29 replies to this topic

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Trains News Wire

 

Activist investor group would put Norfolk Southern back on PSR path, reduce operating ratio to 57%

 

By Bill Stephens | March 26, 2024

 

Hump yards, low-margin traffic would be in the crosshairs of operations makeover under proposed CEO, chief operating officer changes

 

CLEVELAND — An activist investor group says its proposed Norfolk Southern management team would improve the railroad’s operations, service, and profitability by jettisoning CEO Alan Shaw’s resilience strategy and adopting the low-cost Precision Scheduled Railroading operating model.

 

In a letter to shareholders today, Ancora Holdings says its plan for NS would cut costs, focus on the most profitable merchandise traffic, and produce a 57% operating ratio within three years. That would be a 10.4-point improvement over Norfolk Southern’s 2023 operating ratio.

 

Ancora aims to get a majority slate on the NS board at the railroad’s May 9 annual shareholder meeting.  . . .

 

 

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Trains News Wire

 

Norfolk Southern prunes intermodal network and puts focus on operating ratio improvement

 

By Bill Stephens | April 5, 2024

 

The moves, announced on Thursday, were made in response to pressure from activist investor Ancora Holdings, which wants to oust the NS management team

 

ATLANTA – Norfolk Southern has pruned its intermodal network and made the operating ratio a key component of its executive compensation plans, the railroad announced yesterday amid its proxy battle with activist investor Ancora Holdings.

 

NS has eliminated 53 low-volume intermodal lanes — or 15% of its intermodal network — that had limited growth prospects. The railroad did not say how much volume would be lost as a result.

 

“A comprehensive review and optimization of the Intermodal network has eliminated lanes that do not have the density to meet productivity targets,” the railroad said. 

 

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NS reports that in the two weeks since hiring Canadian Pacific Kansas City executive John Orr as chief operating officer, the average train speed for its merchandise network is up 8%, while terminal dwell is down by 8%, and the number of active trains is also down by 8%.

 

 

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Trains News Wire

 

Norfolk Southern customers say activist investor’s short-term strategy would hurt service

 

By Bill Stephens | April 4, 2024

 

Shippers say they would pull traffic away from Norfolk Southern if Ancora Holdings wins proxy battle

 

LITTLE ROCK, Ark. — A vast majority of Norfolk Southern customers believe an activist investor’s plans for the railroad would worsen service and prompt them to shift some of their freight to truck or rival CSX, according to a Stephens, Inc. shipper survey released today.

 

The Arkansas-based investment bank found that 91% of shippers believe that Ancora Holdings’ strategy – which includes focusing on the most profitable traffic and reducing the railroad’s operating ratio to 60% within 14 months and to 57% within three years – would hurt Norfolk Southern’s service.

 

None said Ancora’s plan would improve NS operations. 

 

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“We have seen solid improvement with NS service over the past two years, for both carload and intermodal,” one shipper said. “After reviewing the plan by the activist, I am convinced it is a short-term attempt to squeeze cash out of the NS network.”

 

Said another: “I have been through this with the other railroads, and it is a complete disaster. Rates go up. Service goes down.”

 

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Related:  Report urges railroad growth strategies to regain lost freight

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Trains News Wire

 

Ancora’s activist campaign gains support of Norfolk Southern investor (updated)

 

By Trains Staff | April 8, 2024

 

Ancora also amps up criticism of hiring of John Orr as NS chief operating officer

 

CLEVELAND – Ancora Holdings’ campaign to oust Norfolk Southern’s management team last week gained the support of New York investment management firm Neuberger Berman, which said it has concerns about the railroad’s operations, strategy, safety, and service.

 

“We believe a change in management and refreshment of the board … are warranted and could stimulate improved operations and thus equity performance,” Neuberger Berman said in a statement.

 

Separately, Ancora issued a letter to NS shareholders last week that increased its criticism of the railroad’s decision to hire Canadian Pacific Kansas City executive John Orr as chief operating officer.

 

 

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Trains News Wire

 

Activist investor’s Norfolk Southern CEO candidate touts his UPS experience   

 

By Bill Stephens | April 11, 2024

 

Jim Barber Jr. sees similarities in moving packages and hauling freight, while proposed Chief Operating Officer Jamie Boychuk promises not to repeat the mistakes made during the implementation of Precision Scheduled Railroading at CSX

 

Former UPS executive Jim Barber Jr., an activist investor’s candidate to replace Norfolk Southern CEO Alan Shaw, says his experience at the parcel giant is directly applicable to a railroad.

 

UPS’s package network relies on the very same principles as the low-cost Precision Scheduled Railroading operating model that Ancora Holdings wants to fully implement at NS, Barber said on a webcast with investors today.

 

“The network UPS runs is a scheduled network. It’s the exact same theory as PSR,” Barber says. “You run the same routes every day the same way in a balanced network, you gain the efficiencies. Terms like ‘blocking’ and ‘switching’ in rail are ‘handles’ and ‘pieces per trailer’ at UPS. Intermodal is ‘bypass’ in UPS lingo. Service is service.”

