Norfolk Southern may idle additional hump yards

CEO hints at additional moves while touting benefits of Precision Scheduled Railroading
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NSmugJamesSquires
Norfolk Southern CEO Jim Squires
Norfolk Southern

NORFOLK, Va. — Norfolk Southern CEO Jim Squires hinted today that the railroad may idle more hump yards.

NS has shut down the humps at four classification yards in the past year — Allentown, Pa.; Sheffield, Ala; Linwood, N.C.; and Bellevue, Ohio — as its shift to a Precision Scheduled Railroading operating model reduces the emphasis on switching at major terminals.

“Over the past year we’ve fundamentally changed the way we run our railroad to ensure the greatest efficiency across our operations,” Squires told an investor conference. “Step change is hardly adequate to describe the pace at which we’ve reduced resources and assets. And yet we’ve dramatically improved the service we’re providing to our customers and have created new capacity in the process.”

Before adopting its TOP21 operating plan, NS had 10 active hump yards. Now it has six. 

“By leveraging PSR, we’ve substantially reduced dependence on those major facilities, resulting in the idling of four more humps…” Squires says. “To put that in perspective, in the 16 years following the Conrail acquisition we closed four humps. But in the past year alone we closed four more, with the potential for even more of this type of structural change.”

Norfolk Southern’s active hump yards are in Elkhart, Ind.; Conway and Enola, Pa.; Chattanooga, Tenn.; Birmingham, Ala.; and Macon, Ga.

The railroad will continue to do more with less, even as traffic rebounds from the pandemic-related volume declines that hit bottom in May. The railroad will be able to handle more traffic with fewer people and locomotives because of productivity and efficiency gains, Squires says.

NS stopped running unit trains of finished vehicles during the pandemic-related shutdown of North American auto assembly plants in April and May, for example. Once production resumed and auto racks began moving again, NS blended much of this volume into its merchandise network, Squires says. 

Norfolk Southern’s daily carloads have declined 4% since TOP21 was fully implemented in July 2019, Squires says, while the number of crew starts remains 19% lower as the railroad moves its tonnage on fewer but longer trains. Train weight is up 6% compared to last year, while average train length is up 11%.

NS employment levels have fallen 24% since the beginning of 2019, Squires says, and its active locomotive fleet is down 27%, to 2,561 units as of July 31.

Meanwhile, NS’s average train speed and terminal dwell figures are better than the three-year average, Squires says. NS service also has improved, Squires says, although the railroad’s Service Delivery Index is a relative measure that’s compared to 2018 levels rather than an absolute measure of on-time performance.

NS is handling intermodal volumes at fall peak levels, Squires says, thanks to a surge in domestic containers loaded with goods that are restocking low retail inventories, as well as rising e-commerce business and related parcel traffic.

As truck capacity tightens, NS will continue to work with partners such as J.B. Hunt, Hub Group, FedEx, and UPS to bring more intermodal volume to the railroad, Squires says. The railroad’s premium intermodal segment is now showing year-over-year volume gains.

Squires spoke at a Morgan Stanley investor conference on Thursday morning.

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