Overview
Harris Ligon, co-founder and CEO of Telegraph, argued that freight rail is not a dying mode, but that the industry may be limiting its own growth by treating network efficiency as a substitute for usable capacity. His analysis centered on three ideas: rail demand should be compared with industrial production rather than total GDP; lower operating ratios do not automatically produce better service or more volume; and growth requires sufficient locomotives, train and engine crews, yard crews, local-service capacity, and terminal infrastructure before demand arrives.
For shippers, his practical message was to rely less on systemwide train-speed and dwell statistics and more on lane-level cycle time, demurrage, and market-aware pricing. He encouraged companies expecting higher volumes to bring specific forecasts and historical performance data into railroad discussions, test whether the network can handle the increase, and arrange alternatives early if the answer is unclear.
The introduction noted that Ligon spent nearly a decade across multiple functions at BNSF and Norfolk Southern before combining his rail and technology experience at Telegraph.
Rail is tied more closely to industrial production than GDP
Ligon opened by challenging a common narrative that freight rail is steadily fading from the economy. A comparison with total GDP can make rail look structurally irrelevant because GDP has grown rapidly while rail volume has remained roughly flat. In his view, that is the wrong benchmark: freight trains move physical goods, not the expanding share of the economy represented by software and other services.
He proposed industrial production as the more meaningful comparison for carloads and intermodal units. In the public data he presented, rail volume and industrial production moved together with an approximate correlation of 0.6. Based on that relationship and the industrial-production forecast discussed at the meeting, he expects underlying rail demand to increase over time.
That outlook led to the central question of his presentation: if demand grows, does the rail network have enough practical capacity to absorb it? He used a gym analogy to distinguish two kinds of failure. A gym with abundant equipment but no customers is demand-constrained; a gym full of customers who cannot access equipment is supply-constrained. Ligon believes rail's larger long-term risk is the second condition.
What public operating data can—and cannot—show
Ligon said nearly all of the analytical presentation used publicly available information, including railroad operating reports and 10-K/SEC filings. The exception was one aggregated example drawn from Telegraph's customer cycle-time data.
His public-data analysis compared originated carloads with average train speed and found an inverse correlation of approximately -0.59: when carloads increased, average train speed tended to decline. He interpreted that relationship as a warning that the network becomes less fluid as it fills. The same pattern appeared in reverse when volume declined: dwell tended to improve and train speed tended to rise.
Ligon did not present train speed as useless. Instead, he said it should be read as a broad trend line rather than a shipper's service scorecard. A systemwide average can obscure the first and last mile, interchange performance, local switching, and the experience of a specific facility—especially one located at the end of a branch or short-line route. Reporting both record speed and record-low dwell can also overstate the message because the two measures often reflect the same underlying network condition.
Capacity is also broader than track mileage. Locomotive availability, train and engine crews, yard crews, and the resources needed to process trains and provide local service all determine whether a railroad can convert physical infrastructure into dependable service.
Why cycle time matters more to an individual shipper
The customer-derived example reinforced the limitation of industrywide averages. Ligon said Telegraph's aggregated customer data showed large movements in reported train speed while the corresponding end-to-end cycle-time change was only about one day. His conclusion was that a railroad can report meaningful improvement in a network average without producing an equally meaningful change in a particular customer's full trip.
For that reason, a shipper's first question should be whether its own cycle time has changed. That analysis should be segmented by lane, commodity, routing, interchange, and other network characteristics that can produce materially different results. The origin and destination are generally fixed; what matters operationally is how long the complete cycle takes and how consistently the railroad repeats it.
Efficiency is not the same as growth
Ligon's second challenge concerned the industry's emphasis on operating ratio—the share of revenue consumed by operating expenses. He invoked Michael Porter's observation that operational effectiveness is not itself a strategy. Lowering the operating ratio can improve margins, but it does not automatically create more volume, more capacity, or a better customer experience.
Using public data from 2014 through 2024, he compared operating-ratio changes with train-speed trends at several Class I railroads:
- Norfolk Southern's operating ratio improved, but its train-speed trend did not show a comparable sustained improvement.
- Union Pacific also made substantial operating-ratio gains without a similarly large change in train speed.
- CSX was the stronger counterexample in his analysis: both its operating ratio and train speed improved. Ligon connected that result to choices such as continued maintenance-of-way spending, network reinvestment, and the Howard Street Tunnel project.
His broader criticism was not that efficiency or shareholder returns are inherently wrong. It was that an industry promising growth should be able to explain how savings and capital spending translate into outcomes customers can use—for example, shorter cycle times, more reliable local service, faster intermodal availability, or additional capacity on a constrained corridor.
