Will CSX become like Penn Central?

[Noel Weaver]

I totally disagree with this one, once the feds sold out and Conrail became
a stockholder owned company, it was very successful in what they did.
They ran a well maintained, well oiled machine.
Trains ran on time, customers got their shipments when they were
supposed to get them, management respected their employees and
employees respected management and their superiors too.
Funny thing, while all of this was happening, the taxes were being paid,
the stockholders were receiving their dividends and things worked.
Along came CSX and their we can do it better attitude and look at what
happened.

Noel Weaver

The intent of Congress regarding the duration of Conrail's existence is actually pretty well documented. However, this history actually amplifies the point that Mr. Weaver is making. Conrail was very successful as a government operation ( unlike Amtrak) and its always intended sale actually returned funds to the U.S. Treasury. It was because it was so well run that it was able to do this. Given this history, there is no real excuse for what is happening now. One would never think that the government could run a railroad better than a private entity, but this appears to be what has happened here.

Conrail was also very successful as a railroad after the federal government sold out and private shareholders became the owners.
The break-up and sale to CSX and NS was totally uncalled for and in my
opinion has had less than ideal results.
Had Conrail stayed separate from the two, I wonder if CN might have
made a good offer for it. Sound familiar?, another railroad that has done
quite well since the government (Canada) sold it off some time back.
Noel Weaver

[AmtrakFan]

Mr. Weaver,
I for one agree with you Conrail should of stayed a seperate company. I feel that we would have been better off without a break up. CN or CP could of came and made a good offer.

[AmtrakFan]

Rob Krebs, retired (I think) head of BNSF, formerly of ATSF.

Yes he is retired head of BNSF he was formally with ATSF/SP.

[MSchwiebert]

For those who fell that Conrail should not have been broken up - how do you propose that this would have been done? If I recall correctly, the Conrail stockholders (and that's who the company was in business for) agreed to the breakup as the benefitted from the move.

As for CSX becoming another PC - it won't happen. Keep in mind that PC existed during an era of intrusive government regulation on rates, route rationalization etc. Indeed, if the Staggers act would have occured during PC's existence - Conrail would have probably not been necessary. Penn Central was hamstrung by their inability to "right-size" their system due to restrictive methodology in place for abandoning trackge during the era of the ICC.

Compare this to the current day where line sales/abandonments can be accomplished much more rapidly to match the system to current traffic levels. Penn Central on the other hand was forced to keep a system in place for traffic levels that were long gone (essentially wasting money).

Penn Central was also forced to operate money losing commuter rail operations in the Northeast - which took away more money that could be better applied elsewhere. CSX does not.

Penn Central was also saddled by an employee base that again was not matched to the technology available at the the time. 5 and 6 man crews were common. Compare this to today where the two man crew is the norm.

I could go on, to summarize, CSX will not become Penn Central because the times & business environment have changed. Along those lines, a stand alone Conrail would not make sense in todays business environment either.

Mr. Weaver,
I for one agree with you Conrail should of stayed a seperate company. I feel that we would have been better off without a break up. CN or CP could of came and made a good offer.

[LCJ]

Yes he is retired head of BNSF he was formally with ATSF/SP.

Oh -- I thought you said Rob Kerbs, not Rob Krebs.

[LCJ]

As for CSX becoming another PC - it won't happen.

This was addressed already. He did not say CSX will be just like PC, but that it will perhaps fail to invest enough in physical plant to keep from having it be as bad as it was under PC.

...CSX has had none of these problems, so I can't see how there can be any comparison between it and PC.

Correct -- but I believe the main comparison that has some validity is the insufficiency of capital investment in equipment and physical plant leading to operational deficiencies and problems with serving customers adequately.

As for the CR split -- absorption of this firm was inevitable, as we have discussed at great length here. Crying about the loss of Conrail is a foolish waste of energy. As a former shareholder, I was pleased with the financial aspect of the transaction. As a former employee, though, I hated to see the company torn into pieces.

Life goes on! The question is -- how do customers feel about about the way the franchise has been managed/mismanaged?

NS seems to be doing better in that regard, in spite of their reputation for being abusive of employees.

[SRS125]

I would agree that NS has been doing a good job at keeping traffic levels in a good shape but rember they also had there problums for the frst couple of months when the split happened. Now that they have worked the bugs out things are looking good.

CSX Did not seem to have these problums... Well not that that I could see for the first few months. Althow there are a few short lines in the area
(They shall remain nameless for the time being) that were complaneing that cars were not being picked up by CSX on a timeley manner and are now doing more buisness with NS connections. As is CSX looks to have worked the bugs out of that mess but in my opinion I would feel that CSX will have to work hard to gain back trust from there interchangeing partners.

