Ultimate magazine theme for WordPress.

Warren Buffett ‘not above copying’ other railroads on PSR

Dive Brief:
  • Warren Buffett left the door open for his
    railroad, BNSF, to adopt the tenets of precision-scheduled railroading
    (PSR) at his annual shareholders
    when asked if it’s time for BNSF to adopt the PSR “playbook.”
  • “We are not above copying anything that
    is successful … If we think we can serve our customers well and get more
    efficient in the process we will adopt whatever we observe, but we don’t
    have to do it today or tomorrow. But we do have to find something that
    gets at least equal and hopefully better customer satisfaction and that
    makes our railroad more efficient,” Buffett said to thousands of
    shareholders in the annual marathon meeting.  
  • BNSF is one of the few U.S. railroads that has
    not yet converted to PSR. At the end of 2018, BNSF had an operating ratio
    (OR) of 65.6%, lower than many railroads pre-PSR but significantly above
    the sub-60 OR most Class I railroads have reached or are working toward.
Dive Insight:
This openness to PSR is a
change in attitude for the railroad that has, up to this point,seemed happy to
watch the machinations of other railroads on the PSR path.

In January,BNSF’s former
chairman Matthew Rose, who retired last month, told the Midwest Association of
Rail Shippers
 annual meeting the evidence in favor of PSR
remains to be seen. 

BNSF is in the midst
of $3.57 billion in network infrastructure
 to replace and maintain existing assets while other
the railroads Buffett alluded to close yards and rationalize routes. Rose has
often warned that badly-implemented PSR could bring unwanted attention from
regulators to the industry if customer satisfaction goes low enough. 

But Buffett’s comments
suggest BNSF may eventually follow Canadian NationalCanadian PacificUnion PacificCSXNorfolk Southern and Kansas City Southern

“All those companies
dramatically improved their profit margins and they have varying degrees of
difficulty with customer service and the implementing of it,” he said.

Buffett specifically named
Union Pacific as a railroad he watches “very carefully,”
as BNSF’s main competitor. “Union Pacific is doing a somewhat
modified version,” he said.

Supply Chain Dive

Leave A Reply

Your email address will not be published.