testing the hypothesis bill schafer director, strategic planning march 21, 2007 can rail reduce...
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Testing the Hypothesis
Testing the Hypothesis
Bill SchaferBill Schafer
Director, Strategic PlanningDirector, Strategic Planning
March 21, 2007March 21, 2007
Can Rail Reduce Congestion?
Can Rail Reduce Congestion?
Discussion PointsDiscussion Points
How Rail Intermodal Works TodayHow Rail Intermodal Works Today
Where It WorksWhere It Works
Where It Doesn’tWhere It Doesn’t
Where It ShouldWhere It Should
How NS Is Testing the HypothesisHow NS Is Testing the Hypothesis
ConclusionsConclusions
Intermodal TodayIntermodal Today
> 500 Mile Hauls> 500 Mile Hauls
Once a Day FrequencyOnce a Day Frequency
Average Speed ~ 25 mphAverage Speed ~ 25 mph
Reliability ~ 60-70%Reliability ~ 60-70%
~ 10% Annual Volume Growth~ 10% Annual Volume Growth
Intermodal TodayIntermodal Today
Customer-FocusedCustomer-Focused Organic GrowthOrganic Growth Internally FundedInternally Funded Benefits to Customers, Employees, OwnersBenefits to Customers, Employees, Owners Discipline of the MarketplaceDiscipline of the Marketplace
No Incentive to Reduce Highway CongestionNo Incentive to Reduce Highway Congestion Better Freight Replaces Good FreightBetter Freight Replaces Good Freight Capital Improvements Enhance Shareholder Capital Improvements Enhance Shareholder
ValueValue
Intermodal Not Intermodal Not Keeping Up With Keeping Up With
GrowthGrowth
Key QuestionKey Question
Can Rail Reduce Truck Can Rail Reduce Truck Congestion?Congestion?If So, How Much?If So, How Much?
What is Needed?What is Needed?
How Much Will It Cost?How Much Will It Cost?
Where Will Money Come From?Where Will Money Come From?
Where It’s Already Where It’s Already HappeningHappening
Chicago-CaliforniaChicago-California As Much As 80% Penetration in Some As Much As 80% Penetration in Some
LanesLanes BNSF Betting the FarmBNSF Betting the Farm
New York-ChicagoNew York-Chicago ~ 30% Penetration~ 30% Penetration NS and CSXT Have High Capacity RoutesNS and CSXT Have High Capacity Routes
Medium- to Long-Hauls, >750 MilesMedium- to Long-Hauls, >750 Miles
High VolumesHigh Volumes
Where It Isn’t Where It Isn’t HappeningHappening
Shorter Hauls, <750 MilesShorter Hauls, <750 Miles
Fragmented Origin-Destination Fragmented Origin-Destination Flows Flows
Where It Could Where It Could HappenHappen
500 – 1500 Mile Hauls500 – 1500 Mile Hauls
Neither Truck Nor Rail Has Clear Neither Truck Nor Rail Has Clear AdvantageAdvantage
How NS Is Testing How NS Is Testing The HypothesisThe Hypothesis
““Intermodal Expressway”Intermodal Expressway” (Working Name)(Working Name)
In-House StudyIn-House Study
Network of New Intermodal ServicesNetwork of New Intermodal Services
Between Northeast and TexasBetween Northeast and Texas
Target Market: Dry VansTarget Market: Dry Vans
Byproduct: Effect on I-81 CongestionByproduct: Effect on I-81 Congestion Virginia DOTVirginia DOT Virginia DRPTVirginia DRPT
Goal: Better ServiceGoal: Better Service
Faster Average SpeedsFaster Average Speeds
Higher FrequencyHigher Frequency
Greater Levels of ReliabilityGreater Levels of Reliability
Goal: Additional Goal: Additional Assets Assets
Track and StructuresTrack and Structures
TerminalsTerminals
EquipmentEquipment
PersonnelPersonnel
Goal: Additional Goal: Additional BenefitsBenefits
Public Public Highway UsersHighway Users Freight Shippers Freight Shippers
PrivatePrivate Norfolk SouthernNorfolk Southern Truck LinesTruck Lines
Goal: Public-Private Goal: Public-Private PartnershipPartnership
Heartland Corridor ExampleHeartland Corridor Example Federal Federal StateState LocalLocal RailroadRailroad
Next StepsNext Steps
Complete the StudyComplete the Study Train SimulationsTrain Simulations Cost of New ServicesCost of New Services
Identify Additional AssetsIdentify Additional Assets Identify Sources of FundingIdentify Sources of Funding Begin OutreachBegin Outreach
Federal-State-Local PartnersFederal-State-Local Partners Potential CustomersPotential Customers
ImplementImplement
3-Phase Analysis 3-Phase Analysis ApproachApproach
1. Preliminary Assessment of Feasibility
2. Detailed Analysis
Q: Do benefits justify the costs? Use traffic diversion and benefit models3. Decision-Making
Q: Is this project better than alternatives? Use benefit/cost and multi-criteria analysis
Q: Can rail help relieve congestion? Use simple sketch planning tools
ConclusionsConclusions
We Believe Rail Can Help With We Believe Rail Can Help With Highway CongestionHighway Congestion
Benefits Will Be Perceived ByBenefits Will Be Perceived By ShippersShippers ShareholdersShareholders Motoring PublicMotoring Public
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