Ask The Experts: April 17, 2019

Tony Hatch
Independent Transportation Analyst and Consultant

Q:  How is Precision Scheduled Railroading (PSR) impacting Short Lines?
A:  The highlight of NEARS, aside from coinciding with the Orioles Opening Day, was the “Short-Line Panel” with two members of the panel I put together at ASLRRA and RailTrends in 2018 – Pan Am and Anacostia & Pacific, along with local players Canton Railroad.  The latter noted one thing that comes with overall PSR adoption is “more work for the Short Lines that the Class Ones used to do” – citing rate-making, (local) marketing, and hand-holding”.  To which I would add, of course, pre-blocking and other first/last mile operations.  This new, “over the transom” workload will be met with some small carrier push-back, the panel said (although when I questioned their ability to push back hard against a carrier such as Union Pacific, they admitted that the leverage wasn’t exactly even).  It wasn’t of course, all sweetness and light as a renewed regulatory challenge could well be coming.

Q:  What is the future of the reefer boxcar market?
A:  The high cost reefer boxcar market could be revived if the cycle times improve from ~7x/year (!!) to once a month – something that could well happen with Precision Scheduled Railroading (PSR), unlocking a new market opportunity in a low current share environment.

Q:  What is the latest news on Class I rail line sales?
A:  There is hope of more Class One line sales (or leases), with CSX as a leader (although their process has been choppy: 2 done, 6+ to go; unsubstantiated fears exist that short term cash interests are competing with long term business development).  NSC and BNSF have ruled out sales, for now, but UNP might provide an opportunity as they accelerate through their Precision Scheduled Railroading (PSR) transformation.  I should note that as PSR was introduced to the mother-ship, CNI (when it was simply “Scheduled Railroading”), the effect was to lead to short line acquisitions.  That being said, there is a bit of a gold-rush mentality going on ….

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Alison Babcock