KSU held a PSR Deep Dive with a favored analyst in an effort to “peel the onion” (a phrase heard so much I started to cry).
The 90-minute session, presided over by the irrepressible Sameh Fahmy and a cast of, well, a lot, served as a sort of mini-Analyst Day (perhaps it should have been an actual one, sponsored by the company), and most effectively showed some real bench strength. It covered Network Operations, Service Design, Fuel, Equipment (utilization and mechanical) Engineering (and some ~15% annual MoW Capex savings)….
One key takeaway was that operational changes in Q2/20 (etc.) may lead to even more PSR savings than the promised $95mm. KSU is up YOY on most KPIs, even after the upward, post-trough gyrations (volumes are up some 40% from the trough, so the metrics have dropped form the Q2/20 reported numbers but the 2020 Goals remain in place). Taking a step back, since the PSR beginnings at KSU at the end of 2018, velocity and dwell have shown large, marked improvement. Examples were shown of major drill-down initiatives, such as in the Monterrey region. Another interesting factoid came from Service Design showing the KC-Shreveport corridor, where train starts were reduced from 28/week to 17 while trains were 40%+ longer – and customer service improved. That is a great refute to the wide criticism that PSR is only about reducing costs – and volumes/service, if necessary. This is the genesis of the ~$40mm additional savings, only some of which are in the previously expressed 2020 PSR productivity guidance.
Further upside comes from several areas, including fuel efficiency, where great progress has been made but more is targeted to catch the Canadians or even FXE!); in addition to car hire (and maintenance), engineering, etc….