Norfolk Southern, CSX Begin $10 Billion Conrail Bet
They will wish they find the way to make this one-time turkey named Conrail – grown more attractive and meaty as it aged – yield nourishing, high profits for both.
To do so, they are going to have to make their intermodal traffic grow by winning customers away from truckload carriers – and analysts say that will be a lot tougher than carving up a railroad.
In 1997, Norfolk Southern and CSX Corp. together anted up $10 billion — $5.8 billion from NS and $4.2 billion from CSX – and now they begin the official dismemberment of Conrail.
Certain lines in Detroit, Philadelphia and parts of New Jersey serving the metropolitan New York area and certain lines serving the Monongahela coal fields, which range between northern West Virginia and southwestern Pennsylvania, will be called “shared assets” and managed by a Conrail vestige.
When the breakup is completed, the railroad that the government created in 1976 from the ashes of six bankrupt railroads will — for all practical purposes — disappear and reappear only as a memorial logo on a coffee cup.
NS will grow to 21,600 miles of tracks in 22 states, as well as the District of Columbia, and the Canadian province of Ontario. It will own or lease 3,500 locomotives and 126,000 freight cars.
CSX will grow to 22,700 route miles, serving 23 states, along with the District of Columbia, as well as Ontario and Montreal in Canada. It will own or lease 3,646 locomotives and 121,500 freight cars.
But drawing the map and splitting the assets are the easy parts. The tough part is making the bet pay off.
For the full story, see the May 31 print edition of Transport Topics. Subscribe today.
