I think the problem here is slightly different: these bean counters are content with the level of profit they can get without working for it – or assuming more than BCG cash-cow levels of risk.
One notes that with that attitude it’ll be no surprise Wall Street only values UP around $220/share instead of $400…
I’ve yet to see someone who thinks refusal of profitable business in the OTR industry is a good thing. That only seems to be a railroad industry issue. But then again I’ve seen enough trucking companies go out of business from not keeping up with their actual costs of doing business.
Whether or not this new beef plant is successful who knows having one of the largest grocery stores as a customer will help it there for buying their output. It sounds like Walmart is doing this to get more integration with their supply chain.
My impression of folks in the accounting component of business is they primarily seek to control and reduce the impact of cost centers rather than grow the revenue stream because the latter is more difficult to measure and predict.
Sorta kinda related : ups and Amazon.
That’s pretty rude.
My part of the Great Plains has a lot of packing plants, and I don’t think any of them ship meat by rail anymore. I’m not sure of that, though.
Ranting? He (Ken)just suggested a revenue stream. Disagreeing with someone is not ranting.
Telling someone where he can go is rude, specifically passive-aggressive behavior.
Three groups. Am I wrong? As Charlie said, Accounting * only provides data to simply SHOW how much it costs to do this, that or yet another way of doing business.
*Don’t call them bean counters, (I have also, bad). They only ADVISE with data.
High level people in “the corner office” ($$$$$) make the decisions, supposedly with discernment. Just becauses this costs more (avoid) or this is the cheapest (the way to go) is not wise management decision making.
On the other hand the third group is marketing. They go out and get business. Sadly with all their work, it goes to the corner office (where it might never get looked at) Probably this group is the most demoralized. They work, do their job, and new business gets nixed by “the corner office”. And when accounting shows the cheapest way to go, accounting does not make the decision to go that way. Guess who does? That’s why they make the $$$$$$$. endmrw0627251850
I bet they don’t have sales people that go out and look for business. At least not like they and every railroad once had. They have a website and toll-free number.
About 15 or 16 years ago, employees were asked to notify the railroad if they saw any potential business the railroad could get. It was after the big downturn around and after 2008. They have people to follow up on leads that come to them. People to follow up on something that may come to their attention through various sources. I doubt they have people making calls, by phone or in person, to businesses that aren’t already using rail.
I just remembered something that was said 5 or 10 years ago. It was the attitude of someone in UP management that, “UP was the Macy’s of railroads, BNSF was the Wal-Mart of railroads.” It reflected that one is for an upscale clientele, that they could be more selective in who they dealt with. The other was the every man’s option, that did business with anyone.
I thought it was unusual that they picked that analogy. At the time Macy’s was in financial distress while Wal-Mart was, well, Wal-Mart. One of the wealthiest retailers ever.
Jeff
You misread my post. Greyhounds has called out Balt for not responding to his bait at the same time he did me. Balt talks about his experiences, which I enjoy and appreciate. Greyhounds just complains.
What do you want to know about my background. For starters, I had 28 years of logistics/warehousing/trucking experience.
If you found what Greyhounds said to be at variance with your opinions, you should directly respond to that rather than just complain about him.
There’s meat that goes by rail car, but it’s the hard frozen kind. Most meat going by highway is kept closer to freezing. Often that meat will be further processed at the customer’s facility.
There’s meat that goes by rail in containers that is for export through the west coast ports. Some days seem to be heavier than others. Still, meat by rail, by rail car or TOFC/COFC, is a drop in the bucket to all highway moves.
Deregulation of both trucking and railroads changed the landscape. Before dereg, and except for some lightly or non-regulated agricultural commodities, trucking companies were limited to where they could operate. Many operated in the same fashion and the same structure of unionization, wages and benefits. Dereg did away with artificial barriers. Trucking companies could go anywhere, barriers to entry were removed. The truck competion, already formidable became fierce.
Meanwhile, rail dereg helped turn railroads into wholesalers of transportation instead of retailers. They focused on bulk commodity unit trains and intermodal trains. Car load, especially boxcar traffic, was thought to eventually become intermodal service. They didn’t forsee that moving loads from boxcars to trailers were more likely to go by highway for the entire trip. Most such freight moves relatively short distances that isn’t really conducive for rail intermodal moves.
No matter, they still had coal and long distance intermodal. Until coal fell out of favor. Now some of that car load traffic is looking better. Except that current Wall Street demands makes such growth next to impossible, that is, “Don’t spend money to make more money.”