[Matt Langworthy]

What??? CSX certainly did have traffic problems for quite a few months after the CR split. Heck, their traffic woes actually began a few days before June 1st, 199. I know this for a fact because I was on Amtrak on May 31st. Traffic woes on CSX added nearly an hour to my return trip to Rochester. Even after that, I saw quite a few trains "parked" on the Chicago Line, and there was very little of anything resembling a schedule for anything in the Rochester area. The recent traffic woes on CSX are deja vu for me.

Shortlines that had a choice between CSX and NS often choose the latter because NS hasn't adopted most of the "chinese wall" practices used by CSX and CR that discourage access and competition. I got that information directly from a lawyer (now retired) who was legal counsel for several shortlines, and attended the STB hearings!

[R Paul Carey]

Conrail, as the smallest of the five large roads in the mid-1990's, was simply not destined to survive independently once its bid for the "SP East" was denied in mid-1996. The merger process that followed, CSX+CR, then NS' hostile offers, and the resulting split between CSX and NS came at such a high price the buyers (CSX in particular) will continue to work off this debt for many years to come.

The price paid for CR was outrageous, and would not have been incurred to this extent if NS had sought their desired conditions at the STB, but their risk aversion drove them to the bidding war instead. Messrs. Goode (and Snow) have the well-deserved wrath of many shareholders (including employees) for this unnecessary outcome. Sadly, the enmity between CSX and NS was greater than their business sense as to the intrinsic value of CR.

The operating and service difficulties at CSX are troubling, for sure; I believe Mike Ward and Tony Ingram will dig them out - if anybody can.

Thanks to all for the thoughtful posts and informed discussion of this very important topic...

[Tadman]

Another thought that's important to consider - if CSX has emergency capital needs, they have some money to use towards those ends - PC had no money for those ends, due to spending it on redundant track, passenger trains, and NH.

Also, CR may have had a definite timetable for existance while a governemnt entity, but once a company is publicly owned, the shareholders determine the company fate.

Regarding the Amtrak vs. Conrail debate, as far as running a profitable goverment railroad vs. loss-making, it's as simple as this: Conrail made lots of money because the government removed the barriers to profitability - things like deregulation and abandonment, as well as shifting responsibility for passenger trains, made conrail profitable. Amtrak would be profitable too, if the goverment would remove barriers - sound tough? Make the airlines pay more for their subsidized airports in towns like South Bend, IN, or Flint, MI - no way would the airlines serve cities like that if the airport weren't subsidized. Make each interstate a tollway - you drive, you pay. Put tollbooths at the entrance to each city (London has done this) and make people pay to use a car when they don't need one. But right now it's just easier to limp along like we have been.

[LCJ]

The price paid for CR was outrageous, and would not have been incurred to this extent if NS had sought their desired conditions at the STB, but their risk aversion drove them to the bidding war instead.

I had never considered that (NS using the STB to get concessions on the proposed CR-CSX merger). Excellent point.

CSX market capitalization, at present, does not bode well for them, as I see it. Will they be able to maintain the franchise to the extent necessary to serve customers well? Or are they becoming prime pickings for takeover action? Western roads are currently financially stronger in that regard.

Mr. Carey -- as someone who knows, first hand, the labor relations issues of the former CR Mohawk-Hudson territories, how do you view the recent struggles Mr. Ingram has encountered there (assuming you've been following it, and you're willing to share)?

[MikeB]

How do taxes, labor costs, and other things vary between eastern and western roads anyway, is there is big difference? Would CSX be any better or worse off running the railroad in other parts of the country in the same fashion?

[CSX Conductor]

Things would run a little bit better if they wouldn't be changing stuff all the time, i.e keep operating under NORAC Rules.

[LCJ]

Here's a May 5, 2005 story from Jacksonville Business Journal:

CSX running behind in performance measures

Tony Quesada
Staff Writer

CSX Corp. continues to have trouble running its trains on time, even though it reported record-setting operating income for its rail business in the first quarter.

The company's operational performance metrics -- such as on-time percentage and average train speed -- declined in the recent quarter after two quarters of modest improvement and despite implementation of its ONE Plan, which is intended to streamline railcar handling and overall efficiency.

(For the rest of the story, click on link above.)

[Brad Smith]

Sorry if this is a question that has been asked and answered before, but what is the ONE plan. Is it part of what irked labor at Selkirk?