Norfolk Southern’s PSR plan is moving on down the line

Class I railroad carrier Norfolk Southern said this week it is making significant strides on its precision scheduled railroading (PSR) initiative, entitled TOP21, which it initially announced earlier this year.

PSR was created by late railroading legend E. Hunter Harrison whom passed away in December 2017, when he was running CSX. PSR requires cargo to be ready when rail cars arrive for loading or risk being left behind, a practice that served also both CP and CN well under his leadership, with both companies seeing multiple positive results in the form of lower operating ratios, improved service, record amounts of reinvestment into networks, as well as creating significant shareholder value.

NS said that the objective of TOP21 is to enhance customer service, increase operating efficiencies, support growth, and drive long-term shareholder value. TOP21 is a key facet of the railroad’s three-year strategic plan, which it rolled out in February. At the core of this plan are five key principles: serve its customers; manage its assets; control its costs work safely; and develop its people.

In May at the Norfolk Southern Annual Meeting of Shareholders, CEO James A. Squires said that the company’s three-year strategic plan is driving transformational changes for NS.

“Our new plan, based on precision scheduled railroading, is taking us to a higher level operationally,” Squires said at the May meeting. “Through a process we call Clean Sheeting, we are moving rail cars more quickly through our terminals and increasing the efficiency of operations. Through our new operating plan, TOP21, we are rethinking how we run trains, to improve network velocity and fluidity. Through our new locomotive strategy, we are creating a more reliable and cost-efficient locomotive fleet. Through our new Cars-On-Line Team, we are identifying ways to move more freight with fewer rail cars.  All of these changes will yield a ‘capacity dividend’ and a platform for future growth.”

As for NS’s timeline for TOP21, it announced in April that the initiative’s first phase would focus on its general merchandise market, adding that it has already made initial changes to its TOP21 train plain, with other related changes to kick off in early July in conjunction with the July 4th holiday.

NS said that when it initially started developing its TOP21 plan in 2018, it used computer modeling and simulation tools to analyze data and train flows to achieve optimum network fluidity and velocity. And it added that Under TOP21, the its main focus will center around reducing circuity of freight car movements to and from customers and balancing its network flows. The key benefits of this will be in the form of running fewer trains, using its operating assets more efficiently, and creating capacity for growth.

“TOP21 will improve our network fluidity and velocity, reduce our circuity and train miles, make our railroad more resilient, and give us greater capacity for growth,” said Alan Shaw, chief marketing officer, in a statement. “We are engaged with our customers to talk about these changes and how we all can benefit from the opportunities that lie ahead as we fully implement the plan.”

Tony Hatch, president of New York-based ABH Consulting, said that NS is already providing great metric improvement.

“This should “turbocharge ” that improvement (though perhaps not in a straight line),” he said.

The shift to PSR is prevalent among all North American Class I railroads is fully intact, with the exception of BNSF Railway.

Freight railroad stakeholders maintain that this collective industry focus on PSR is likely to bring about improving rail service levels, especially in terms of shipment service consistency, if not also actual transit times.

Analyst Hatch explained in a previous interview that as PSR is adopted and adapted, things like service consistency and transit times will see further improvements.