Norfolk Southern CEO Jim Squires: ‘Restoring our service levels is our top priority’

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NSmugJamesSquires
Norfolk Southern CEO James Squires
Norfolk Southern
WASHINGTON — Norfolk Southern is adding locomotives, stepping up conductor hiring, and streamlining terminal operations in order to clear congestion and speed up service across its system.

“We readily admit our service is not where we or our customers need it to be, and restoring our service levels is our top priority,” CEO Jim Squires told federal regulators, who last month requested service outlooks from each Class I system.

The railroad’s strategy depends on growth, Squires told the Surface Transportation Board, and providing a level of service that will support increased traffic volume is critical for NS to succeed.

NS’s service problems began in the Southeast, where the railroad had a difficult time rebounding from hurricanes in September and October, followed by snowstorms in December and January.

For the first 11 weeks of the year, NS’s average train speed is down 16 percent compared to a year ago, while terminal dwell is up 21 percent. First-quarter train speed is down 7 percent compared to the fourth quarter, while dwell is 9 percent higher than the fourth quarter.

The number of trains requiring recrews has jumped 133 percent when comparing February 2018 to February 2017. Local performance, meanwhile, is currently 7 percent below normal levels.

“Decreased velocity and increased dwell time increase, in the short term, the need for track capacity, locomotives, and crews, and place a premium on having an effective operating plan and maintaining solid communications with customers,” Squires told the STB in his April 2 letter, which was posted to the agency’s website today. “NS is responding on all fronts.”

The NS capital budget, which increased by $120 million over 2017 levels, includes projects to clear chokepoints in Birmingham, Ala.; Charleston and Columbia, S.C.; Savannah, Ga.; Louisville, Ky.; Chicago; Fort Wayne, Ind.; and Pittsburgh.

NS also reopened its Birmingham-Columbus-Macon, Ga., line to through traffic as a relief valve for the route via Atlanta.

The railroad put its entire 100-unit locomotive surge fleet into service in the fourth quarter and will lease 90 additional road locomotives. Through last week, NS had deployed 22 of 27 leased units that are currently on the property.

A tight locomotive leasing market is slowing the railroad’s efforts to boost the fleet.

“We are continuing our efforts to acquire the additional 63 locomotives and deploy them into active service as soon as possible,” Squires wrote.

NS also is continuing its 500-unit DC-to-AC locomotive conversion program, including 150 units scheduled for conversion this year. Fifty-seven units were converted last year.

“Two AC locomotives can move the tonnage of three DC locomotives, so converting these locomotives will result in more powerful locomotives and increased resiliency,” Squires wrote. “In the short run, however, while these locomotives are being converted or in the queue to be converted, they are not available for use in our daily operations.”

NS will hire 1,400 conductors this year and currently has 459 in training. When factoring in anticipated attrition, NS will have 275 additional crew members heading into the peak season later this year.

To respond to short-term crew shortages, NS developed “go teams” that can deploy to trouble spots within 48 hours and then remain on site for weeks, Squires wrote.

NS is in the midst of a two-year effort to improve terminal operations and simplify its operating plan, Squires said. The goal is to decrease dwell time and improve consistency and on-time performance.

“One of the techniques we are using is clean sheeting, which in summary can be described as a re-engineering of the train place in specific locations with a terminal-centric focus,” Squires wrote. “The intent is to drive capacity and create enhanced ability to sustain more volume.”

The effort has helped make Norris Yard in Birmingham — the epicenter of NS service problems in the Southeast — fluid again. It’s also been completed in Allentown, Pa.; Chattanooga, Tenn.; and on the 3B District from Birmingham to Mobile, Ala.

The STB’s request for service outlooks was prompted by shipper complaints about sluggish, erratic rail service across North America as well as deteriorating performance metrics at most of the Class I systems. Automakers and grain shippers were particularly critical of rail service.

NS said it has been having trouble securing enough empty multilevel cars for handling automobiles.

“Due to service issues affecting other carriers, NS has not been able to receive its requested allotments of multilevels, leaving NS less equipped to meet automotive demand, compounded by the slowed current status of our own network,” Squires wrote.

The railroad has taken steps to improve service for grain shippers, including adding grain train sets to the fleet, rerouting around congestion on the former Cincinnati, New Orleans & Texas Pacific Railway Rathole line south of Cincinnati, and working with customers to prevent shutdowns.
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