Jason Seidl: Shippers want more rail service

Cowen and Company Managing Director and Railway Age Wall Street Contributing Editor Jason Seidl attended the North East Association of Rail Shippers (NEARS) Fall Conference and offers the following generally positive report:

“The conference posted record attendance, with most focused on the state of their businesses. When asked about their business levels in 2016, a slight majority held positive opinions about 2016. When asked about their thoughts on 2017, almost all of the audience held more positive opinions.

Growth was definitely on the mind of the highest-ranking Class I rail attendee when he presented. Mike McClellan, Vice President, Industrial Products at Norfolk Southern, injected a bit of humor when he quipped that the things that are fun to report on are the things that grow. McClellan knows a bit about growing a business, as he was in charge of NSC’s Intermodal division for more than a decade. He remarked that the next act for him is to help merchandise do what intermodal has done. One of the main things NS intends to do is to invest in customer service. He told the audience that his company was going to launch multiple new products over the next 24 months aimed at enhancing the customer experience at Norfolk Southern.

“A panel of shippers expressed the desire to do more business with the railroads ,but thus far the end results seem very different. One very large New England-based beverage shipper was using predominantly truck until it began test runs of intermodal trains over Pan Am and NS. After a successful period this shipper indicated that he would be increasing the amount of business shipped via rail and expressed his company’s positive feelings on cost savings and environmental impacts.

“Another shipper practically stood up and begged the railrods to give him more business. However, there seemed to be numerous roadblocks including consistency of service and (shockingly) the ability to get the railroads to quote him a rate in a timely fashion. Indeed, this seems to be more of a common problem than we thought it would, as discussions with another shipper and a Class I rail sales person confirmed it. Hopefully, the aforementioned pending enhancements at NS will help reduce the amount of time shippers wait for price quotes.

“As usual, the NEARS conference is widely attended by the short line community (New England is dominated by short line railroads). Everyone was abuzz about the recent deal from Genesee & Wyoming to acquire the Providence & Worchested. Most we spoke with were surprised at how much G&W paid, and noted that union contracts will make it difficult to reduce rank and file membership. Many, however, noted that they were confident G&W would improve the railroad and potentially improve interline movements to Canada.

“[Linda Darr], President of the American Short Line and Regional Railroad Association, spoke and noted that further support has been garnered for the 45G tax credit extension. While she appeared confident, she did note that this extension was either going to be multi-year or none at all.”