Subject: Re: Operating earnings
I wonder if BNSF's reluctance to firmly embrace PSR (because it burdens the customer with very precise delivery times for freight to be loaded and shipped) is having the unintended consequence of leaving BNSF with the least well run customers (those whose own performance leaves them incapable of operating to PSR precision requirements). I note we lost another intermodal customer this quarter. I'm guessing that they (intermodal customers) tend to be the most supportive of PSR, its tighter scheduling and its much higher operating efficiencies. Greg Abel has defended BNSF's management and their resistance to PSR "because customers don't like it". I'm thinking there may be a slow culling or exchange of customers based on how well or poorly the customer's business is managed. Other industries have demonstrated that abilities to deliver to very precise time windows force suppliers and customers alike to operate at much higher efficiency/productivity levels while also lowering working capital requirements. Suppliers who don't improve performance are left with the weakest performers as their customers. Admittedly, the culture required for successful PSR is a more disciplined culture than pre-PSR culture and performance levels. Culture change is hard. Especially underneath a parent culture as strong as Berkshire's.

Just a quick thought on BNSF earnings weakness.