STB Votes in Favor of Conrail Deal
On June 8th, the Surface Transportation Board imposed a
number of conditions the railways must comply with before
they may take over Conrail:
- Daily, weekly and monthly performance reports must be submitted to the STB, especially for the "common
assets" classification yards so as to spot potential
congestion problems before they get too serious. These
reports are modelled on those required from Union
Pacific, though the reports from the eastern railways
will remain confidential. UP's reports are part of the
STBs effort to help sort out that railway's congestion.
- Conrail's computer systems must be able to
communicate with CSXs and NS before the break-up
proceeds.
- Existing union contracts with Conrail may not be
bulldozed; the two buyers must renegotiate the terms
and go to arbitration if necessary. The railways had
wanted to have existing contracts with CSX and NS
extended to encompass Conrail workers.
The STB refrained from imposing open access on railways
east of the Hudson river, as had been requested by New
York Senator D'Alfonso. In response to the criticism of little
competition in this region, the railways pointed out that the
deal improves the situation even if it isn't perfect. Too much
tinkering in a situation where there just aren't enough tracks
for serious competition, may not achieve the desired goal
anyway.
The new STB stipulations intensified speculation that
everything will not be in place in time for the September 1st
implementation date. CSX has been publicly suggesting that a
delay may be necessary to avoid embarassing glitches. NS
have been saying they want to stick to September 1st, but
the new STB conditions may make this unrealistic. NS also
says that all three railways must co-ordinate the
implementation date.
As for repeating problems out West, UP adamantly maintains
that their problems are due to a combination of fluke
(accidents and bad weather) and overzealous downsizing
(inability to cope with stresses to the system). However,
popular explanations emphasize arrogance and an
unwillingness to embrace the people and knowledge from
Southern Pacific. This includes an underestimation of the
problems inherent in making two incompatible computer
systems talk to each other.
A combination of a wise STB and prudent railways should
minimize the risk of western probems in the East. The
requirement to have computer systems talking to one
another before lift-off will ensure that one source of
problems is eliminated. And both CSX and NS have taken on
board numerous high-ranking Conrail officials who should be
able to make sure that two decades Conrail knowledge and
experience will not be lost. Conrail employees have also
found new work at the CSX-NS common facilities in X, Y and
Z. If there are problems, there will not be a shortage of
experienced Conrail people with the authority to solve
them.
A formal, written decision will be issued by the STB on June
23rd.
More articles in no particular order:
Saturday June 6th:
Railways do some last-minute manoeuvering
On June 2nd and 3rd, the STB held the final hearing on the
proposed spitting of Conrail between CSX and Norfolk
Southern. Agreements have been reached at the last minute
with Amtrak, Cleveland and Indianapolis, but some are still
against the deal.
Most seriously, a New York republican senator says that since
all lines east of the Hudson river would be controlled by CSX,
he wants the deal stopped. Sen. Alfonse D'Amato says he will
bring a federal lawsuit against the deal if his concerns are
not resolved. (Where do you want to go today, Mr D'Amato?)
Still to be convinced are also Conrail unions who don't want
to abandon their labour contracts and be swallowed up by
their counterparts in CSX and NS.
But Amtrak is online following agreement on the Northeast
Corridor. Amtrak will give CSX and Norfolk access to the NEC
where Conrail currently operates, and improvements for
freight will be made to the NEC.
While the final hearing was proceeding, deals were also
reached with the cities of Indianapolis and Cleveland.
Cleveland was bought off with 13 million dollars for noise
reduction measures and landscaping, plus a promise that 40%
of employees at the expanded Collinwood intermodal facility
will be from Cleveland. CSX is investing $70 million in rail
facilities in and around Cleveland.
The Conrail transaction has not provoked the kind of howling from other railways that UP's gobbling up of Southern Pacific provoked two years ago. To be fair, the parties opposing the UP/SP merger did not do so for fear of congestion but for fear of lack of competition.
But CSX officials say they are playing it safe. If key elements do not fall into place by the planned September 1st
implementation date, CSX will let the date slip as far as
1999. Norfolk Southern says they will have to work with CSX
to fix a definite date. Both railways vow not to let the
embarassment in the west be repeated in the east.
The Conrail plan would restore rail competition to New York
City. However the two carriers will still share key facilities
in Detroit, New York and Philadelphia after the transaction.
None of the corporate websites goes into this in any detail,
and neither company has been able to provide more details
by e-mail.
This shared responsibility brings a story comes to mind:
It is a story about four people named Everybody, Somebody,
Anybody, and Nobody. There was an important job to be
done and Everybody was told to do it. Anybody could have
done it, but Nobody did it. Somebody got angry about this,
because it was Everybody's job. Everybody thought Anybody
could do it, but Nobody realized that Everybody wouldn't do
it. It ended up that Everybody blamed Somebody when
Nobody did what Anybody could have done.
Originally, CSX had wanted to buy Conrail itself in what it
amusingly called a "pro-competitive merger". Only after
much indignation, it was agreed that part of Conrail would
go to Norfolk Southern.
At the final hearing, NS and CSX each got two and a half
hours to make their case, and the following parties had six
and a half hours to make theirs: federal government parties;
broad shipper interests; specific shipper interests; coal
interests; passenger and commuter interests; other railroads;
New York/New Jersey; Chicago; Indianapolis; Ohio; other
state governments; environmental and safety issues; and
labor. U.S. Congressmen also had time to speak.
