{"id":17936,"date":"2024-03-06T14:38:07","date_gmt":"2024-03-06T04:38:07","guid":{"rendered":"https:\/\/www.vibewire.com.au\/?p=17936"},"modified":"2024-03-06T14:38:07","modified_gmt":"2024-03-06T04:38:07","slug":"two-years-after-service-issues-stb-chief-sounds-the-alarm","status":"publish","type":"post","link":"https:\/\/www.vibewire.com.au\/?p=17936","title":{"rendered":"Two Years After Service Issues, STB Chief Sounds The Alarm"},"content":{"rendered":"

By Justin Franz\u00a0<\/span><\/p>\n

Outgoing U.S. Surface Transportation Board Chairman Martin J. Obermann said last week that public safety and the American economy as a whole are at risk if aggressive activist shareholders continue to get their way with Class I management by forcing them to make drastic cuts in pursuit of short-term profit.\u00a0<\/span><\/p>\n

In remarks on February 29, to the Southeast Association of Rail Shippers\u2019 spring meeting, Obermann said that service issues following the pandemic were a direct result of executives cutting their workforce and that there was no doubt the crisis \u201cdepressed the nation\u2019s industrial output.\u201d Almost two years after the STB demanded that Class I executives answer for the industry\u2019s shortcomings, Obermann said he\u2019s worried that some in the industry are again heading in the wrong direction.\u00a0<\/span><\/p>\n

Obermann\u2019s comments come as the investment group Ancora Holdings is trying to overthrow Norfolk Southern CEO Alan Shaw. The group has said they want to boot Shaw and put in their own management to increase safety on the railroad following last year\u2019s explosive derailment in East Palestine, Ohio. But many observers, including Obermann, don\u2019t buy that.\u00a0<\/span><\/p>\n

\u201cSeveral weeks ago, Ancora wrote me a letter. The essence of their message was that they had taken a $1 billion dollar stake in NS in order for it \u201cto become a safer railroad.\u201d Really? What hedge fund raises $1 billion to promote safety anywhere?\u201d Obermann told the shippers group.\u00a0<\/span><\/p>\n

After a series of hearings in early 2022, most of the Class Is, including CSX Transportation, Canadian National, CPKC and NS, made steps to try and be more resilient to economic changes. Specifically, they made moves to increase their workforce to handle traffic surges. Obermann said such moves benefit the public, the economy and shareholders. But some shareholders don\u2019t see a benefit to preparing for the long term and instead want quicker gains. One of the best ways of doing the latter is lowering a railroad\u2019s operation ratio through cuts, something that was preached by the creator of Precision Scheduled Railroading, Hunter Harrison.\u00a0<\/span><\/p>\n

\u201cIt does not take a degree in higher mathematics to understand that there is another way to lower the OR than by reducing the numerator, i.e., which includes the amount spent on payroll. The OR will also go down if you increase the denominator\u2014that is by having enough resources to attract new business to the railroad, increase the volume\u2014the number of loads\u2014and thereby increase total revenue,\u201d Obermann said. \u201cThat is the vision being employed up to now by this new group of CEOs\u2014particularly those at CSX, CN and yes, Norfolk Southern.\u201d<\/span><\/p>\n

Obermann said if people want a preview of what could happen to NS, they should look at what has happened to Union Pacific since Jim Vena took control last year. Obermann blasted Vena for reducing his workforce and capital improvement budgets while other railroads were increasing both. Last week, the head of the Federal Railroad Administration sent a letter to UP stating that he was concerned about safety on the Class I railroad because of the continued cuts, particularly to maintenance of way departments.\u00a0<\/span><\/p>\n

Obermann concluded his remarks by stating that the federal regulator would take steps to prevent service issues in the future, including allowing for reciprocal switching, something that the Class Is have long resisted.\u00a0<\/span><\/p>\n

\u201cTo be clear: Railroads are a regulated monopoly,\u201d he said. \u201cThey have a common carrier obligation to the public interest and to the nation\u2019s economy. Unlike other businesses, railroad management and owners are not just free to manipulate the business by draining the company\u2019s resources for short-term gain. Those of us in the rail community\u2014and every U.S. citizen\u2014need to stay tuned.\u201d<\/span><\/p>\n

The post Two Years After Service Issues, STB Chief Sounds The Alarm<\/a> appeared first on Railfan & Railroad Magazine<\/a>.<\/p>","protected":false},"excerpt":{"rendered":"

By Justin Franz\u00a0 Outgoing U.S. Surface Transportation Board Chairman Martin J. Obermann said last week that public safety and the American economy as a whole […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"_uf_show_specific_survey":0,"_uf_disable_surveys":false,"footnotes":""},"categories":[47],"tags":[11],"class_list":["post-17936","post","type-post","status-publish","format-standard","hentry","category-rail-news","tag-usa"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=\/wp\/v2\/posts\/17936","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=17936"}],"version-history":[{"count":0,"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=\/wp\/v2\/posts\/17936\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=17936"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=17936"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vibewire.com.au\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=17936"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}