No. of Recommendations: 20
I think Berkshire will eventually adopt PSR to compete
I think it is more complicated than yes or no on something like this. Berkshire/BNSF doesn't have to do anything. They don't have pressure from shareholders or armchair experts focusing on one ratio over other factors.
All railroads aren't the same, and BNSF has unique characteristics being a very long-route western railroad with a bunch of one-way traffic (where empty carloads head the other direction). Berkshire/BNSF has tried to make additional investments in order to increase market share, including spending a lot of money on logistics centers where they developed the real estate for customers to locate in their rail-centric business parks - and some of that new business is because customers like them better. Buffett likes to say that PSR is sort of the customer conforming to the railroad, vs. the railroad conforming to the customers needs.
BNSF can adopt aspects of PSR where and when they want to without having to check a box for wall street analysts that we are 100% on the Hunter Harrison kool-aid and just look at our operating ratio targets and we are going to be lean and mean at all costs.
Buffett and BNSF management are fully aware of what is going on in their industry and they are pretty sharp, rational operators. BNSF being private and making decisions with different time frames and motivations will probably result in a much better railroad over time vs. the alternative of quarterly conference calls, buzz-words, financial engineering, and on and on.
