STB Chairman Goes Off the Rails Defending Norfolk Southern

Outgoing Surface Transportation Board (STB) Chairman, Martin J. Oberman, is not holding back when it comes to criticizing activist investors who are targeting Norfolk Southern (NS). He believes that these investors are posing a threat to the railroad industry and the U.S. economy. According to Oberman, these activist investors, like Ancora Holdings and Soroban Capital, are all about making a quick buck by making short-term decisions that improve a railroad's operating ratio (O.R.).

But here's the problem: their focus on lowering the O.R. as fast as possible often means cutting jobs and resources in the short term. And that's not good for the long-term vitality of the railroads or for safety. Oberman gives props to CEOs and boards of railroad companies like CSX, Canadian National, and NS, who resist the pressure from these activist investors and focus on increasing traffic and revenue to improve their O.R.

The layoffs that happened due to the implementation of Precision Scheduled Railroading caused crew shortages and service disruptions. Oberman is concerned that any campaign, including proxy fights, that undoes recent efforts to rebuild railroad resilience and achieve long-term growth will be a setback for safety, business, and the public interest.

To prevent this, the STB is considering granting sole-served rail customers access to a second railroad and ditching the "bottleneck rule" that limits shipping options for sole-served shippers. The aim is to ensure better service and competition in the industry.

Oberman isn't buying Ancora's claim that their proxy battle is all about improving safety at NS. He points out that NS is already doing a good job in reducing accidents and derailments. And let's be real, no hedge fund raises $1 billion just to promote safety. So, Oberman is skeptical about Ancora's intentions and suggests that their ultimate goal might be to sell the Brooklyn Bridge.

That's the lowdown on what's happening with the activist investors and Norfolk Southern, according to Chairman Oberman. It's a serious matter, and he's not afraid to speak up to protect the railroad industry and the interests of the public.

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