NFS vs. CSX Railroad

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  • Topic: Rail transport, Rail tracks, Norfolk Southern Railway
  • Pages : 48 (6889 words )
  • Download(s) : 117
  • Published : November 4, 2010
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NFS versus CSX Railroad

Table of Contents

Title Page1
Table of Contents2
Executive Summary3
Stock Selection: Concepts and Practices5
Industry, Company, and Competitor Descriptions8
Financial Analysis14

Executive Summary

Norfolk Southern Corporation and CSX Corporation are feeling the strain from the current economic condition. According to Helms & Dileepan (2005), discuss the issues of Just-In-Time production for transportation companies. Having the right parts delivered when needed has become a big business. Some major manufacturers use railroad services when large amount of specific raw materials are needed. There has been a recent shift in the way parts are being shipped and stored to meet production line processes. Companies such as UPS and FEDEX have taken steps to fulfill the requirements. United Parcel Service picks up production components and delivers them right on time. Federal Express has incorporated space in their warehouses so that parts which need to be delivered on a certain day can be stored in their facilities until needed. This process has put some additional strains on the railroad industry. Railroad companies have shifted their focus to providing finished products to pre-planned destinations. Rail companies now ship approximately 70 percent of automotives in the United States. Rail companies were initially losing significant business because of the JIT environment. They have bounced back by using methods that manufacturers can use without the need of maintaining excessive amounts of parts in its own spaces. Some manufacturers have made a schedule of what material will be needed during the manufacturing process and rail companies have started loading railcars in a specific way that works for the manufacturer. The rail companies can move material quickly, efficiently, safely and produce the material on time. Moving material via railways is becoming cheaper than transporting by trucks. This gives the railroad companies an advantage for now. Rail companies now move approximately 64 percent of coal which generates one-third of our electricity. They also move approximately 40 percent of all our grains. Spivak (2010) discusses why the new era in freight rail is the creation of giant intermodal-distribution logistics centers. The rail companies have figured out that in order to remain competitive in the transportation business they must focus on how to deliver raw material at the right time for JIT operations. He goes on to state that “"the rail carriers believe there's a long-term future in handling more and more international trade and intermodal business, and that's what they're building for now." The rail companies are investing heavily in areas where they can house freight villages to serve major metropolitan cities that have a large amount of manufacturing which uses JIT operations. Railways have been able to show large retailers how much money they can save by trucking material from a nearby freight house to the manufacturing site as opposed to trucking the material from distribution centers that are further away. The large retailers are saving millions of dollars a year by using the rail industry. The retailers like to save as much as possible because business is very competitive and the savings add up to a considerable amount which can be applied to stockholders wealth. According to Spivak (2010) the “Department of Transportation (DOT) is signaling its commitment to getting freight off the highways by investing heavily into railway track projects.” One of the major issues with every transportation system is the rising risk of terrorist attacks. Plant (2005) states “rail security cannot be reduced to a simple formula and says that it’s not now nor will it ever be a simple problem”. In order to understand the threats to the rail system we must identify its main uses. There are four major components to the rail industry and they...
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