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
meeting Saturday
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.
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.
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
projects 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.
of $3.57 billion in network infrastructure
projects 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 National, Canadian Pacific, Union Pacific, CSX, Norfolk Southern and Kansas City Southern.
suggest BNSF may eventually follow Canadian National, Canadian Pacific, Union Pacific, CSX, Norfolk 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.
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
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
