LOMBARD, Ill. — Matthew Rose, the outgoing chairman of BNSF, told a crowd of 850 rail executives and shippers Wednesday that times are good for railroads, but continued success is in their own hands.
"The quality of the business has never been better. The returns have never been higher," said Rose at the Midwest Association of Rail Shippers (MARS) winter meeting in Lombard, Illinois, Wednesday. Rose will be leaving his post in April after 26 years with the railroad including 13 as CEO.
The railroads have been taking advantage of skyrocketing growth in the intermodal segment of their business after years of development work, explained Rose.
"We spent almost a decade trying to figure out how we can make intermodal really a big part of the railroad industry," he said. The last two weeks of September 2018 broke the all-time U.S. record for transporting the most intermodal units.
Rose said in terms of loads, intermodal is the only obvious growth area right now. But what could bring uncertainty to this bullish segment of the railroads' business is regulation, according to Rose.
"Right now the [Surface Transportation Board ] STB doesn’t even regulate intermodal," he said. As long as service runs smoothly, he expects that could remain the case, but if shippers become frustrated, railroads are likely to hear about it through the conduit of the STB.
"What do we gotta do? We gotta make sure we don’t screw it up... The number one way we’ll screw it up is service."
The controversy around service centered around the industry's transition to precision scheduled railroading (PSR) — a trend BNSF has chosen to sit out.
"People talk about 'it should result in better service' and I hope it does," said Rose, adding that the evidence of that is yet unseen in his opinion. A hallmark of PSR is what railroads call "rationalizing," which entails streamlining their networks — closing facilities and condensing routes to minimize stops, delays and dwell time.
"I think you run into potentially a lot of problems when you start rationalizing your network," said Rose. He warned the process of streamlining routes and loads could bring about further scrutiny from the STB that could potentially interrupt intermodal's heyday.
Though the railroads compare themselves to each other in terms of service, nearly every speaker at the MARS meeting acknowledged that their real competition is trucking.
"We’ve got to be able to achieve those same levels of productivity on the railroad or else our spread between the highway and the rail will get narrower and narrower, and we’ll lose traffic," said Rose.
