Norfolk Southern’s Elkins: An evolving supply chain opens doors to adding value
7/23/2021
By Julie Sneider, Senior Associate Editor
While working from home during the early days of the pandemic shutdown, Norfolk Southern Railway Vice President of Industrial Products Ed Elkins realized something important when he tried ordering groceries online for the first time.
Not being able to run to the grocery store made Elkins realize back in April 2020 that “whoever gets this right in terms of the grocery business will have a leg up on their competitors because they’ve solved someone’s problem.”
Had someone told him a few weeks earlier he would soon be picking out his family’s produce, meat and other food products from a website, Elkins wouldn’t have believed them. But he found a grocery website that worked for him, he adapted and learned how to food shop during a pandemic.
Although he can now safely enter a grocery store, Elkins says he’s still buying some groceries online.
“It has been a change that will be sustained,” he said July 13 during the Midwest Association of Rail Shippers’ (MARS) summer meeting in Lake Geneva, Wisconsin.
The pandemic has greatly accelerated existing consumer behaviors — such as online shopping — and changed upstream logistics trends, perhaps permanently.
“One thing we have to do as logistics providers is figure out what those sustainable changes are and how we’ll add value in these transactions” with customers, Elkins told the group. “If we do that, we’ll be in a much better position to compete for our customers’ business and help them serve their customers.”
Elkins described how NS is positioning itself for success in an evolving industrial market. Helping customers solve their business problems during what he described as a “partial unwinding” of the logistics supply chain is especially important.
NS is doing so by deploying a customer-centric approach, maintaining an experimental mindset, accelerating its digital transformation, and leveraging real estate and industrial development.
The Class I’s markets have evolved over the years, Elkins said. Today, there’s a bigger piece of the freight shippers market that “does not have a particular preference for mode” — they could ship via rail or truck.
“Based on the study we’ve done, that flexible freight world is twice as big as either of those other ones and that mode is growing faster. So, the question is how do we deliver value for those potential customers?” he said.
'Reinforcement of supply chains" a long-term trend
While NS aims to continue providing value to its existing customer base, the railroad now seeks the business of those potential customers who are “flexible” in their mode of choice.
Elkins shared examples of how NS is creating — or aims to create — value and convenience for customers. They include RailPulse, a joint venture formed in 2020 between NS, GATX Corp., Genesee & Wyoming Inc., TrinityRail and Watco. The venture seeks to create a technology platform that will help transform rail shipping. It will facilitate and accelerate the adoption of GPS and other telematics technology across the North American rail-car fleet, NS officials said at the time the venture was announced.
Also, NS is getting more involved in helping customers locate access to reliable warehousing that has access to multiple modes of transportation.
“I think the long-term trend is more toward reinforcement of supply chains and less about driving out every single redundancy that you can in those supply chains,” Elkins said. “And the way I think that will manifest itself over time is through some version of nearshoring or onshoring of manufacturing. It also means that warehousing close to consumers and warehousing capability that has modal optionality will be important as a long-term trend.”
The Atlanta area — where NS is building its new headquarters — has a tremendous amount of warehousing available and more is being developed.
“We are taking steps to be part of that,” he said, noting that it’s pursuing a joint venture involving public and private partners that would help customers locate warehouse space that offers access to intermodal facilities, rail service and highways. Additionally, NS is seeking to be part of rail-served megasites.
Moreover, NS is exploring how to add more value to its Thoroughbred Bulk Transfer (TBT) business. TBTs are designed to transfer bulk products, such as plastic pellets, dry and liquid chemicals, construction materials and food products, from one transportation mode to another. Earlier this year, NS announced it had opened its 29th TBT facility.
And, the Class I is experimenting with a new door-to-door Thoroughbred Freight Transfer (TFT) service that would provide greater access to the growing “B2C” truck market.
“We are combining intermodal service with box cars to provide door-to-door value for a growing number of customers,” Elkins said. The service is starting in the Chicago, Atlanta and Miami areas, but is expected to expand to other locations.
“The key is, we find a niche that delivers value to customers, that they’re willing to pay for and that solves problems,” he said. “In the current environment, there is not a great deal of excess capacity on the highway, so this is an [TFT] experiment that is very interesting to us.”
On the sustainability front, NS is experimenting with some carbon abatement programs that it can use to help customers shrink their carbon footprint. Still in the early stage, the effort looks “very, very promising,” Elkins said.
“This is how we deliver value going forward,” he added.
