Saving what can be saved from innovative, but flawed precision scheduled railroading in the US and Canada
 The bloom is off the rose for precision scheduled railroading (PSR). In the last year, more expert voices have been added to the mounting criticism, questioning the practice's overall efficacy, however much it is beloved by accountants.
PSR became something of a fashionable enthusiasm, if not a fad, in North American executive railway suites as the mercurial career of the late E Hunter Harrison soared high in the firmament.
Harrison first introduced his own conception of PSR at the Illinois Central, where he became CEO in 1993, then implemented it at Canadian National as CEO in 1998. After leaving CN, he applied it to the Canadian Pacific as CEO in 2012 and again as CEO to CSX Transportation n 2017 eight months before he died.
Specifically, PSR shifts the focus from older practices, such as unit trains, hub and spoke operations and individual car switching at hump yards to point-to-point movements in simplified networks, operating freights on fixed schedules like passenger trains.
As a technique it produces cost-savings, popular with accountants because it also reduces headcount and payroll. Rather than moving freight as and when it wants to be moved, there is instead strict adherence to rigid scheduling.
The quality of rail service PSR produced came into question when US west coast ports began losing market share to east and Gulf Coast ports. West coast shippers depend on fast, reliable and cost competitive service from the Union Pacific and the Burlington Northern Santa Fe (BNSF) to deliver freight to and from Chicago and other Midwest points.
Doubts were also raised by the regulatory Surface Transportation Board (STB) and the Federal Railway Administration (FRA). They sent letters to the railways, expressing concern about the quality of the infrastructure and disruptions in service.
Said one letter: "We have been made aware of service issues, including missed industrial switches and excessively late or annulled trains due to crew availability issues. As you know, with both increasing intermodal and carload volumes and a robust harvest, railroad employee availability, together with sufficient equipment resourcing, is essential for the nation's economic recovery. Given the challenges related to changing demand patterns and operating conditions, increased communication and transparency with rail shippers is especially important to ensure they have the information needed to plan their businesses and meet their own customers' needs."
Not surprisingly, trade unions do not share the enthusiasm PSR aroused in railway accounting departments. Jed Dodd, vice president Brotherhood of Maintenance of Way Employees Division - International Brotherhood of Teamsters (BMWED) said de-regulation of the railways, downsizing and the impact of PSR has undermined the infrastructure of the Class I railways at a time when they are also not doing enough about testing and protection of employees from the Covid virus.
"The railroads are doing very little to safeguard the health of their employees. We have had two deaths at the Union Pacific and this is related to a lack of tracing, which the railroads say they are doing," said Mr Dodd.
"Even worse," he said, "these workers can be spreading the virus from state to state as their work area might take them from Chicago to northern California. They might infect people at motels, gas stations and restaurants. All of this because the railroads don't want to invest in testing and tracing of their employees."
Not so, says Burlington Northern's PR man Ben Wilemon: "From the outset of the pandemic, we've had two main objectives: Protect the health of our employees and keep trains running. As the situation and environment around us has evolved, we have continued to evolve with it. We've grounded all of our decisions in CDC [Centres for Disease Control and Prevention] guidance and made adjustments to our policies and protocols to protect the health of our employees and the integrity of our operations."
Ditto, said the Union Pacific's PR woman Kristen South: "The Union Pacific has a robust Covid-19 response plan that focuses on employee safety and maintaining safe operations. We've increased cleanings and access to hand sanitiser, antimicrobial wipes and facial coverings; locomotives are sprayed with disinfecting solution during mechanical service stops; and we're encouraging social distancing by implementing alternative work locations. The Union Pacific also has a safety hotline that allows employees to raise specific Covid-related concerns. These policies and procedures are consistent with CDC and OSHA [Occupational Safety and Health Administration] guidelines."
But Teamster Dodd was adamant: "There is no doubt that the investments made by the Class I railroads including the BNSF and the UP have contributed to improved efficiencies and productivity on the US railroads. However, since de-regulation was enacted under the Staggers Act and following Presidential Emergency Board findings in the early 1990s, we have seen maintenance workers go from track jurisdiction of 150 miles from their homes to workers living in Chicago travelling to northern California to do track maintenance. This places a tremendous burden on the employee, reduces per employee costs but does not improve track maintenance. It makes it worse.
Continuing, he Dodd explained: "Precision Scheduled Railroading (PSR) was developed by a man named Hunter Harrison who brought these practices to the Canadian National Railway, which suffered service declines under his administration and the CN only recovered after he left.
"Today, the Union Pacific is a major practitioner of PSR with the result that costs have gone down but so has manning and maintenance. Over at BNSF, Warren Buffett's management is not emphatic in the use of PSR but they still practice a form we call PSR Lite," he said.
Mr Dodd said railways practice PSR "to target so-called wasteful spending in areas such as maintenance and repair and cut back employment of workers".
Shippers complain of demurrage charges arising from PSR's strict scheduling, often unfairly imposed, made too quickly. They also protest the costly hassle overturning false charges when it is the result of railway service failure.
CSX began strictly enforcing its demurrage and accessorial charges under then-CEO Mr Harrison in 2017. Like CSX, Norfolk Southern and Union Pacific have also raised the charges levied against shippers who don't load or unload freight cars quickly enough.
Said Grain Alliance spokesman Bruce Abbe: "Some feel PSR will be a boon for the railroads by improving efficiencies and lowering costs. Yet, it's been a boondoggle for many rail shippers so far over the last three years that it's been implemented by more class one railroads."
Several shippers said it was impossible to avoid demurrage charges when railways deliver cars in bunches on the same day.
Dow Chemical noted that it shipped nine cars in four shipments of one to four cars over a six-day span to its Norfolk Southern-served facility in Kankakee, Illinois. The goal was to match the pace of deliveries with the plant's capacity. But Norfolk Southern delivered all nine cars on the same day, triggering a congestion charge.
In other cases, shippers say such bunching of cars makes it impossible to load or unload them quickly enough to avoid demurrage charges when car free time has been reduced to 24 hours from 48.
Railway executives say the charges are there to encourage shippers to be on time. This, in turn, would make service more reliable. CSX, NS, and UP all told federal regulators that their service has improved since implementing PSR, pointing to reductions in dwell time, increase in train speeds, and of the number of cars online.
But there is a growing consensus that the "customer-is-always-wrong" PSR philosophy has had its time in the sun, but like its creator, the late E Hunter Harrison, it has seen its day. While undoubtedly aspects of it, can be kept alive, there is no way it can survive in the way that makes shippers servants of the railways. |
