Opinion: Rumblings on the Rails
Depending on which morning newspaper you read with your breakfast coffee, things were either going okay (Wall Street Journal, Associated Press) or things were in danger of falling apart (Washington Post).
The Journal and AP both reported that the breakup and mergers were suffering only minor glitches, and that rail management was confident things would soon be operating at normal levels.
The Post, on the other hand, talked of a myriad of problems, mostly on Norfolk Southern. The newspaper told of General Motors Corp. and Ford Motor Co. both running out of rail cars on which to ship their vehicles to market, problems for Procter & Gamble Co. that could force the manufacturer to shutter several plants, and serious disruptions of shipments for United Parcel Service.
As was the case during the Union Pacific Railroad’s service meltdown of 1997 and 1998, trucking is likely to be a beneficiary of any significant foul-up by either NS or CSX. GM and Ford reportedly have already shifted as much traffic as they can to truckers to make up for the lack of rail equipment at their plants. And UPS, which has a reputation for not tolerating service snafus, always has the option of shifting more of its freight to the highways.
In the aftermath of the problems that brought Union Pacific, the nation’s largest railroad, to its knees — with trains stranded on the Great Plains, Houston’s rail yards tied in a snarl, West Coast ports clogged with backed up traffic and freight delayed for weeks — official Washington is in no mood to coddle new transgressors.
The federal Surface Transportation Board was excoriated for waiting too long to act on the Union Pacific’s traffic fiasco, and criticized by many for not taking harsher measures against the Omaha, Neb.-based railroad.
When the Conrail proposal came before the same board, its members decided to try to head off new problems by ordering Norfolk Southern and CSX to conduct safety audits before approval of their plans would be granted. The STB also called for other steps to prevent any recurrence of the woes that arose after Union Pacific acquired a large competitor, Southern Pacific Railroad.
So CSX and Norfolk Southern hired hundreds of workers and bought strings of locomotives and cars to prepare for the new business they said they would generate with their shares of Conrail. Officials from both carriers met with Union Pacific executives to autopsy the mistakes they had made during the earlier merger and to prepare contingency plans of their own.
Shippers are unlikely to show any patience, or mercy, if the new Conrail operators don’t live up to their service commitments.
Shippers reported hundreds of millions of dollars in lost business and additional expenses caused by the Union Pacific situation, and urged the STB to maintain a firmer grasp on the implementation of the Conrail split up.
“We’ve had some surprising calls about Norfolk Southern” from members, said Edward Rastatter, the director of policy for the nation’s largest shipper group, the National Industrial Transportation League, last week.
Shippers proved during the Union Pacific meltdown that they know how to dial their congressmen’s telephones. Meanwhile, Congress is still weighing the STB’s fate. Thus, the board can be expected to be extra-sensitive to Capitol Hill’s concerns.
And with Congress already being asked to review the state of railroad service in the nation, and to consider forcing the railroads to open their track to other service providers, this would not be a good time for a major new service fiasco. That could prove detrimental to the economic future of all the remaining rail carriers.
