Uncle Sam gives green light to Conrail deal
By Staff -- Purchasing, 9/15/1998 6:00:00 AM
Another day, another rail merger. Despite ongoing complaints about service interruptions and shipment delays as a result of railroad mergers in the western United States, the Surface Transportation Board has approved the $10.2 billion acquisition of Conrail Inc. by CSX Corp. and Norfolk Southern Corp.
The Board's 424-page decision allows the rail companies to create a mammoth rail network east of the Mississippi that controls more than 14 million shipments and $13 billion in freight revenue.
CSX Chairman and CEO John W. Snow says his company is going to great lengths to avoid making the same mistakes that have plagued rail mergers in the West.
"We will not move forward with the Conrail integration until we have information systems in place and tested, the new rail network flows effectively, and proper training and necessary labor implementing agreements are complete," says Snow.
Snow's comments, while sincere, are not as altruistic as they might appear on the surface. Before getting the right to take over Conrail, CSX and NS had to agree to several concessions put forth by the National Industrial Transportation League, the nation's largest shippers' group.
These include a three-year rate freeze for shippers whose current service by Conrail will be replaced by service from either NS or CSX. In addition, the railroads had to agree to establish amenable labor and safety plans before divvying up the Conrail network.
If all goes according to schedule, CSX and NS can begin creating their massive Eastern rail network sometime this month.
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