UTU News Digest - Wednesday, June 9, 1999

UTU Daily News Digest

Information of interest to operating railroad and transportation employees

Wednesday, June 9, 1999

CLEVELAND: Takeover sidetracks rail service

CLEVELAND -- CSX Corp. and Norfolk Southern Corp. twice delayed their takeover of Conrail to be sure they were ready to handle the largest and most expensive railroad merger in U.S. history, The Plain Dealer reported today.

Now, one week after the June 1 takeover, the transition has not been flawless. While some customers say they have experienced no problems, others, most notably the United Parcel Service, say the railroads are not performing as well as expected - or promised.

"Lousy" was UPS spokesman Norman Black's characterization of the first week without Conrail. "Those two railroads are not meeting their time commitments."

UPS is the largest single customer of the U.S. railroads.

"We have informed both of the railroads that their performance during the first week was very, very poor and it was unacceptable, and that we expect to see drastic improvements this week," Black said.

Late-arriving trains have forced UPS to spend more on overtime to meet delivery deadlines, he said. The company will put more packages on trucks if the railroads do not do better.

More preparation was needed, said David Eden, spokesman for the United Transportation Union in Cleveland, which represents 150,000 active and retired brakemen, engineers, conductors and other railroad workers.

"We are getting reports that it's mass confusion, more so on Norfolk Southern than CSX, and mostly between Chicago and Cleveland," he said.

The railroads are having a hard time pairing crews with trains, he said, and former Conrail employees did not get enough training on Norfolk Southern computers.

While acknowledging problems, spokesmen for the railroads said the problems were not unexpected and were being corrected quickly. While the division of Conrail tracks and contracts between Norfolk Southern and CSX eventually should make shipping smoother and more efficient, the enormous task of two railroads absorbing a third is bound to produce some problems, they said.

"Overall, the system is working," said Norfolk Southern spokesman Bruno Maestri.

In some cases, computer glitches have made it hard to track cars, requiring railroad employees to visit railyards to find shipments, he said. "We have had some delays in getting crews out there to the trains."

CSX spokesman Gary Wollenhaupt said customers have been patient. "It hasn't gone perfectly, but it's going pretty well."

Not everyone has complaints.

"It's been going pretty well. We haven't experienced any problems," said Ron Iori, spokesman for Ford Motor Co., which ships cars by rail.

B.F. Goodrich Co. spokeswoman Denise Bowler said the transition has been seamless for the company. "From our standpoint, it has been business as usual."

Marty Schlessel, executive vice president of White Stone Supply in Twinsburg, said the poor rail service under Conrail so far has not improved with Norfolk Southern, but he is willing to give it time.

"I'm optimistic they're going to put it together," he said.

NEW YORK: NS, CSX avoid major service disruptions

NEW YORK -- A week after dividing Conrail Inc.'s track network between them, Norfolk Southern Corp. and CSX Corp. have avoided major service disruptions but are working out kinks in their operations, the Wall Street Journal reported today.

The carve-up of Conrail, whose tracks blanket the Northeast and upper Midwest, carries high stakes for everyone involved. Norfolk Southern and CSX paid $10 billion for Conrail, the most expensive rail acquisition in history. And the breakup is particularly complex, because it involves splitting a major railroad and integrating its pieces with two others.

Rail customers still remember the massive service failures and freight tie-ups in 1997 and 1998 that followed Union Pacific Corp.'s takeover of Southern Pacific Rail Corp. Those problems, which started in Houston, led to higher shipping costs for hundreds of rail customers.

So far, the Conrail takeover has been accompanied by some computer snags, operating glitches and backups at terminals in various parts of the new system. Shipments have been delayed, and freight trains in the Conrail territory have been running several hours late. "They wanted it to go perfectly, but so far it has fallen short of the mark," said Larry DeYoung, a railroad consultant in Flemington, N.J.