Ligon's aggregation of railroad filings indicated that, across the 2014–2024 period he studied, approximately $1.50 went to shareholders through dividends and share repurchases for every $1 of capital expenditure. He presented that as a strategic question rather than a condemnation of shareholder distributions: if growth is the objective, is enough of the available cash being used to build the capacity and customer experience required to support it?
Where rail can grow
Ligon emphasized that the goods-producing economy remains essential even as services account for a larger share of GDP. Coal's long-term decline has removed a major source of traditional carload volume, but he sees meaningful room for growth in agriculture, energy, natural resources, and manufacturing, where rail's share remains small in many markets.
He also drew an important distinction between carload and intermodal competition:
- Intermodal is rail's most direct vehicle for competing with over-the-road trucking.
- Converting truck freight into carload business is possible, but it is a more complex sale that often requires transload facilities and other first- and final-mile infrastructure.
Railroads investing in intermodal capacity and a denser network of practical access points will therefore be better positioned to capture freight from highways. In the carload market, transloads provide the “dots on the map” that allow companies without a rail siding to use the network.
Ligon described the trucking market as having passed through a severe cyclical downturn and moving toward much higher rates across over-the-road, flatbed, and refrigerated service. He expected that pressure to create an opportunity for rail, but repeated that the opportunity can only be captured if railroads prepare capacity before the volume arrives.
What shippers should do now
Ligon urged shippers to make capacity planning concrete during contract and forecast discussions. Rather than simply telling a market manager that business will increase, a shipper should arrive with:
- Actual cycle-time performance from the preceding 90 days, segmented where possible by lane and operating pattern.
- A specific estimate of incremental annual volume, whether that is 1,000, 2,000, or 5,000 additional railcars.
- Direct questions about locomotive availability, train and engine crews, yard crews, local-service plans, and equipment that may need to come out of storage.
- A clear timeline for deciding whether to secure rates and capacity from another provider or redesign the transportation network.
These conversations should begin before the volume materializes. A shipper that waits until the truck market is already tight or its rail service is already congested may have fewer and more expensive alternatives.
Audience Q&A
Which KPIs should a rail shipper track?
Ligon recommended three primary areas:
- End-to-end cycle time. This was his clear first choice. It should cover the full movement between the relevant points and be analyzed by commodity, route, interchange, and other features of the shipper's network.
- Demurrage. He rejected the idea that demurrage must simply be accepted as a cost of doing business. Shippers can identify developing exposure, prevent or reduce charges, and use the resulting evidence in conversations with railroad partners.
- Pricing in market context. A lane's rail rate should be evaluated against its competitive conditions and realistic alternatives, not only against the shipper's prior rate. A sole shipper on a line may have a very different negotiating position from a customer with access to competing routes, railroads, or truck service. Ligon noted that truck shippers generally have much richer pricing benchmarks than rail customers do.
His point was not that every shipper should demand the lowest possible rate. Many customers will pay for consistently good service, but they need enough context to know whether price and performance are aligned.
What does Telegraph do?
Ligon described Telegraph as a data and application layer connecting the parties involved in rail freight. The platform was designed to help railroads and shippers exchange pricing and waybill information, provide shipment visibility and predictive estimated times of arrival, combine data from telematics, cameras, satellites, and other sources, perform analytics, and support freight-bill pre-audit. He said similar information and workflow problems led the company to serve four main groups: railroads, shippers, third-party logistics providers, and railcar leasing companies.
The underlying design goal is to keep context attached to the shipment or asset. Ligon contrasted that with work that requires someone to reconstruct an issue from a long email chain or many pages of repair and billing records.
How do telematics improve rail visibility?
Ligon sees telematics as an important complement to traditional car-location messages and RFID readers. Fixed readers can be far apart, leaving uncertainty about where a railcar is between observations or whether it has been placed at the intended industry. A device on the car provides more frequent and precise data, although equipping the approximately 1.7 million cars in the North American fleet will take time.
He said Telegraph combines those observations with other information to generate predictive arrival estimates and reported that, depending on the railroad, its estimates have been as much as 80% more accurate in some cases. This was a company-reported result; the presentation did not provide the comparison baseline or methodology.
Camera imagery can add another layer by documenting railcar condition at a facility or along the route. That can help identify when visible damage appeared and give operations, repair, customer-service, and billing teams a common record. Ligon's larger point was that no single data source solves visibility: the value comes from associating multiple observations with the correct car, movement, and business context.
Main takeaway
Ligon summarized his argument in three parts: rail tracks industrial production more closely than GDP; efficiency alone does not create growth; and capacity enables growth. For shippers, that means judging service through their own end-to-end results and pressing for a specific capacity plan before awarding incremental volume. For railroads, it means treating locomotives, crews, local service, terminals, transloads, and customer-facing technology as growth infrastructure—not costs to add only after the business has already arrived.