Navis Rail was pleased to be a silver sponsor, for the third consecutive year, of the annual RailTrends Conference on November 19th and 20th of 2020. RailTrends is considered by many to be the most important freight rail industry event in North America, where all of the Class Is are represented by one or more members of their executive management team. Due to the pandemic, this year’s event was held via Zoom.
Key speakers included Jean-Jacques Ruest, CEO of Canadian National, Keith Creel, CEO of Canadian Pacific, Michael Miller President, North America, Genesee & Wyoming Inc. and Michael Walczak, Vice President Network Planning and Treasurer for the Kansas City Southern. RailTrends also honored James Foote, CEO of CSX, with the RailTrends 2020 Rail Innovator award.
The RailTrends team did a great job of running the event, given the potential limitations of a Zoom format. The impacts of the global pandemic, recession and recovery were the primary issues discussed by the speakers and panels. However, there were more than a few good presentations about the direction and future of the rail freight business in North America. Comments on service levels, visibility and consistency were repeated frequently.
This was the first RailTrends in which I heard more than several speakers discuss Environmental, Social, and Governance (ESG) issues. Beth Whited, Executive Vice President & Chief Human Resource Officer of Union Pacific, highlighted this with a very good presentation on “More Than Just Trendy; ESG is a must.” During the talk, she noted that the rail industry is a natural environment for leadership in ESG, since rail moves 40% of long-haul freight in the U.S., but is responsible for only 2% of transportation-related emissions.
Other conference highlights included:
- Mike McClellan, Vice President of Strategy at Norfolk Southern, chaired a talk on the RailPulse initiative. The objective of RailPulse is to upgrade all rail cars to GPS and other new tracking, to give rail the type of visibility seen in trucking and package delivery. The intent is to be open sourced on the technology and have multiple vendors on a common standard. This project currently includes Norfolk Southern, G&W, GATX, Watco, Trinity rail and others. They intend to eventually include all Class Is and railcar fleet owners.
- Mike Walczak of Kansas City Southern focused on the cross-border growth at KCS. He stated that PSR is working for them with a 15% reduction in train starts and a 15% growth in train length. He also noted that over 50% of northbound Mexican traffic is intermodal.
- Oliver Wyman gave a well-researched talk on the modal competition. Adrian Bailey, a Partner for OW, gave the presentation in which she spoke about the 50% of route ton-miles (RTM) that are up for grabs by either truck or rail (not naturally locked into either mode). She also noted that PSR has not done much for service, transit times or reliability.
- Larry Gross, one of the nation’s top experts in intermodal, said that the recent boom in intermodal traffic is unprecedented. Most of the increase came over Southern California ports, which is the quickest way to replenish inventories in the east. He feels the boom will continue through Chinese New Year, and maybe longer. He also said that PSR has not really produced secular rail volume growth overall.
- Alan Shaw, Chief Marketing Officer at Norfolk Southern, gave an excellent talk. He projects that due to Covid19, companies will now keep larger inventories to prevent stockouts. NS clients want consistency and more visibility. In the US, online sales growth for retail will exceed 18% this year and warehouses are replacing factories all over the east. Consumer-oriented, rather than industrial, is the future of IM rail.
- J. J. Reust, CEO of CN, spoke about the shift from PSR to Digitized Scheduled Railroading (DSR), focused on growth and customer service. The DSR label might be unique to CN, but all carriers spoke about PSR 2.0 – a turn towards growth.
Based on the presentations and discussions, I feel that the Rail community in North America is up to the challenges of the pandemic and the volatility in freight volume. We will all be looking forward to the RailTrends event in 2021, where we hope to once again gather in New York City as in past years