United Parcel Service of America Inc., said it had to extend some package-sorting shifts at major hubs in the Northeast and Midwest to accommodate late trains. "We're not at the point of things not showing up, but when something is two hours, four hours or six hours late, that's a big deal for us," said Norman Black, a UPS spokesman. Atlanta-based UPS uses railroads to move ground packages over long distances as an alternative to trucks.

Norfolk Southern and CSX had warned customers for months that there could be some operating problems despite their preparations. The two railroads have bought hundreds of new locomotives and brought on hundreds of additional employees, while making major capital investments in freight yards, tracks and computer systems.

For their part, officials of Norfolk Southern, based in Norfolk, Va., said computer problems adversely affected shipments on former Conrail routes, and there were delays in the system that calls train crews to work. Train operations "are certainly not up to our standard," said Steve Tobias, Norfolk Southern's vice chairman and chief operating officer. "But they continue to improve on a daily basis."

CSX, Richmond, Va., said it had enough locomotives and train crews to run trains during the first week of its Conrail operations. Computer systems are working but need additional fine-tuning. But CSX suffered a setback when its operations center in Jacksonville, Fla., was hit by lightning last Thursday, knocking out signals and disrupting trains for about three hours. "That clearly set us back," said Michael Ward, an executive vice president of the CSX rail unit.

Meanwhile, both Norfolk Southern and CSX are operating special trains to keep shipments moving and terminals from becoming congested. CSX, for example, ran a special train between Baltimore and Jacksonville Tuesday to expedite delivery of packages for UPS.

Customers are urging Norfolk Southern and CSX to respond quickly to any glitches lest they grow into bigger problems. They note that Union Pacific's service meltdown didn't start until months after it began assimilating Southern Pacific.

Still, customers said they were impressed that Conrail's acquirers worked out agreements with labor in advance of their new operations, while retaining Conrail employees familiar with the territory. "They took all the steps necessary to make the launch successful," said Ed Emmett, president of the National Industrial Transportation League, which represents 1,400 rail and truck customers.

Norfolk Southern and CSX also enjoy significant goodwill among Conrail customers, who have long wanted to see an end to Conrail's rail monopoly in the Northeast. Conrail was created by the federal government in 1976 from the ruins of the Penn Central and other failing railroads to preserve rail service. Mike Smith, president of Finger Lakes Railway Corp., a short-line railroad in Geneva, N.Y., said for years he had only one connection to the nationwide rail system: Conrail. But since the Conrail breakup on June 1, he now connects with two railroads, CSX and Norfolk Southern.

"This is what we should have had years ago," Mr. Smith said. "We are finally just getting it."

WASHINGTON: Minor glitches from Conrail breakup

WASHINGTON -- Minor glitches in rail operations resulting from last week's breakup of Conrail Inc. do not warrant major concerns for rail safety, a government official said Tuesday.

CSX Corp. and Norfolk Southern Corp., the two railroads that carved up Conrail, said operations remained relatively smooth one week after the split. Minor problems were reported at the railroads in some staffing and computer functions.

The Conrail split, which took effect June 1, has come under intense scrutiny in light of fatal accidents and delivery delays that followed the 1996 merger of Union Pacific Railroad with Southern Pacific in the West and the Midwest.

Ronald Newman, the Federal Railroad Administration official overseeing the Conrail restructuring, praised CSX and Norfolk Southern for their level of planning, which had delayed the split date and the companies' ability to reap benefits.

"It's a strong confirmation unless things change that the long-term duration -- two years worth of planning -- is right on target and has been worthwhile," Newman said. "It minimized problems with the integration of this gigantic system."

The Conrail split, the most complex restructuring in modern railroading, breaks up a 23-year-old monopoly created by Congress in 1976 out of six bankrupt carriers. Norfolk Southern and CSX now control virtually all rail traffic east of the Mississippi River.

The Federal Railroad Administration dispatched more than 40 inspectors since mid-May to identify problems before they turn into safety concerns.

There were a few complaints from shippers of delays or shipment tracking problems.

