The Railroad Week in Review:
I really caught a lot of flak from my shortline friends over last week's Review and its coverage of the Conrail merger. One chap called to say I "sugar coated" the realities and missed the dire circumstances being faced by his customers. Another wrote, "I have been told by a senior UP officer that empties are not moving west on CSX or NS. UP has stopped the former run-through at Salem and is now building trains at No. Little Rock for run-through at Memphis. The meltdown could develop if Western shippers do not have empties to load!"
Another correspondent writes, "Things are getting downright ugly. Ford, which has more plants on NS than any other RR, is having all manner of problems. I understand GM, Chrysler, UPS, USPS, and others with big stakes in this dissection/merger are not amused. Conrail's Chicago Line routinely handled a flood of freight, from intermodal to finished vehicles to coal, that in places exceeded 100 trains in 24 hours. These folks, and the people that worked for them, knew how to railroad. You can't replace a seasoned veteran of the challenge of running trains that intensively by simply relocating someone up from Georgia."
Officials with both NS and CSX have been quite candid with me in their evaluations of what's going on. Yes, UPS, Ford, and GM have had disruptions. And, yes, there are learning curves to be gotten up and the road is fraught with surprises. However the view from here is that nobody is taking any of this lying down. The customers -- and shortlines -- that will emerge best from this are the ones who state their problems in terms couched with solutions.
A Pennsylvania shortline operator sends in a daily status report showing cars interchaged in and out and a list of recommended actions to alleviate his particular customers' problems. Another called around to find cars his class 1s had misplaced and suggested options to expedite their movement to the customers. Still others are doing everything from classification of cars in their overflow yards to running bypass operations around congestion spots to running extra local trains. Like it or not, we're all in this together, and specific solutions to specific problems will win the day more quickly than constant carping from the sidelines.
Of course, information has to flow both ways. A friend with a smaller shortline writes, "I have tried to impress on my class 1 contacts the need to get information out to customers and short lines. People will put up with a lot if they at least know what the problem is and what the plan is for a solution. To be sure, class 1 people have been good about staying in touch, but some appear to be more prone to offer sympathy rather than information."
There are three items at the top of shortline Hit Parade right now: the successful implementation of the Conrail split and merger, the paper barrier aspect of the Railroad Industry Agreement (RIA) crying out for success stories, and the beginning of car supply discussions under the RIA. Each of these issues will be followed even more closely in the Week in Review and in my Railway Age columns. Reader observations and comments are eagerly solicited so please feel to respond.
Regarding paper barriers, the success stories are beginning to come in, although more slowly than we'd like. Several cases are now in negotiation and news of their outcomes will be posted in this space. In one instance, the shortline manager writes, "The class 1 would like to have a success to point to, so that may help us break the barrier we ran into on our first attempt."
On car supply, a western shortline operator writes, "We have not had any major problems however, it is a great concern for the future because of the many capital requirements faced by the large railroads after their mergers. We believe short lines will have to step up to the plate and invest or lease cars to meet customers needs. We are willing to do that, but are deeply concerned we will not be able to recover our increased costs because we have very little leverage in our negotiations. Our class 1 'partners' need only to reject the deal or offer amounts that will cut our net revenues."
And from the Midwest, another shortliner pretty much agrees, saying, "Short lines must be prepared to solve their own car supply problem. One thing that the class 1 roads could do is make surplus cars available to short lines first before selling them to a broker or scrapper. I do not mean give them away either but sell them at the lowest possible price. It is really infuriating to have to pay a premium to a third party when it is really not necessary."
At the former Philadelphia Navy Base complex Norfolk Southern, Delaware River Port Authority (DRPA) and Philadelphia Industrial Development Corporation (PIDC) are working to finalize a $12 mm intermodal yard. Canadian Pacific's St. Lawrence & Hudson unit, which has an existing operation at the Navy Base, is in the midst its own million-dollar rehabilitation project. The rail improvements, according to Mayor Ed Rendell, will make the old Navy Base complex a central location for distribution-related companies.
Philadelphia, by the way, is perhaps one of the best-kept maritime secrets on the eastern seaboard. Last week WIR reported that the Port Authority of of NY and NJ "increased its share of the share of North Atlantic port volume to 55.7% from 54.6% in 1997." Wrong, reports an eagle-eyed correspondent with the Philadelphia Port. What NY increased was its share of container business. Philadelphia's port operations were up 20% last year and retain its position as the Number One port in terms of total cargo handled. No wonder NS, CSX, and CP are all clamoring for access.
An item in Thursday's Philadelphia Inquirer cited a NIT League "bulletin to members" that UP is routing some shipments to NS that should have gone to CSX. I shot a note off to UP's John Bromley asking about this, and he responded thus: "If UP gets billing information showing CR in the route, UP will modify the route using a default logic system which was developed in agreement between the railroads to maintain fluidity at interchange points. It is the responsibility of the customer to route cars to the proper railroad.
"Also on June 1 the National Customer Service Center began a daily review of all billing showing CR in the route. Customers will be notified by fax that they have routed shipments inappropriately to CR and that Union Pacific changed the route to prevent delay in shipments. As of this morning [6/18] I was told that this issue is under control." To which I can only add that it would be a great help for shortlines interchanging outbounds with UP (or BNSF for that matter) make sure waybills do not still show CR destinations.
For dessert, Danny Machalaba, not normally known for a particularly humorous bent, got "the Orphan" (that's the odd little bit in the lower left corner of page B1) on Tuesday in a piece titled, "Merging Rail Workers Dress Up, Then Find New Partner Unsuitable." If you didn't see it, do. It's a hoot and it's available at www.wsj.com if you'll search on "Norfolk Southern."
The goal of this site is to help short line managers, railroad investors, and students of the industry find the tools necessary in their respective areas of interest. The beauty of this medium lies in its ability to educate and inform as it communicates. Send comments to email@example.com
© 1995-1998, The Blanchard Company, 2041 Christian Street, Philadelphia PA 19146-1338, 215-985-1110 (voice) 215-985-1446 (fax). All rights reserved.