SEPTEMBER 1 is set to see the disappearance of another US Class I railroad with the formal break-up of Conrail and its merger into Norfolk Southern and CSX Transportation. The $10bn deal was ’unanimously and enthusiastically’ approved by the Surface Transportation Board on June 8 (map RG 5.97 p271).
Announcing the decision, STB Chairwoman Linda Morgan said ’this transaction, as conditioned, creates two strong competitors in the East that can handle the transportation needs of an expanding economy.’ Vice Chairman Gus Owen felt ’the public benefits are compelling.’ To meet the concerns of shippers, and avoid similar problems to those arising in the wake of the UP-SP merger, the STB will supervise the takeover for five years. The two railways will have to submit monthly, weekly and daily reports to the STB detailing on-time performance and other critical issues.
Another condition is the requirement for the railways to share tracks in northern and southern New Jersey and the Philadelphia and Detroit areas, ending Conrail’s monopoly in the northeast of the USA dating from the federal rescue of six bankrupt railroads in 1976. CSX must grant track access for Canadian Pacific Railway into New York City, and both CSX and NS are required to give trackage rights or other concessions to several small railways.
But the board left the basic elements of the deal intact, allowing the two companies to dominate rail freight in the eastern half of the USA and for the first time offer single-line service from the south and the Midwest to the northeast. CSX and NS predict that they will remove a million lorries a year from the interstate highways. Around 3 850 redundancies are envisaged, and another 2 300 staff will be relocated.
STB’s formal decision is due to be issued on July 23 and will take effect after a 30-day appeal period expires. NS says the September 1 target date for the merger is firm, although senior CSX executives have said they would delay implementation of the complex takeover until early 1999 if necessary to avoid the kind of problems suffered by UP. o