"We were very disappointed with the first week's performance," said Norman Black, a spokesman for United Parcel Service. "We saw an unacceptably high number of delays, of trains simply not arriving on time."

CSX spokesman Rob Gould said the company ran a special train for UPS on Tuesday between Baltimore and Jacksonville, Fla. He cited it as an example of the company working aggressively to tackle problems.

Norfolk Southern faced some computer troubles initially when technicians mistakenly loaded test data. Later, the company discovered a few problems with Norfolk Southern and Conrail computers talking with each other.

Donald O'Brian, assistant Norfolk Southern vice president for implementation, said the company has technicians dispatched throughout the rail network 24 hours a day to handle those problems.

"We're not ready to declare victory yet, but we are making progress each day," he said.

Norfolk Southern also ran into problems with an unexpected number of crewmembers deciding to take days off in Michigan. Phone lines and crews had to be added to restore normal service.

At CSX, some customers had trouble accessing the railroad's electronic data system, used to track shipments and order cars.

"We have had some glitches, but while we didn't anticipate these things to be happening, we knew we would have issues that would arise and have responded to them," said Bob Haulter, assistant CSX vice president for integration planning.

The one major service disruption that occurred at CSX last week was not related to the Conrail transaction. A lightning strike at a communications center in Florida on Thursday slowed or halted about 200 trains, including about 15 passenger trains. Computers were restored in about three hours.

WASHINGTON: AAR, others foresee growth

WASHINGTON -- The summer months could bring welcome relief for railroads in the form of higher intermodal, grain and general merchandise traffic. But weak coal shipments could slow the growth pattern, the Journal of Commerce reported today.

That picture emerges from the latest industry traffic report compiled by the Association of American Railroads and insights from industry analysts and officials.

A substantial pickup in business would be a change for the rails, whose carload volume rose an anemic 1.4% in May. After five months of 1999, car loadings trail 1998 levels by 0.7%.

"What do we make of this lack of growth?" said Tony Hatch, an independent analyst.

"Is it permanent? Are the railroads going to be able to grow by adding service and spending money, or is this a pipe dream? The answer is I think they can," Hatch said.

Michael Lloyd, a Merrill Lynch transportation analyst, saw some potential good news for the railroads as a result of recent economic trends.

"We've seen a pickup in the National Association of Purchasing Managers (NAPM) index, which is a good indicator of industrial production," he said.

The NAPM index for May reflected production growth, increased orders and increased export activity.

"We are hearing from more and more industries that there will be inventory building due to the Y2K situation," Lloyd said. "It may not be occurring yet, but that may be part of it as well."

"This hasn't been a tremendous year for rail traffic, but it is OK," Hatch said. "When some commodity group turns down, there is always something else that goes up."

So far this year, the down side has been coal traffic, which has accounted for 35% of carloads.

Traffic fell 2.8% short of last year in May, virtually identical to the 2.9% volume decline for the year to date.

Industry analysts and officials attribute the traffic pattern to operating problems, high stockpiles and weak export markets.

On the plus side are automotive traffic (up 12.4%) in May and chemicals (up 3.2%) last month. Those results were an acceleration of a growth pattern through the previous four months.

Intermodal business also appears to be strengthening, as traffic volume picked up 6.6% in May.

That pace more than doubled the year-to-year growth rate between January and April.

Union Pacific, Canadian National and Canadian Pacific led the intermodal parade with double-digit traffic increases.

"I am somewhat encouraged that intermodal is going to come out OK," Hatch said. "That is something to watch. It is so important for that intermodal number to represent growth because it is the key to railroads' overall growth."

Another potential bright spot is agricultural traffic, which has long been a disaster area due to low commodity prices and weak exports.

Lloyd said Merrill Lynch analysts believe corn and wheat exports increased 35% during March, April and May. A 12% year-to-year improvement is expected during the June-August period, he said.

UP posted the fastest grain traffic growth rate at 18.3% in May.

