Railroads' New Era: Service Resiliency and Growth
Monday, Nov 18, 2024 12:35 pm ET
4min read The U.S. Class I railroads have turned the corner on service and resiliency, according to industry analysts, marking a significant shift in the sector's performance. This article explores the factors contributing to this improvement, the impact on freight volume, and the potential for future growth.
Over the past year, railroads have demonstrated remarkable resilience in the face of operational stress tests and disruptions. Adequate train crews and locomotives in reserve have bolstered service and resiliency, as seen in the performance of BNSF Railway and Union Pacific. These railroads maintained fluidity despite intermodal volume pressure, while CSX and Norfolk Southern quickly rebounded from hurricanes and other disruptions.
Key operational strategies have played a crucial role in enhancing service and resiliency. BNSF's focus on reducing dwell times at hump and flat-switching yards resulted in a 15% improvement, while UP's buffer strategy, involving maintaining reserves of power and crews, enabled the railroad to expect the unexpected and adapt accordingly. CSX and NS have shown industry-leading operational performance, with NS recovering quickly from various disruptions.
These improvements have allowed railroads to capture more freight volume, signaling a potential growth trend. A slight 0.1% third-quarter gain in domestic market share may be the beginning of a trend, as analysts suggest. However, there have been similar upticks in the past that amounted to "head fakes" amid flat volumes, so it remains to be seen if this growth is sustainable.
Railroads' investments in infrastructure and technology have also contributed to enhanced service and resiliency. Strategic investments in infrastructure, such as BNSF's focus on improving yard efficiency, have led to significant improvements. Additionally, investments in technology, like Norfolk Southern's use of mathematical optimization to assess and improve resilience, have played a crucial role.
Partnerships and collaborations with other transportation providers and stakeholders have further strengthened railroads' position. CMAC's work with Eurostar has enabled better disruption management and pre- and post-shift travel support for traincrew, boosting overall service reliability. Air Canada's expansion of through-ticketing to railways has offered customers more travel options, further strengthening the rail industry's position.
As railroads continue to improve service and resiliency, they are well-positioned to capture more freight volume and grow in the coming years. By maintaining a focus on operational excellence, strategic investments, and partnerships, railroads can solidify their role as a critical component of the transportation ecosystem. Investors should keep a close eye on this sector, as the potential for growth and steady performance makes it an attractive option for a balanced portfolio.
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Over the past year, railroads have demonstrated remarkable resilience in the face of operational stress tests and disruptions. Adequate train crews and locomotives in reserve have bolstered service and resiliency, as seen in the performance of BNSF Railway and Union Pacific. These railroads maintained fluidity despite intermodal volume pressure, while CSX and Norfolk Southern quickly rebounded from hurricanes and other disruptions.
Key operational strategies have played a crucial role in enhancing service and resiliency. BNSF's focus on reducing dwell times at hump and flat-switching yards resulted in a 15% improvement, while UP's buffer strategy, involving maintaining reserves of power and crews, enabled the railroad to expect the unexpected and adapt accordingly. CSX and NS have shown industry-leading operational performance, with NS recovering quickly from various disruptions.
These improvements have allowed railroads to capture more freight volume, signaling a potential growth trend. A slight 0.1% third-quarter gain in domestic market share may be the beginning of a trend, as analysts suggest. However, there have been similar upticks in the past that amounted to "head fakes" amid flat volumes, so it remains to be seen if this growth is sustainable.
Railroads' investments in infrastructure and technology have also contributed to enhanced service and resiliency. Strategic investments in infrastructure, such as BNSF's focus on improving yard efficiency, have led to significant improvements. Additionally, investments in technology, like Norfolk Southern's use of mathematical optimization to assess and improve resilience, have played a crucial role.
Partnerships and collaborations with other transportation providers and stakeholders have further strengthened railroads' position. CMAC's work with Eurostar has enabled better disruption management and pre- and post-shift travel support for traincrew, boosting overall service reliability. Air Canada's expansion of through-ticketing to railways has offered customers more travel options, further strengthening the rail industry's position.
As railroads continue to improve service and resiliency, they are well-positioned to capture more freight volume and grow in the coming years. By maintaining a focus on operational excellence, strategic investments, and partnerships, railroads can solidify their role as a critical component of the transportation ecosystem. Investors should keep a close eye on this sector, as the potential for growth and steady performance makes it an attractive option for a balanced portfolio.
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