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Can Railroads Keep up with this Economy?

September 20, 2018 By Young Research

By Baxtar @ Shutterstock.com

In an attempt to keep up with the booming economy, Union Pacific is stealing some ideas from the late railroad pioneer, Hunter Harrison. Harrison transformed both major Canadian railroads and CSX before he passed away last year. Now Union Pacific, desperate to keep up with the booming economy by clearing backlogs on its rails is attempting to replicate Harrison’s successful methods. Paul Ziobro reports at The Wall Street Journal:

Union Pacific Corp. UNP +0.27% never hired Hunter Harrison to run its sprawling network. But with congestion clogging its system, the company is now adopting the late railroad maverick’s strategy to speed its freight trains.

The railroad, which until recently had been adding locomotives and crew, plans to use less equipment in a bid to improve its financial performance and service.

“By a number of measures, it’s evident that we have not made the kind of progress in improving our service and productivity performance in recent months,” Union Pacific Chief Executive Lance Fritz said Wednesday.

Union Pacific will shift its focus from moving trains to moving the individual railcars, with the end goal of providing a tighter delivery window for customers. It also will try to minimize downtime for railcars, reduce the number of times cars are sorted at facilities so-called hump yards and blend different types of cargo on one train.

The strategy being implemented at Union Pacific was espoused by Mr. Harrison, who was running rival CSX Corp. CSX -0.43% when he died last December. He honed the so-called precision scheduled railroading model over a five-decade career that included turning around two large Canadian railroads before he took the helm of Jacksonville, Fla.-based CSX last year.

During a nine-month stint at CSX where he battled undisclosed health issues, Mr. Harrison quickly idled hundreds of locomotives, eliminated thousands of jobs, closed facilities and overhauled train schedules.

Mr. Harrison’s plan was disruptive at each stop, resulting in thousands of layoffs and jolting changes to railroad schedules that led to complaints from shippers. But the strategy drastically cut costs, resulted in faster train times and lifted stock prices.

Read more here.

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