NS and CSX in hot seat over Conrail

The railroads find that breaking up is hard to do.

By Staff -- Logistics Management, 8/1/1999

Sometimes even the best laid plans of mice and men go awry. Norfolk Southern and CSX railroad executives may be thinking of that dusty old adage as they struggle with the integration of Conrail into

their rail operations. The June 1 takeover and division of Conrail was not as seamless as either rail carriers or shippers would have liked. "It's not the smooth kind of operation that one would have hoped for after a year's worth of planning," says Diane Duff, executive director of the Washington, D.C.-based Alliance for Rail Competition, an organization of rail shippers promoting legislative reform. (See the article on rail regulatory proposals on Page 87.)

Norfolk Southern and CSX officials expected there would be some bumps in the process. But rail shippers believe there have been far too many bumps, especially when it comes to track congestion, train availability, and lack of crews to operate equipment.

The nation's largest shippers group, the National Industrial Transportation League (NITL), says some of its members reported problems involving the inability of the railroads' computer systems to distinguish between loaded and empty cars, which resulted in so-called "Ping Pong" cars.

"A Ping Pong car is one that goes from Norfolk Southern or CSX to Conrail, goes from loaded to empty status by mistake, and gets returned to the sender," explains NITL's rail and truck policy director, Edward Rastatter. "We had a lot of people complaining about a loaded car coming back loaded." He says the problem developed because CSX's and Norfolk Southern's information systems had trouble accepting data regarding the status of transferred railcars from Conrail.

The railroads say they are working hard to solve any service problems. CSX representative Kathy Burns says her company has addressed the data integrity issues surrounding Ping Pong cars, but concedes that "service is not up to our levels or our customers'."

Burns adds that CSX is focusing on increasing the velocity of car and train movements within the rail system. As one step toward that goal, she says, CSX plans to consolidate separate CSX and Conrail yards in the Toledo area in order to alleviate congestion. "By consolidating the two [yards] under one operating system," she says, "[the company] will enhance efficiency."

A Norfolk Southern representative, Susan Terpay, says that a majority of the computer problems have been dealt with. She adds that Norfolk Southern has enlisted other railroads to help classify car status properly. To handle the congestion that resulted from the status-reporting problems, she says, Norfolk Southern has leased extra locomotives and hired more engineers and crews. "The number [of complaints] has stabilized and continues to decrease," Terpay says.

NITL's Rastatter agrees that the situation has improved. "We're encouraged by what we're seeing more recently," he says. "Both are first-class railroads and we have a lot of confidence in them."

But other shippers are skeptical. "We have railroad cars that are tied up. And we can't go to the five-and-dime and pick up some [extras]," says Ken Enzor, president of the National Association of Rail Shippers and director of logistics at OMYA Inc. in Proctor, Vt.

Duff of the Alliance for Rail Competition agrees with Enzor's assessment. "My folks are saying they are facing the same challenges," she says. "The situation is largely unchanged."

The federal government, meanwhile, is watching the two railroads' performance. The Surface Transportation Board (STB), the federal agency charged with rail oversight, has requested additional information from CSX and Norfolk Southern, including reports on the number and causes of train delays on former Conrail lines.

Some shippers remain worried that CSX and Norfolk Southern won't get their act together by fall. Enzor notes that fall is an especially critical time of year for rail shippers because that is when companies ship merchandise for the holiday selling season. If shippers can't get railcars then, they'll be forced to compete for access to trucks during a busy time of year. "The rail issue has to be resolved within the next 30 days," he says. "If it carries into September, that will be even more critical as the trucks become less available because of Christmas. The railroads have got to [get] us out of this jam."