Railway Age: Short Line and Regional Marketing Advocate
March 1998


lean and safe: they're closer than you think. Any good mechanic knows you can't see defects under a coat of dirt, and any track supervisor will tell you good track is money in the bank. What clean equipment and good track have in common is the ability to present a picture of safe, professional and dependable performance to owners, operators, and the shipping public.

There is no doubt that railroads have become more profitable and that safety has had a major role, not only in loss-avoidance but also in revenue enhancement. We still have a way to go, however. Even though preliminary FRA statistics show 1997 posted an all-time low of 3.45 accidents per million train-miles, a ten percent improvement over 1996, there were 37 industry fatalities in 1997. A third of these were in switching operations, the very place shortlines have the most exposure.

While safety
equipment and
programs cost money,
the cost of not
investing in safety is
even greater

There are those who will say that safety equipment and programs cost money, and they're right. But the cost of not investing in safety is even greater. First, it costs you revenue dollars from shippers who opt for other carriers whom they perceive as being more protective of their goods. Second, a poor safety record means higher operating ratios, higher capital expenditures to repair and replace what wasn't kept up, and less efficient asset management. And these four -- revenue, the operating ratio, capex, and asset management -- are the chief drivers of railroad profitability. (For the relationship between these and customer value drivers, see my Railway Age column for January, 1997.)

For proof of a direct correlation between safety and revenue, look at Ben Friedland's Morristown & Erie. Here is a 100-year old UTU railroad whose current management team has been in place since 1982, has had had no FELA claims, has had no FRA reportable personal injuries, and has won three Jacobson Awards in a row. M&E uses New Jersey Transit mainline tracks to connect the several parts of the M&E operating territory, operating mostly during daylight hours when NJT runs on 30 minute-headways at respectable speeds. Out there, operating safely and on-time is not an option - it's a necessity -- and freight customers truly benefit. As a result, M&E carloads have doubled in just four years, an average annual compound gain of 18%.

M&E's safety record also helped win a lucrative terminal switching contract inside Tosco's Bayway refinery (the one you see from the Turnpike just south of Newark Airport) for M&E's Bayshore Terminal subsidiary. The work involves moving 8,000 cars a year - 80% of which is hazmat - in an environment where train crews wear flame-resistant clothing, trains carry respirators, and all railroad personnel have pre-set escape routes from every hazmat location.

To put things in class I perspective, BNSF has an annual budget upwards of $14 mm just for personal protective equipment -- hard hats, boots, glasses and such. Then there are other safety-related expenditures for grade crossing education and recognition, system safety programs and, of course, salaries and expenses directly related to running a safe railroad. The safety investment pays off, too. The road cut FRA Reportables 17% to 1.66 per 200,000 man-hours in 1997 from 2.01 the prior year. This was the second biggest drop among class Is, coming on the heels of Norfolk Southern's 28% drop to 0.91 from 1.26.

Driving this remarkable safety record is a change in attitude, and changing attitudes are at work in the shortline environment as well. Mike Deatherage, Director of Safety and Operating Practices at RailTex, tells me they seek to instill a personal sense of safety ownership. The safety program looks more at what process caused an incident than at "who done it." Mike told me, "Too often investigations round up the usual suspects and stop when a culprit is fingered. That does nothing to fix a faulty process." Does this approach work? Writes Mike, "Human Factor Reportable Train Accidents per 1 million train miles 1995 - 1997 have come down to 2.38 from 4.03, a decrease of 40.9%. You can bet your cowboy boots it works."

A similar direction is taken by Earl Durden's Rail Management Company. Dean McAllister, an experienced ex-UP hand, runs Durden's safety program, and will tell you that their safety program is changing attitudes with a "training, safety and health" awareness process. Rail Management moves 358,000 cars a year over 675 miles of railroad for some decent density, yet that density also increases exposure to switching-related injury (recall the fatality statistic above). Yet in just three years the company has cut lost-time injuries 85%, to 0.44 per 200,000 hours from 3.44.

It's clear that top-performing railroads - of whatever size - recognize the positive impact of keeping safety first. The focus is on safety as an attitude, an attitude that shows in appearance and profitability. The way you present to employees, the FRA man, and your customers is mirrored in your attitude toward safety. Clean and safe works every time.

Annual safety award developed by Copper Basin's Jake Jacobson for railroads with zero personal injuries and zero lost-time injuries without respect to the minimum number of total man-hours required by the Harriman.

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