Warren Buffett 'not above copying' other railroads on PSR

Dive Brief:
  • Warren Buffett left the door open for his railroad, BNSF, to adopt the tenets of precision-scheduled railroading (PSR) at his annual shareholders
    Saturday when asked if it's time for BNSF to adopt the PSR "playbook."
  • "We are not above copying anything that is successful ... If we think we can serve our customers well and get more efficient in the process we will adopt whatever we observe, but we don't have to do it today or tomorrow. But we do have to find something that gets at least equal and hopefully better customer satisfaction and that makes our railroad more efficient,” Buffett said to thousands of shareholders in the annual marathon meeting.  
  • BNSF is one of the few U.S. railroads that has not yet converted to PSR. At the end of 2018, BNSF had an operating ratio (OR) of 65.6%, lower than many railroads pre-PSR but significantly above the sub-60 OR most Class I railroads have reached or are working toward.
Dive Insight:
This openness to PSR is a change in attitude for the railroad that has, up to this point,seemed happy to watch the machinations of other railroads on the PSR path.

In January,BNSF's former chairman Matthew Rose, who retired last month, told the Midwest Association of Rail Shippers annual meeting the evidence in favor of PSR remains to be seen. 

BNSF is in the midst of $3.57 billion in network infrastructure projects to replace and maintain existing assets while other the railroads Buffett alluded to close yards and rationalize routes. Rose has often warned that badly-implemented PSR could bring unwanted attention from regulators to the industry if customer satisfaction goes low enough. 

But Buffett's comments suggest BNSF may eventually follow Canadian NationalCanadian PacificUnion PacificCSXNorfolk Southern and Kansas City Southern

"All those companies dramatically improved their profit margins and they have varying degrees of difficulty with customer service and the implementing of it," he said.

Buffett specifically named Union Pacific as a railroad he watches "very carefully," as BNSF's main competitor. "Union Pacific is doing a somewhat modified version," he said.
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