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Post Info TOPIC: Matt Rose, BNSF critisizes PSR


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Matt Rose, BNSF critisizes PSR
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BNSF's Rose Critisism of PSR
The criticism BNSF Railway Executive Chairman Matt Rose leveled at the other Class I railroads regarding their Precision Scheduled Railroading operating plans has been greeted by silence.

None of the other five big systems each of which is running or shifting to an operating plan based on the late E. Hunter Harrisons principles of Precision Scheduled Railroading would comment on Roses statements.
Rose, speaking at a conference on Monday, said the sweep of PSR across the Class I industry will pose a regulatory risk as railroads opt to drop service to certain customers and locations. Rose also said that PSR does not result in service improvements.
Rose said that railroads have the right to differentiate pricing. What they dont have, he says, is the right to simply walk away from certain markets. CSX Transportation, Norfolk Southern, and Union Pacific have ended service in hundreds of low-volume intermodal lanes in the past few months.
Both UP and NS, under pressure from Wall Street to boost profitability and cut costs as CSX has done, last fall began implementing their own versions of PSR. UP and NS executives say they are aiming for a slow rollout of operational changes in an effort to minimize the potential for service disruptions.
The three big systems that Harrison once led have the industrys lowest operating ratios and are the most profitable Class I railroads.
BNSFs philosophy is that customer service drives profitability, the virtuous cycle of reinvestment, and provides the railway with a social license to operate. This goes against the grain of the current trend at most of the publicly traded Class I railroads, which is to reward investors as quickly as possible through a combination of share buybacks, cost-cutting, rate increases, and a focus on the operating ratio.
CN and CSX declined to comment. UP said it couldnt comment because it was in its pre-quarterly earnings quiet period. CP and NS representatives did not return emails from Trains News Wire seeking comment.



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The biggest difference between BNSF, and the rest of the publicly traded Class-I railroads is that BNSF is 100% privately owned. Thus there is no pressure to buy back shares, nor pay a dividend to share holders.

Since Warren Buffett, of Berkshire Hathaway bought the railroad, as part of their class B shares, B-H earns only for the fund. Owners of the fund(s) of B-H earn their investment back through price increases of either A, or B shares when they 'take profits' by selling shares via NYSE.

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