Rail officials quizzed about coming changes Norfolk Southern gives overview of Conrail deal's aftermath

Railroads

August 12, 1998|By Kristine Henry | Kristine Henry,SUN STAFF

As the countdown to the acquisition of Conrail continues, officials of Norfolk Southern Corp. met with Baltimore-area business and shipping leaders yesterday to explain how the changes might affect commerce here.

The split-up of Conrail Corp.'s 11,000 miles of track was approved last month by the federal Surface Transportation Board.

The $10.2 billion deal between Norfolk Southern and CSX Corp. won't be made final until Aug. 22, allowing time for any lawsuits asking the board to revisit its decision.

George "Bud" Nixon Jr., president of Rukert Terminals Corp., ticked off a list of questions that appeared to be on many people's minds when he took the conference-room floor at the Hyatt Regency Hotel.

"I need to get past safety issues and the lines and talk about rates," said Nixon, the co-owner of a 100-acre general-cargo terminal in Baltimore.

"Are you going to grandfather in our current rates? Are you going to lower them? What's your car supply? Do you have a phone roster? Who can we call with questions? Are you going to have an office in Baltimore? When will you be operational? We need to get down to the nitty-gritty and see how this is going to affect us on a day-to-day basis."

No rate predictions now

Much of the nitty-gritty will have to wait.

Although Norfolk Southern and CSX, which has a strong presence in Baltimore, have coughed up the money for the acquisition, they have not had access to Conrail's books.

Therefore, Norfolk Southern officials said, it's impossible for them to make predictions about rates and expansion, or to say when the switch might occur.

"The effective date of an actual split is not a question I can answer, although there's a tremendous amount of interest and pressure to say what the date is," said David Goode, Norfolk Southern's president and chief executive.

"I see this process not as an instantaneous one. It's not like turning on a light switch, but building a foundation for a building."

Norfolk Southern officials said they will honor all current Conrail contracts but that after those contracts expire, new rates will be set.

On Sept. 1, the company will open an office on the sixth floor of the World Trade Center.

Norfolk Southern, which will have 58 percent of the split entity, has made several promises regarding investment in the area. For example, it has agreed to build a $15 million automobile distribution facility here, build an intermodal rail yard and spend $19 million to raise the clearances on the Conrail line so that double-stacked containers can be moved in and out of the port.

The railroad was no closer yesterday to explaining when those projects might proceed or where the new facilities will be.

Existing business must be cultivated and new business attracted before the company can invest in many of its planned projects, officials said.

Instead, the officials focused on building ties with future customers, highlighting Baltimore's importance and Norfolk Southern's desire to work with industry leaders here.

Winstead satisfied

State Transportation Secretary David L. Winstead said he was comfortable with the information Norfolk has provided.

"We're moving in the right direction and the state will continue to work in partnership with them," he said. "This was a meeting of minds."

Nixon said he was happy with Norfolk's presentation but looking forward to hearing more.

"I think it's going to be just great; we just need to get some answers," he said. "Grand overviews are wonderful, but how will it work?"

Pub Date: 8/12/98

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