Faced with a need to renew its aging Top Gon fleet, NS outfitted existing cars with new steel tubs rather than buying new cars. In a volatile coal market – where buying too many new cars could have been a costly miscalculation – the retub strategy added at least five years of life at a fraction of the cost of buying new.
“Rather than going out and buying 5,000 or 6,000 new coal cars in an uncertain market, retubbing put us in a position where we could control our costs and our destiny – we could turn it on and off as needed,” said Jamie Williams, NS director mechanical operations and support. “We were able to serve our customers and put the retubs in an envelope that fit us the best.”
The bottom-line payoff: cost savings of nearly $357 million. The savings are based on the price of a new coal car, around $90,000, versus the cost of a retub, about $14,000.
The program also boosted NS’ top-line growth.
“Coal is a global market, with global uncertainty, and that requires us to be very flexible,” said Steve Ewers, assistant vice president service management. “The retubs allowed us to capture a lot of export business that we would not have otherwise been able to capture. At the same time, we really mitigated our capital costs. That’s the good news story about the retub program.”
NS Reimagines Possible
With its new strategic plan, rolled out in February, NS aims to “Reimagine Possible” in all aspects of business. Driven by precision scheduled railroading practices that streamline operations, the plan involves culture change in how the company operates its rail yards and runs trains across the network. The retub program reflects the innovative spirit in the railroad’s DNA, demonstrating how NS strives to continuously improve operations to meet ever-evolving business demands.
“With the retubs, we took equipment that otherwise would have been scrapped and came up with a plan that allowed us to quickly put it back in the lane and serving customers at a much lower cost,” Williams said.
The retub program involved collaboration among operations and marketing, a key component of the new strategic plan to align commercial and operational expertise to better serve customers and grow business.
“It’s really a story about cost-effective management of our equipment fleet in a very dynamic and challenging market,” said Rob Zehringer, group vice president, coal. “This supports our entire coal franchise, not just the export market, and it’s helping us better manage on a cost-basis how we move forward in our equipment strategy.”