Another, maybe more important impediment, is that since class ones became less relevant to retail type service, the physical landscape has changed. Many old shippers and receivers are gone. Most new ones aren’t on rail lines. Even when new facilities are planned, even in locations with active rail lines, truck transportation is all that is considered.
Railroads say they want to grow. They know they need to grow. Other than going after low haning fruit on a more and more picked over tree, they have no real clue on how to grow.
Jeff
I am not a railfan. I am a Retired Railroader. With 51+ years experience in a variety of job titles and locations involved with the 1st mile, line of road movement, last mile as well as seeing that the company bills the appropriate party for the services the company provides. My experiences went from the manual ways of keeping track of the operation to the computerized methods of doing so. It went from 15 foot wide Train Dispatcher train sheets to the operation of Computer Aided Dispatching Systems. I worked AT and WITH the Business of Railroading. I was never in the marketing department though I car pooled for a couple of years with one of the company’s marketing executives, and learned a small bit about that operation from him. I enjoyed what I did working or would not have lasted 51+ years.
As the crow flies I am less than a mile and 200 feet above CSX’s Old Main Line Subdivision and routinely hear trains blowing for the road crossings at Gaither Road and Main Street Sykesville. I have been retired since just before the PSR contagion struck CSX and my former office was moved back to Jacksonville less than a year after I retired.
In most large organizations, i.e. business, education, government, etc., accountants play a predominant role in financial accounting, management accounting, and internal audit.
Financial accountants keep the books and prepare the financial statements. Management accountants perform cost accounting studies. Internal auditors evaluate the organization’s policies, procedures, and practices (internal controls).
The managers of all three activities usually report to the CFO. They serve in an advisory capacity. They do not drive strategy, tactics, etc. The CFO is almost always a member of the executive committee. His/her impact on the committee’s decisions is a function of personal power, position power, etc.
Accountants, financial analysts, corporate planners, etc. are staff. They provide executive management with information needed to make key decisions, i.e. organizational financing, estimated returns for product/services, mergers, acquisitions, etc. They do not make the decisions; executive management makes them.
Most modern organizations, which probably includes the UP, use sophisticated financial models to determine the present value of the cash flows associated with products/services, present or future, and how to risk rank them. The end game model is not difficult to understand. Coming up with reasonable estimates of future cash flows that can be discounted can be mind boggling, albeit fun for people who thrive on mathematics, finance and probabilities.
To know whether UP is missing an opportunity in North Platte, compared to other opportunities, one would need access to its financial analysis models, books, etc.
You just hit the nail on the head.
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Just remember this about Jb Hunt. How Santa Fe got them as a customer was this Michael Haverty literally invited Mr Hunt himself onto the business car tacked on the back of the 199 train. Inside the last trailer was a complete table set for a fine dining meal. He wined and dined Hunt all the way across America and when they got to LA showed the table was still set the same as in Chicago.
That’s why the one of the largest truckload carriers of the 90s became the biggest intermodal shipper in the USA.
They know how. But it involves changing out the old guard that’s been in place in the past 30+ years. And they aren’t giving up yet. I’ve said it before - the same small group of execs have been getting passed around the various RRs for way too long. And when an outsider with “new” (post 1875 views) gets hired - they always get pushed out. AT least on our side of the equation.
As far as marketing - how much of this is the RR, and how much are the customers? Customer xyz says they want rail service, but their top level people may balk at the initial cost. If I had a dollar every time I heard a customer wanted to put in a siding, or rehab a siding, but nothing ever happens - I’d have a few bucks. Or a customer does get a siding with promises of 30 cars a week that turns into 3 a month… I’d have a few more. I’d even have a nickel or 2 for customers that put in a brand new siding to never have it used.
Now for those that have sidings: I think some customers also expect the RRs to be like trucks - where they can sit around and wait hours before the blue flags are dropped so they can go in and spot or pull cars. Sorry - but with x number of customers on the line that day, that level of service is going to call for dedicated crews and a lot more money. Or they play the release game, releasing cars before they are ready. Or they want multiple switching moves and dispute the charges.
I think that’s the some of the disconnect between sales and operations that causes issues.
Now here’s a question for the marketing side:
Customer X wants to build a terminal and ship 25 cars a day and even wants cars pulled and respotted halfway through the day. A place like this would require another crew and engine. The local railyard that services them doesn’t have that in their budget.
Does marketing ever try to fight for additional resources or just lets transportation try to figure it out?