Norfolk Southern, CSX Begin $10 Billion Conrail Bet

On June 1, two of the biggest players in the railroad industry will each grab one side of a wishbone that joins somewhere around Cleveland and make a wish.

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.

If a wishbone is not an appropriate image, picture an "X" representing Conrail's principal lines in Ohio. NS takes the leg between Chicago and Cleveland, and CSX takes the line running Cleveland, Pittsburgh, Philadelphia and northern New Jersey.

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 seven bankrupt railroads will -- for all practical purposes -- disappear and reappear only as a memorial logo on a coffee cup.

For the full story, see the May 31 print edition of Transport Topics. Subscribe today.