Passport Research: PSR’s past and future

The modern operating strategies known collectively as precision scheduled railroading (PSR) have driven profound changes in the way railroads think about their workforces, revenue growth, assets, facilities, networks and customer service.

In this piece, we explore the past, present and future of PSR through two decades of railroad industry financial and operating data.

First, we define what we believe are the core features of PSR. Because railroads’ networks and customer portfolios differ, and their approaches to efficiency differ, we believe that a list of “family resemblances” and a discussion of how they interlock is a better introduction to PSR than a strict definition.

Then we look at the historical results of PSR implementation across all seven Class I rails in terms of earnings, carloadings, revenue and operating ratio. It becomes clear that the majority of earnings growth is due to a combination of rate increases and improved efficiency, with the lion’s share from improved efficiency.

Finally, we consider future opportunities for PSR. Which railroads have the most progress ahead? Which ones may struggle to maintain momentum? And, against the grain of PSR, which railroads are in the best position to grow volume?

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