John Bromley, a UP spokesman, said increased UP grain exports to Mexico were driving volume growth.

The positive trend extended to other commodities, including coal, chemicals, minerals, motor vehicles and forest products.

"We have been successful in regaining some of the traffic we lost during the service crisis," Bromley said.

For the month of May, UP moved 40,000 more carloads than it did in the same month of 1998, representing a 12.7% growth rate. Rival BNSF's carload traffic rose by just 1,357 shipments.

That trend was a sharp change from last year, when BNSF was posting double-digit traffic growth in some months and UP was experiencing volume losses at a rate that nearly matched BNSF's gains.

Canadian National Railway registered the second highest growth rate in May, due to double-digit increases in forest products, vehicle and agricultural products traffic.

Eastern railroads remained in the doldrums.

CSX Transportation coal traffic slipped 10% in May from year ago levels. CSX's non-coal carloadings of other commodities were flat, leaving the railroad with a 3.8% decline.

Carloads were even lower at Conrail, whose last month as a major railroad ended with a 13.6% drop in coal traffic and a 16% slide in metals shipments that were tied to steel industry woes.

Norfolk Southern eked out a 0.4% year-to-year growth rate.

The growth was fueled by a 4,159-carload increase in automotive traffic that more than offset a loss of 3,043 coal shipments.

INDIANA: Residents may be eligible for compensation benefits

INDIANAPOLIS -- The following is being issued by AT&T Corp.: People who currently own or who once owned land underlying or adjoining abandoned railroad corridors in certain locations in Indiana may be eligible for compensation benefits under a class action settlement in the U.S. District Court for the Southern District of Indiana.

The Court is seeking to reach all potential claimants to notify them of the agreement and of their rights. Claimants may be entitled to benefits averaging $45,000 per mile under the settlement.

The people who may have a claim are those who own or once owned land underlying or adjoining abandoned railroad corridors that were formerly used to provide service from Indianapolis to Bloomington, from Palmer to Chicago, from Richmond to Muncie, and from Sheridan to Indianapolis.

People who believe they may have a claim may obtain further information by calling 800-436-6136, or by accessing website: http://att.fsiwebs.net/settlements, or by writing the claims office at TeleCable Settlement Center, P.O. Box 19750, Indianapolis, IN 46219-0750.

The defendant, AT&T Corp., owns fiber optic telecommunications cable on the property along the abandoned corridors.

Claimants have until August 15, 1999, to comment, object to or opt out of the settlement. On September 17, 1999, there will be a fairness hearing on the settlement.

The lawsuit alleges that AT&T installed more than 80 miles of optic fiber or other telecommunications cable in Indiana in land that is or once was subject to a right of way for railroad purposes. The lawsuit alleges that AT&T negotiated and entered into contracts with the railroads for the right to install its fiber optic cable on the railroad corridors and generally did not negotiate with adjoining landowners.

The suit contends that the class members, not the railroads, own the abandoned corridor land and are entitled to compensation for the use of the their property. The settlement involves only Indiana right-of-way corridor that has been abandoned for railroad purposes. The settlement does not involve property adjacent to railroad lines that are still in active service.

CALIFORNIA: Ridership up on capitol trains

OAKLAND -- Ridership on the Capitol Corridor Trains has experienced tremendous growth for two months in a row, it was announced today by Steve Cohn, Chairman of the

Capitol Corridor Joint Powers Board (CCJPB), including a record-breaking 50,491 passengers for this past May, 18 percent above May 1998.

Ridership on the Capitol Corridor Trains for this past April was 48,076, an 18 percent increase over April of 1998.

The CCJPB is responsible for managing and setting policy for the Capitol Corridor Trains, which provide an intercity service between Colfax, northeast of Sacramento, and San Jose, over 185 miles of track. Amtrak operates the service under a contract with the CCJPB.

Cohn, who is also a member of the Sacramento City Council, said it is very gratifying to see this increase in ridership, which not only validates the need for the Capitol Train service but also underscores the potential market demand for considering additional service where needed.

