<div class="phx-topic abstract-wrapper">If railroads want to succeed in a tough market, they must prioritize service, one of the few factors impacting the industry it can directly control. </div>

If railroads want to succeed in a tough market, they must prioritize service, one of the few factors impacting the industry it can directly control.

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<div class="phx-topic">For this entire century, I truly believed in my forecast powers when in retrospect the world was (seemingly) simpler. From 2001-2014, the “railroad renaissance” was in full bloom and the rails beat the market … every … single … year … of the century. The simple answer to just about every pertinent question was “up” or “more” or “better,” whether it be rail stocks, market share, price, capex, service levels, productivity or margin (OK, “operating ratio” and “down”). But then came last year, when a series of unforeseen or misunderstood events shook railroading to the core — an uneven economy with some real dead spots (steel, for instance), free-falling energy prices and all that has entailed for CBR and the shale/sand business (and to a lesser degree, competitiveness with trucks); the complete rout in the so-called war on coal, and the breaking of a 10-year trend of improving rail service levels. So what about 2016? We can only control what we can — it has surely been proved that demand planning is uncertain at best (tough in a world of competing time frames of investors and shippers and carriers, and one in which management must match imperfect short-term info and capital budgets tied to assets with lives of at least 30 years).So, what can the rails control? Three things:<ol><li>Service — the key to customer acceptance (I guess “happiness” is too much to ask.). The means reduced threats of reregulation and marketplace intervention (and less “need” for risky M&amp;A).</li><li>Service — the key to market share and overall volume growth, especially in a more consumer/industrial products world — and the key to continued pricing power.</li><li>Service — the key to improved productivity and further margin expansion (OR reduction).</li></ol>If railroads control what they can control (all together now: service!), they can restore the “renaissance” as well as the “grand bargain” with shippers, communities, regulators; reduce government and operational risk; and translate the new challenges such as growing the complex and competitive domestic intermodal product profitably, into opportunities. And make prognosis simpler once again.Anthony B. Hatch, Principal, ABH Consulting</div>

For this entire century, I truly believed in my forecast powers when in retrospect the world was (seemingly) simpler. From 2001-2014, the “railroad renaissance” was in full bloom and the rails beat the market … every … single … year … of the century. The simple answer to just about every pertinent question was “up” or “more” or “better,” whether it be rail stocks, market share, price, capex, service levels, productivity or margin (OK, “operating ratio” and “down”). But then came last year, when a series of unforeseen or misunderstood events shook railroading to the core — an uneven economy with some real dead spots (steel, for instance), free-falling energy prices and all that has entailed for CBR and the shale/sand business (and to a lesser degree, competitiveness with trucks); the complete rout in the so-called war on coal, and the breaking of a 10-year trend of improving rail service levels. So what about 2016? We can only control what we can — it has surely been proved that demand planning is uncertain at best (tough in a world of competing time frames of investors and shippers and carriers, and one in which management must match imperfect short-term info and capital budgets tied to assets with lives of at least 30 years). So, what can the rails control? Three things: Service — the key to customer acceptance (I guess “happiness” is too much to ask.). The means reduced threats of reregulation and marketplace intervention (and less “need” for risky M&A). Service — the key to market share and overall volume growth, especially in a more consumer/industrial products world — and the key to continued pricing power. Service — the key to improved productivity and further margin expansion (OR reduction). If railroads control what they can control (all together now: service!), they can restore the “renaissance” as well as the “grand bargain” with shippers, communities, regulators; reduce government and operational risk; and translate the new challenges such as growing the complex and competitive domestic intermodal product profitably, into opportunities. And make prognosis simpler once again. Anthony B. Hatch, Principal, ABH Consulting

<topic id="20acbb40-c5b6-4adc-807b-7b50502a7bc6"><title>Anthony B. Hatch, Principal, ABH Consulting</title><summary>If railroads want to succeed in a tough market, they must prioritize service, one of the few factors impacting the industry it can directly control. </summary><body>For this entire century, I truly believed in my forecast powers when in retrospect the world was (seemingly) simpler. From 2001-2014, the “railroad renaissance” was in full bloom and the rails beat the market … every … single … year … of the century. The simple answer to just about every pertinent question was “up” or “more” or “better,” whether it be rail stocks, market share, price, capex, service levels, productivity or margin (OK, “operating ratio” and “down”). But then came last year, when a series of unforeseen or misunderstood events shook railroading to the core — an uneven economy with some real dead spots (steel, for instance), free-falling energy prices and all that has entailed for CBR and the shale/sand business (and to a lesser degree, competitiveness with trucks); the complete rout in the so-called war on coal, and the breaking of a 10-year trend of improving rail service levels. So what about 2016? We can only control what we can — it has surely been proved that demand planning is uncertain at best (tough in a world of competing time frames of investors and shippers and carriers, and one in which management must match imperfect short-term info and capital budgets tied to assets with lives of at least 30 years).So, what can the rails control? Three things:<ol><li>Service — the key to customer acceptance (I guess “happiness” is too much to ask.). The means reduced threats of reregulation and marketplace intervention (and less “need” for risky M&amp;A).</li><li>Service — the key to market share and overall volume growth, especially in a more consumer/industrial products world — and the key to continued pricing power.</li><li>Service — the key to improved productivity and further margin expansion (OR reduction).</li></ol>If railroads control what they can control (all together now: service!), they can restore the “renaissance” as well as the “grand bargain” with shippers, communities, regulators; reduce government and operational risk; and translate the new challenges such as growing the complex and competitive domestic intermodal product profitably, into opportunities. And make prognosis simpler once again.Anthony B. Hatch, Principal, ABH Consulting</body></topic>