 

 

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The Weirton Daily Times, Steubenville, OH 4/13/24

 

Proxy battle for Norfolk Southern control heats up

 

EAST PALESTINE — As revitalization and remediation efforts continue in East Palestine in the wake of last year’s Norfolk Southern derailment, so does the setting of the stage for an attempted company takeover at the Norfolk Southern shareholder meeting which is set for May 9.

 

An activist investor group led by Ancora Holdings and the embattled board of the railroad are now months into a proxy battle which began in January when the Ohio-based group took a $1 billion stake in the railroad and then began a bid to oust current NS CEO Alan Shaw by nominating new majority directors. Those nominations included transportation network leader Jim Barber Jr. as chief executive officer and lifelong railroad operator Jamie Boychuk as chief operating officer. Former Gov. John Kasich was also among the nominees. On April 5, Ancora sent a letter it sent to its fellow shareholders, taking aim at Norfolk Southern’s appointment of John Orr last month as the company’s executive vice president and chief operating officer, which was effective immediately.

 

Orr was lauded by NS when announced as the CCO. The railroad noted his “turnaround of Canadian Pacific Kansas City’s Mexico operations” as well as for his “execution of Kansas City Southern’s service-focused scheduled railroading initiatives” and the role he played in the “improvements in Canadian National Railway’s safety and operational performance.”

 

Ancora wasn’t as impressed with Orr’s resume.

 

 

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Trains News Wire

 

Activist investor’s chief operating officer candidate would strip Norfolk Southern ‘down to the studs’

 

By Bill Stephens | April 15, 2024

 

Former CSX operations boss Jamie Boychuk says NS needs a complete overhaul and that tweaking the operating plan won’t produce meaningful results

 

Jamie Boychuk, the activist investor candidate aiming to lead operations at Norfolk Southern, says improvements the railroad has made in recent weeks under new Chief Operating Officer John Orr — like increasing train velocity, reducing dwell, and removing 75 locomotives from active service — are low-hanging fruit that will help reduce the operating ratio by a point or two.

 

“What really needs to be done there, though, is we got to strip this thing down to the studs — and that’s the difference,” Boychuk told investors on a webcast today. “What our plan is, our plan is to really take it down to the studs. It’s got great, great bones and a good foundation as a franchise, as a railroad, but it needs to be redesigned.”

 

 

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Trains News Wire

 

AFL-CIO urges Norfolk Southern shareholders to vote against activist investor’s proposals

 

By Bill Stephens | April 16, 2024

 

The labor organization raised concerns about service, safety, and job losses should Ancora Holdings win its proxy contest

 

Norfolk Southern AC44C6M No. 4693 sports rail labor union logos on its long hood. NS

 

WASHINGTON — The AFL-CIO today became the latest organization to oppose an activist investor’s bid to gain control of Norfolk Southern.

 

“In our view, Ancora’s business plan to reduce Norfolk Southern’s operating ratio while improving safety and service is not realistic. Railway labor unions, shippers, and federal regulators have warned that Ancora’s plans may jeopardize the safety and service improvements that Norfolk Southern has made since the 2023 derailment in East Palestine, Ohio,” the union coalition wrote in a letter to NS shareholders today.

 

 

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Trains News Wire

 

Norfolk Southern questions operational data behind activist investor plan

 

By Bill Stephens | April 22, 2024

 

Ancora says it has high conviction in its plan for NS and stands by the numbers and forecasts in its investor presentation

 

Norfolk Southern says that activist investor Ancora Holdings’ detailed plan for the railroad, released last week in a 193-page presentation, contains misleading operational data and vastly overstated cost-savings projections.

 

Ancora says its proposed management team would reduce costs by $800 million through a full-blown implementation of the low-cost Precision Scheduled Railroading operating model at NS. In the activist investor’s crosshairs: The size of the NS active locomotive fleet, the number of freight cars online, the railroad’s fuel consumption rate, and its switching workload.

 

But due to faulty data and assumptions, Ancora’s projected savings might be as little as $400 million, Norfolk Southern said last week. And that means that Ancora — which like NS has said it won’t cut jobs — would not be able hit its initial 62% operating ratio target without furloughing 2,900 employees, NS said in a presentation to investors last week.

 

 

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Trains News Wire

 

Norfolk Southern details operations and service improvement progress and goals

 

By Bill Stephens | April 24, 2024

 

The railroad’s first quarter earnings were in line with preliminary financial results that NS announced on April 9 amid proxy battle

 

ATLANTA — Norfolk Southern executives today outlined steps they will take over the next six months to improve operations and service while wringing out $250 million in costs.

 

NS is under pressure to show improvements amid a proxy battle with activist investor Ancora Holdings, which has been critical of the railroad’s lagging financial and operational performance.

 

 

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