"Last October, after taking over the service, we added a fifth train, followed by a sixth train this past February in an effort to create more opportunities for potential riders to use the service. Additionally, we are carrying out a marketing effort to increase potential riders' awareness of the service and the various destinations served by the Capitol Trains," Cohn said.

The trains stop at Auburn, Rocklin, Roseville, Sacramento, Davis, Suisun/Fairfield, Martinez, Richmond (direct BART connection), Berkeley, Emeryville (direct bus to San Francisco), Oakland at Jack London Square, Hayward, Fremont, Centerville, Santa Clara/Great America, in addition to Colfax and San Jose.

OKLAHOMA: Amtrak celebrates new Oklahoma City service

OKLAHOMA CITY -- On Monday, June 14, Amtrak and the State of Oklahoma will celebrate the inaugural of passenger rail service on the Fort Worth to Oklahoma City route, providing the first passenger train service to Oklahoma in 20 years. The news media is invited to join Amtrak, federal, state and local officials as they celebrate the inaugural of this service on board a special inaugural train and at station festivities along the Fort Worth to Oklahoma City route.
WHAT:   Inaugural festivities for a new Amtrak passenger train,
               operated in partnership with the State of Oklahoma, from Fort
               Worth, Texas, to Oklahoma City, Oklahoma.
WHERE: On board the train and at intermediate railroad stations as it
               operates from Fort Worth to Oklahoma City.  News media are
               invited to station festivities prior to the train's arrival at
               each station and during the train's visit to each community.
               You are also invited to ride any or all portions of the trip.
               Return transportation is not provided.  Locations of station
               ceremonies include: Fort Worth and Gainesville, Texas;
               Ardmore, Pauls Valley, Purcell, Norman and Oklahoma City, Okla.
               Station addresses are attached.
WHEN:  Monday, June 14, 1999
               The inaugural train schedule follows.
               Station events commence 15-30 minutes prior to the train's
               arrival except at Fort Worth and Oklahoma City.  Times are
               below.
WHO:    U.S. Senator Kay Bailey Hutchison
               U.S. Senator Don Nickles
               Oklahoma Governor Frank Keating
               Oklahoma Transportation Secretary Neal McCaleb
               Amtrak Chairman Governor Tommy Thompson
               Amtrak Intercity President Lee Bullock
               Other Amtrak representatives will be present at all station
               events and on board the train.  Various state and local
               officials representing states and communities along the route
               of the new train
 RSVP:   Due to the extraordinary interest in this new service, news
               media who wish to ride the inaugural train must RSVP by June 10
               by calling 312-655-1311.  Please leave the names of all
               riding as well as where they will be boarding and deboarding.
               Only reporters with media credentials will be allowed to board.
             
               Amtrak(R)
              OKLAHOMA SERVICE
              INAUGURAL TRAIN SCHEDULE
              Monday, June 14, 1999
Ft. Worth Ceremony 8:00 a.m. Depart 8:30 a.m. Gainesville, TX Arrive 9:50 a.m. Depart 10:10 a.m. Ardmore, OK Arrive 10:53 a.m. Depart 11:13 a.m. Pauls Valley Arrive 12:16 p.m. Depart 12:36 p.m. Purcell Arrive 1:01 p.m. Depart 1:21 p.m. Norman Arrive 1:52 p.m. Depart 2:12 p.m. Oklahoma City Arrive 3:00 p.m. Ceremony 3:30 p.m. Note: Inaugural festivities will begin 15-30 minutes prior to train's arrival at intermediate stations.

Station addresses:

Fort Worth, Santa Fe Station; 1501 Jones Street
Gainesville, Texas; 605 East California Street
Ardmore, Okla.; 251 East Main
Pauls Valley, One Santa Fe Plaza
Purcell, East End of Main Street
Norman, 200 South Jones Ave.
Oklahoma City, Santa Fe Station; E.K. Gaylord Ave. and Sheridan