Freight Broker Sees Comeback by Railroads

Trucking’s ills and rising shipper expectation that rail services will be more reliable could give railroads a bigger slice of the freight market, according to an official with one of the nations’ top freight brokers.

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Speaking at the Transport Topics 2000 Management Forum, Barry Butzow, senior vice president of C.H. Robinson (CHRW) in Eden Prairie, Minn., said he expects railroads to make a comeback after several years in which they struggled to meet delivery commitments.

“This is the first year in some time that you haven’t had major disturbances in the rail system,” he said.

Shortage of over-the-road drivers and high fuel costs, along with other problems in trucking, will contribute to the revitalization of rail, Butzow said. Rail networks can feed regional routes and pool distribution networks, “as over-the- road carriers struggle and have to balance their own economics over the next year or two.”

Past problems with unreliable service have led many shippers to shun the rails for trucking services. Problems were particularly troublesome in two mergers.

In 1997, Norfolk Southern Corp. (NSC) and CSX Corp. (CSX) bought Conrail for over $10 billion and split the company between them. Among other problems, the companies had incompatible computer systems that caused service delays and misdirection of trains and jammed terminals that also caused delays.

A year earlier, Union Pacific (UNP) bought Southern Pacific. During that merger, a service meltdown in which trains came to a standstill set rail service back in the eyes of customers. The problems cost the company close to $1 billion in lost business alone in 1997, according to UP President Richard K. Davidson (5-24-99, p. 2).

For the full story, see the Dec. 11 print edition of Transport Topics. Subscribe today.