Norfolk Southern admits that its rail network is congested, particularly for international intermodal and automotive products services. But the railroad hopes that aggressive efforts to hire additional employees will address the capacity constraints, NS President Alan Shaw said at the Citi industrial tech and mobility conference this week.
“We are going to get this fixed. We’re going to get the resources right. We’re going to get the plan right, and then we’re going to be able to grow efficiently and take advantage of what’s there in the market,” Shaw said.
To boost capacity, NS has streamlined hiring, including collapsing the timeline for preemployment screening. The company has also increased trainee pay and hiring and retention bonuses, Shaw said.
NS said last week that it is offering starting bonuses of up to $5,000 for conductor trainees in priority locations and $2,500 for other locations. Priority locations include Binghamton and Buffalo, New York; Cincinnati; Louisville, Kentucky; Manassas and Roanoke, Virginia; Harrisburg and Conway, Pennsylvania; Birmingham and Sheffield, Alabama; Chattanooga, Tennessee; and Linwood, North Carolina. NS also announced recent changes at the executive level, available here and here.
While NS’ network is “generally tight just about everywhere,” according to Shaw, “not all crew districts” are in deficit, said CFO Mark George.
“Where we really need the [volume] lift is in intermodal, automotive and in our industrial products network,” Shaw said, noting that NS moved lower volumes at the start of the year and is “not delivering the capacity we need to the market.”
However, volumes of export coal from central and northern Appalachia to the Lamberts Point coal terminal in Norfolk, Virginia, have “done well,” Shaw said.
His comments come as a number of ports on the East Coast are seeing higher dwell times, including the Port of Charleston, South Carolina, which NS serves.
A lot of the steamship lines that NS (NYSE: NSC) works with aren’t offering inland port intermodal moves right now, leaving it up to beneficial cargo owners to pick up the containers at the dock, Shaw said. As drayage capacity continues to improve, that could help unwind congestion in the second quarter, according to Shaw. He also noted that NS is having issues with equipment turns and the railroad needs to ramp up its velocity.
In a Monday operational update, vessel operator Hapag-Lloyd confirmed the delays at the Port of Charleston, noting that inland dwell times at the port were high while export loads are experiencing limited trucking capacity. The number of vessels waiting offshore at various East Coast ports has also been growing.
“Import dwell time remains [the] biggest issue for terminal capacity. The port is urging customers to pick up import loads ASAP to assist with space at the terminals,” Hapag-Lloyd said, noting that the South Carolina Ports Authority is seeking to free up space at the Wando Welch Terminal and improve terminal productivity. The local NS ramp also faces severe congestion, with export loads sitting at the ramp awaiting truck power to transport to the marine terminals, Hapag-Lloyd said.
NS is continuing efforts to redesign its operating plan, which it mentioned during the company’s fourth-quarter 2021 earnings call in January. The plan, which calls for NS to run longer and heavier trains, will target all the markets NS serves but will focus first on intermodal, Shaw said.
Capital projects that NS plans to pursue this year include lengthening the sidings on portions of NS’ north-south routes, as well as investing in intermodal terminals and the merchandise network.