must understand the cost of operations and the impact of service on their customers, and, just as important, develop the ability to identify an unmet customer need or opportunity. This will take support and recalibration of responsibilities. But isn’t that what a data-driven, efficient railroad provides?
Rather than extending territories to reduce headcount, let’s use this opportunity to broaden the perspective of these front-line railroaders. Teach them to sell, to pursue opportunities and to manage customer service, and reward them for doing so. They must join the local industrial development group, visit the customer at the end of the rusty track, and introduce themselves to the new business under construction on the outskirts.
As we recruit new railroaders, our success will indeed be dependent on allowing a new generation to help redefine how we perform and thrive.
Read more of Railway Age’s special CEO Perspectives series:
• Katie Farmer, BNSF: Sustain a Growth Mindset
• Keith Creel, Canadian Pacific: Supply Chain, Market Reach and Sustainability
• JJ Ruest, CN: Railroads Must Lean Into Their Natural Strengths
• Jim Foote, CSX: Performance, Sustainability, Innovation Are Keys to Growing Market Share
• Pat Ottensmeyer, Kansas City Southern: Competing on a Global Scale
• Alan Shaw, Norfolk Southern: A Simple, Powerful Recipe for Growth
• Lance Fritz, Union Pacific: Solving Customer Problems at the Heart of Innovation
• Dan Smith, Watco: Stay Close to Your Customer
• Ian Jefferies, Association of American Railroads: A Growing Rail Industry Needs Policy Sanity
• Chuck Baker, American Short Line and Regional Railroad Association: Four Parallel Paths to Growth