advertisement

---

Norfolk Southern Railway is entering the second stage of its NS21 program, an initiative started in October 2000 that's aimed at improving business processes to cut costs and boost efficiency.


NS21 Version 2.0 includes a track structure and density team that's attempting to match the railroad's new network under its Thoroughbred Operating Plan to existing track infrastructure to reduce maintenance costs.


Other teams are trying to reduce equipment costs (focusing on containers, trailers, locomotives and rail cars), rationalize yards to match NS' yard capacity with changing traffic patterns and increase workers' productivity.


"Even though we have made great strides in lowering our labor costs over the last three years, we believe that we can still make marked improvements … both in agreement and non-agreement forces," said Senior Vice President Financial Planning Kathryn McQuade at NS' recent analyst meeting in New York City.


Through NS21, the railroad so far has saved $110 million, including $45 million in recurring cost savings, by closing facilities, reducing its rail-car fleet by 15,000 and rationalizing about 600 vehicles.


The Class I also has improved billing accuracy to 96 percent (compared with 90 percent pre-NS21), created a strategic sourcing department that saved $6.6 million in 2002 and eliminated 20 positions in the railroad's claims department by improving automation.


"We're just getting started," said McQuade. "This program is now a part of our organization."