The rail industry, like every other, is experiencing a demand drop of unprecedented proportions as this economic crisis unfolds. And like other companies, railroads are reacting to the sharp volume drop by reducing costs, both fixed and variable, as fast as they can. Cutting expenses quicker than Wall Street expectations is where they've traditionally shined during the last few recessions.rnIn Q1, the rails demonstrated that anywhere from 30 percent to 50 percent of their cost base is variable and can be pulled down (fewer train starts being the most obvious but not only example). As of this writing, they once again were beat-ing consensus earnings estimates, helped no doubt by lower oil prices.rnRails also continue to work on the 50 percent to 70 percent of their cost base that is fixed, breaking it into long and intermediate terms (about half each) and accelerating their ongoing (since Staggers) efforts to get more efficient. Facilitating this effort are the increasingly powerful information systems and real-time database usage, as well as the continuous fine-tuning and outright revamping of their operating plans (e.g., CSX Corp.
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