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Norfolk Southern rolls out productivity, accountability plans

Norfolk Southern Corp. yesterday announced new initiatives the company says are designed to drive productivity and accountability.

The initiatives will empower recently appointed Chief Operating Officer John Orr to implement his scheduled railroading plans and accelerate operational improvements, NS President and CEO Alan Shaw said in a press release.

“This positions Norfolk Southern to become a more productive, resilient and efficient railroad, and drive long-term value creation,” Shaw said.

To accelerate operational performance, NS announced the following actions:
• Intermodal and automotive operations, previously under the marketing division, will now report to Orr;
• Near-term operational priorities will include a “safety blitz” to reinforce best practices; a Network Operations Center task force to assess asset utilization; a heat map to identify blockages and increase speed; and the classification of two hump yards as “high performance terminals” in order to improve dwell time;
• Low-volume intermodal lanes that don’t meet productivity targets will be removed; and
• An intermodal reservation system will be implemented.

In addition, NS announced changes in its compensation program that calls for adding operating ratio (OR) as a performance metric. The 2024 OR targets also align with the improvements needed to achieve the company’s long-term objectives of achieving a sub-60% OR in three to four years and delivering an industry-competitive OR, company officials said.

For more details of the initiatives NS announced yesterday, click here.

The announcement comes as NS is fighting activist investor Ancora Holdings Group LLC’s efforts to overhaul the NS board and replace Shaw as CEO. A major shareholder in NS, Ancora is pushing its own slate of board candidates for shareholders to consider at their annual meeting on May 9.

Meanwhile, Ancora today issued a letter to shareholders outlining why it believes the NS board exercised poor judgment in hiring Orr as COO. Ancora’s letter can be reviewed here.