https://www.railwayage.com/freight/34968/?fbclid=IwAR2y2f17_yfPfX62fFL8k7j8xwr2gpK-Fhf1H8nQdcb9Dm2jTgWme3XaGn4
3 replies (most recent on top)
Interesting 2nd comment. So, basically it's just a game moving expenses from one category to another and ruining thousands of lives in the process. I do agree that with all the games and ignoring of rules and regulations more regulations are bound to be imposed.
The railroad is a capital intensive business, perhaps the most capital intensive private business in North America besides oil refineries. Capital expenditures are not part part of operating expenses and they are not part of the calculation for operating ratio. That key point is why operating ratio is a hoax.
Every time UP fires an employee, especially a professional employee, and replaces him or her with an outside vendor; that vendor costs UP more money than their own employee because UP is paying into that company's profit margin. What is worse, that vendor is now tabulated as a "capital expenditure" because that vendor is working on a project; it could be an IT project, a signal system, new rails to replace old rails...but what used to be an operating expense is now a greater capital expense. Guess what? They're both expenses, they both hit the bottom line; it's just that lowering the OR makes some analyst in New York happy; he writes a little pro-UP blurb, and the stock price goes up.
Lance then takes some of his stock and sells it back to UPRR as part of a share buyback he instituted. So do some of the board members...not a railroader among them by the way, I checked.
Great article, I read the entire thing. The Surface Transportation Board is notoriously weak compared to the Interstate Commer Commission it replaced. But, with all the sh** rolling downhill from CP, CSX, and now UPRR; not to mention NS...they may start enacting further regulations on an industry that used to be highly regulated.
Ahh greed. You're making money, providing halfway decent customer service, "Building America", and then you decide to take a massive sh** on it so you can pretend to be a Steve Jobs when you're just a non-descript nobody who only knows how to copy the late, great confidence man known as Hunter Harrison.
Awesome read. This is why UP execs are clearly after a short term money grab, leaving a crumbled franchise behind. A 55 OR essentially says we made 45% profit. I once made 22% profit on a job at another company and was told it was outrageous and looked bad if customers found out we were doing that well off of them.....