Financier: Harrison didn’t create Precision Scheduled Railroading

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Late CSX Transportation CEO E. Hunter Harrison speaks before the Surface Transportation Board in 2017. A railroad executive now says Harrison is not the inventor of Precision Scheduled Railroading.
R.G. Edmonson
BALTIMORE — E. Hunter Harrison may have written the book on Precision Scheduled Railroading.

But the late chief executive is not the creator of the operating model that’s currently sweeping the industry, says Gilbert Lamphere, the former chairman of Illinois Central who hired Harrison as the railroad’s operations chief in 1989.

Credit for creating PSR, Lamphere says, belongs to Ed Moyers.

In 1987, Moyers, the vice president of the Peoria & Pekin Union Railway, came into Lamphere’s office with “crazy ideas about how to run a railroad.”

In his hands: A 25-page handwritten business plan that, among other things, called for scheduling every movement on the railroad and keeping crews, locomotives, and freight cars in perpetual motion.

“It was the beginning of Precision Scheduled Railroading,” Lamphere told the North East Association of Rail Shippers on Thursday. “But we didn’t have a name for it.”

Lamphere and Moyers put the plan into action on MidSouth Railroad, a regional created from four lines the IC cast off. Within a year under Moyers’ operating plan, the MidSouth’s operating ratio plunged to 59%.

“Most importantly, he created a railroad that was the precursor for today. And he showed us what short lines could accomplish,” says Lamphere, who considers himself the original financier of Precision Scheduled Railroading.

A couple years later, Moyers wanted to try the operating plan on a larger railroad, the IC. Lamphere led an investor group that bought IC, which at the time had an industry-worst operating ratio of 93%.

“It was the worst-run railroad in the United States,” Lamphere says.

Moyers put his operating model in place, scheduling cars and trains, tripling train length to 120 cars, and replacing IC’s double-track main with single track and long sidings. With disciplined operations, IC’s operating ratio improved to 68% within a year and to 59% within two years, Lamphere says.

“At the Illinois Central … Ed and I hired a gentleman by the name of Hunter Harrison,” Lamphere says. “Now Hunter, Hunter was at the BN. And he had been marginalized because he had these crazy ideas about how to run a railroad. Hunter was data-driven, and there really wasn’t a place for him at the Burlington.”

Harrison had similar ideas about running an efficient railroad.

“We taught him a few things about how to run a railroad, which might sound surprising to you,” says Lamphere, who has served as a board member at Canadian National, CSX Transportation, and Florida East Coast Railway.

Harrison became chief executive after Moyers left IC to run the Southern Pacific, which at the time was losing $150 million a year. Within two years under Moyers’ still-unnamed operating plan, SP swung to a $250 million profit, Lamphere says.

Canadian National acquired IC in 1998 and got Harrison as part of the deal. It was at CN headquarters in Montreal that Lamphere and Harrison coined the term Precision Scheduled Railroading, Lamphere recalls.

The focus on a low operating ratio, which ultimately became associated with PSR and Harrison, was not an intended outcome, Lamphere says. Rather, they aimed to use the operating ratio as a simple way to convey the importance of cost-control to ballast-level employees, he says.

Lamphere praised the way Union Pacific, Norfolk Southern, and Kansas City Southern are taking a go-slow approach to adopting PSR. Harrison broke too many eggs while rapidly implementing PSR at CSX in 2017, Lamphere says.

Federal regulators do not want a repeat of the service issues that plagued CSX in the second half of 2017, Lamphere says, and railroads can ill-afford reregulation.

The challenge for the industry now, Lamphere says, is to regain market share lost to trucks over the years.

One way to do that, he says, is for the Class I railroad systems to forge closer ties with short line railroads.

Another way is by making the capital investments necessary to grow with existing and new customers, as CN is doing now under CEO Jean-Jacques Ruest, Lamphere says.

NEWSWIRETrains News Wire

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