Dive Brief:
- Union Pacific will begin implementing precision scheduled railroading as an operating model in phases, starting Oct. 1, 2018, the railroad announced Monday.
- The decision is part of the railroad's Unified Plan 2020 strategy, which it unveiled in detail Wednesday during a webcast. The strategy will shift the company's focus from moving trains to moving cars, minimize car dwell and improve utilization of crews and assets.
- The railroad will first implement the plan on Union Pacific's "eastern North/South corridor" between Wisconsin and Texas. The entire network is expected to shift by 2020.
Dive Insight:
Union Pacific's embrace of the precision scheduled railroading model may mark the first time such a model has been enacted at a railroad not led by the late Hunter Harrison.
Moving cars, not trains, was a hallmark of Harrison's financial turnarounds of CSX, Canadian National and Canadian Pacific. The three railroads, under his leadership, decreased their operating ratio significantly. Union Pacific, it seems, is copying the strategy to help bolster its own finances.
"We are not currently meeting customer expectations," Lance Fritz, Union Pacific's chairman, president and CEO, said in a statement. The railroad seeks to achieve a 60% operating ratio by 2020, and eventually, a 55% ratio.
The Wall Street Journal reports the railroad will begin by creating more precise train schedules without closing rail yards or laying off workers — a tactic Harrison was known for.
During his tenure at CSX, Harrison was criticized for leading the company's transition to precision scheduled railroading too quickly, which resulted in low morale, confusion and delays within the company. Over time, however, criticisms abated as the railroad's financial metrics improved alongside its customer service.
Union Pacific's plan to mirror Harrison's railroading legacy is a victory for proponents of the model. If successful, the company would become the second U.S.-based Class I railroad to implement precision scheduled railroading.
It could also spur other U.S. railroads to do the same. Norfolk Southern is under pressure from investors to improve its own metrics, FreightWaves reports.
