Intermodal shippers moving goods through Houston are facing delays, with Kansas City Southern Railway and Union Pacific Railroad acknowledging congestion and working to address at the rail hub also served by BNSF Railway.
During first-quarter earnings calls, KCS and UP identified Houston as key to fixing their networks through precision scheduled railroading (PSR). The operating model focused on injecting speed and efficiencies into networks hinges on running fewer but longer train sets.
It would be like an airline deciding instead of running 10 half-empty flights, it offers five completely full flights. Every seat has a paying customer, or in the case of a railroad, a load on each railcar. Railroads, unlike airlines, have a finite amount of track rather than a vast horizon. BNSF Railway, KCS, and UP share track near Houston so PSR is supposed to alleviate the congestion.
UP has the largest footprint with two terminals about six miles apart in northeast Houston. Lance Fritz, UP’s CEO, said it’s a complex market and a challenge for the rails historically. He added that PSR is helping because crews are handling cars less frequently and therefore providing better service.
“We’re not the only ones [here]. We have to rely on smooth coordination with other railroads in the area, which we work on every day and we’re getting a little better every day,” Fritz said on a Thursday earnings call.
UP’s terminal dwells have significantly improved in 2019, dropping from 39.1 hours to 29.5 hours year over year in the first quarter, according to the Association of American Railroads (AAR). However, BNSF’s performance deteriorated in the first quarter as terminal dwells rose from 27.1 hours to 28.9 hours year over year. KCS doesn’t report Houston’s terminal dwell to AAR, but it mentioned Houston 15 times on its Apr. 17 earnings call.
Sameh Fahmy, executive vice president of KCS’s precision railroading efforts, said Houston is becoming “a bit like Chicago," in that inefficiencies can harm the entire network. He called Houston his biggest challenge because increasing train velocity benefits shippers in other markets to the west and north since congestion leads to trains bunching elsewhere.
“When you have pinch points where the grid is very tight and the capacity is limited, one of the things you want to do is to reduce the number of trains as much as possible. So you consolidate and you combine trains because the slots for every train are limited,” Fahmy said.
KCS is also beginning to explore shorter routes around Houston to assist UP and BNSF.
“They help the other railroads because they can take us out of the grid and reduce the congestion,” Fahmy said. “it's a nice challenge to have because it is something that has been hindering KCS for a long, long time.”
Rail shippers, both intermodal and non-intermodal, will benefit if a unified solution can be implemented by UP’s Jim Vena and KCS’s Fahmy, both PSR veterans who worked together at Canadian National Railway under the late E. Hunter Harrison, who is credited with refining the operating model.
Contact Ari Ashe at email@example.com and follow him on Twitter: @arijashe.