NS to STB: ‘Service Levels Do Not Meet Our Customers’ or Our Expectations’

Written by Marybeth Luczak, Executive Editor

“Recovering our service is our highest priority, and we assure you we are taking action to achieve this as quickly as possible,” Norfolk Southern President Alan H. Shaw wrote in a Dec. 10 letter to Surface Transportation Board Chairman Martin Oberman, who asked the Class I railroad to address the deterioration of “key operating metrics” and the increasing number of customer complaints to STB about its “poor performance.”

In a Nov. 23 letter submitted to NS Chairman and CEO James A. Squires (who has since transferred his President role to Shaw), STB Chairman Oberman wrote that NS’s recent key operating metrics “are hovering far below 2019 comparables.” For the second reporting week of November 2021 vs. the same period in 2019, he noted a “marked decline” in average train speed for manifest service. This, he wrote, is “particularly troubling given the focus on the manifest network in NSR’s [NS’s] precision scheduled railroading operating model.” He also noted an increase in average system dwell time and in average number of manifest trains holding per day.

“These metrics reflect an unfavorable trend in NSR’s overall performance in 2021,” Oberman wrote. “Yet, NSR’s number of ‘transportation’ employees has continued to decline over the last three months (8,281, 8,269, and 8,207, respectively). …”

At the same time, STB has received an “increasing number” of NS customer complaints, which include “missed switches, cars stranded at intermediate yards, longer transit times, operating plan changes without notice, and a lack of communications from customer service,” according to Oberman. He wrote that the customers—from NS’s Cincinnati to Chattanooga corridor as well as the deep South and mid-Atlantic—represent a “cross-section of key commodity groups.” 

In a letter responding to STB (download below), Shaw attributed performance results to high attrition and a tight labor market, and explained that the railroad is doing whatever it can to put into place the resources needed to serve customers.

Shaw wrote that NS “is currently experiencing workforce shortfalls in critical portions of our network”—primarily in Birmingham, Ala.; the CNO&TP corridor between Cincinnati, Ohio and Chattanooga, Tenn.; and along the Southern Tier line between Buffalo and Binghamton, N.Y.—due to “unexpectedly high rates of attrition.” These rates, he pointed out, have been compounded by “hiring challenges, as the entire transportation industry, along with other sectors of the economy, face an unusually tight and rapidly evolving labor market. As a result of these workforce challenges, we are facing yard congestion in Birmingham and Chattanooga and slower train flows over both the CNO&TP and the Southern Tier. The strains we are experiencing in these areas have created collateral impacts in other parts of the network.

“We have made substantial progress through the Thanksgiving holiday—when business activities declined temporarily—toward restoring our yard operations in Birmingham and Chattanooga. We also have made progress in improving flows over the CNO&TP by redeploying manpower and by reworking crew districts. We have not yet made similar progress on the Southern Tier but our efforts there, and throughout the challenged portions of our network, continue.”

Shaw noted that NS reduced headcount at the onset of the COVID-19 pandemic and has since recalled furloughed employees “or offered the opportunity to transfer to locations of need,” and has begun a “program of targeted hiring as business levels have increased.”

He told Oberman: “We reported to you that as of June 11 we had 114 conductor trainees in training with plans to add more classes every month for the rest of the year. Since then, we have increased the rate of hiring to account for higher than expected attrition levels in parts of our network and to recover our service. As of December 6, 2021, we had 285 employees in conductor training—the highest level year-to-date—and expect to further increase the number of conductor trainees between now and the end of the first quarter. We have a further 939 prospective employees in the pre-employment stage. To accommodate conductor trainee attrition and train a higher number of employees, we are dramatically expanding conductor training class sizes and will be starting new classes every week beginning January 3, 2022.”

The railroad, Shaw pointed out, recognizes the labor market’s changing expectations and is also “offering bonuses and incentives to entice prospective employees to join our team and to encourage current employees to stay with us. To maximize utilization of our current employees, we also are offering availability bonuses, temporary transfer incentives, permanent transfer incentives, and incentives to work voluntarily through previously scheduled vacations. We have added resources to our Talent Acquisition, Technical Training, and Health Services groups to handle a higher volume of job applicants and conductor trainees. We have advertised job openings in areas where we are experiencing high levels of attrition or are otherwise anticipating greater hiring demand, and we have grown the ranks of our ‘go teams’ and reprioritized their deployment to the areas of our network experiencing the most critical need.”

While NS is “making progress” to improve service quality, “it takes time to on-board and properly train new employees to make a safe and effective contribution to our business,” Shaw told Oberman. “Safety is an important value at Norfolk Southern and we are committed to preparing our employees to perform their duties safely. Until we can deploy new hires in sufficient numbers to counteract the unusually high attrition rates in some areas of our network, our ability to deliver the strong service product our customers are accustomed to receiving from us will continue to be under pressure.

“While we always stay close to our customers, we recognize that doing so is especially critical when our service is challenged. We are committed to remaining in constant communication with them with clear feedback on our service capabilities and limitations so they can better manage their supply chains.

“As we commit to staying in close contact with our customers, we similarly commit to staying in touch with you and your staff as we work through the challenges we face. We hope you will not hesitate to contact us if you would like to discuss any of these matters in greater detail.”

STB on Oct. 18 sent a similar letter to CSX President and CEO Jim Foote, requesting information about service problems, as evidenced by what STB characterized as numerous customer complaints. CSX responded on Nov. 2. Read: “CSX to STB: ‘Committed to Overcoming Supply Chain Challenges.’”

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