This website has been archived from TrainWeb.org/eastpenn to TrainWeb.US/eastpenn.

---

OCS TO TAKE TO ROAD AGAIN!

Next Wednesday April 29, the OCS will again be on the road touring a portion of the Conrail system.  The trip will be operated for R.J. Conway (VP of Transportation) between Harrisburg and Allentown and return, with stops at Lebanon and Reading.  The full schedule should be posted later tonight. -Kevin Burkholder

BIG CHANGES FOR NEW OWNER
 

• Norfolk Southern will be inheriting a diverse system from Conrail on August 22.  Portions of the "new" railroad are currently cab signal territory while other portions are not.  Some of the railroad is Rule 261 (bi-directionally signaled) and other areas are Rule 251 or Automatic Block Signals.  In an effort to alleviate many problems and avoid similar delays that UP has encountered post merger, Conrail will begin several "improvement" projects.  On tap to begin this year are several capacity upgrades.  The Harrisburg Line (Philadelphia to Harrisburg) and the Reading Line are scheduled to receive Rule 261 signal systems.  This will allow dispatchers to route traffic on either main track in either direction with CTC implemented.  Directly related to this project is the installation of automatic interlocking at Lyons on the Reading Line and Millards on the Harrisburg Line.  Reports are that a second automatic interlocking will be installed near Wolmelsdorf on the Harrisburg Line.  The Wolmelsdorf location was to be just west of the Klopps Road crossing and actually south of Wolmelsdorf.

• New cab signal territory is also on tap.  In coordination with the CTC and interlocking projects on the Harrisburg and Reading Lines, the territory will become cab signaled!!  The Harrisburg Line has been known for "foreign" motive power leading trains.  CSX frequently utilized this line for detours with their own power leading between Philly and Harrisburg.  With the implementation of cab signals, only units equipped will be permitted to lead.  This will restrict much of the Conrail fleet to former Conrail territory after the NS/CSX acquisition.  The newest NS motive power will also be equipped with cab signal and Locomotive Speed Limiter (LSL for operation over Amtrak territory).  The Altoona constructed SD70's and the new GE C40-9W order will be the first NS-purchased units to be so equipped.  NS has not ruled out the possibility of equipping some of its other motive power with cab signal equipment.

• In addition to upgrade projects on the southern end of the new territory, the Buffalo Line will receive track upgrades as well as the reopening of several sidings.  Norfolk Southern is advertising the new haulage rights over the Canadian Pacific Railway between CP-Kase in Sunbury, PA and Albany, NY.  Intermodal as well as freight service will be marketed and operated.  This increased traffic, coupled to new Buffalo service from points south will undo Conrail's previous policy to downgrade the line.  As a side note, NS will operate their traffic to a CPR interchange at Sunbury, PA.  CPR crews will be handed the train at CP-Kase and will handle the remainder of the trip.

• The final project is in cooperation with the City of Erie.  The 19th Street street running trackage has become infamous with former owner NKP and now NS.  In a deal struck with the city, NS will relocate to a parallel route with the current Chicago Line.  A "shortcut" has also been proposed via the Olean Secondary.  NS has indicated a desire to operate traffic into Hornell off of this shortcut.  This would require an upgrade to the Olean Secondary.  It is unknown if Conrail will begin this project before August 22, however NS plans on utilizing the route by the year 2000!

• The stallion is gathering the mares for an accurate head count.  If you have noticed a recent trend for long-time leased Conrail units suddenly returning home, there is a reason!  Norfolk Southern and CSX have called for the return of all Conrail units either leased or running off horsepower hours owed.  The units are beginning to head back home, where reportedly they will receive a "tentative" new number, in addition to their Conrail number.  It is not clear if this number will be added exteriorly or just punched into a computer for future use.  The only exception to this "return" policy are the LMS 700-series currently on lease to UP.  These units will apparently continue to soldier on as LMS units. - Kevin Burkholder

Norfolk Southern Sets Revenue Record, Reports Gain on North American Sale

Norfolk Southern Corporation today announced revenues that were the highest of any first quarter in its
history.  Norfolk Southern net income for the first quarter was a record $229 million, boosted by a $98 million after-tax gain, or $0.26 per share, on the sale of its North American Van Lines subsidiary. Diluted earnings per share were a record $0.61. Excluding Conrail-related items, net income would have been $279 million, and  diluted earnings per share would have been $0.74.

Net income for the quarter excluding the one-time gain on the sale of North American was $131 million, 2 percent higher than in 1997, and diluted earnings per share were $0.35, up 3 percent.  "Our record first-quarter revenues and Conrail's solid results sparked a 6 percent improvement in income from continuing operations," said David R. Goode, chairman, president and chief executive officer. "The sale of North American helped us produce record net income for the quarter and positions us to focus our full attention on Conrail integration."

Railway operating revenues of $1.07 billion, up 2 percent over the 1997 first quarter, set a record for the ninth consecutive quarter. Leading the revenue growth were the automotive group, up 12 percent as a result of the January launch of Norfolk Southern's mixing center operation with Ford Motor Co., and intermodal, up 10 percent over 1997. Metals and construction, and paper, clay and forest products  posted 2 percent increases. Coal revenues were down 1 percent.

First-quarter railway operating expenses were $815 million, up 7 percent. The first-quarter railway operating ratio was 76.5, compared with 73.1 for 1997. -Norfolk Southern

BNSF and Alabama Power Extend Coal Transportation Contract to 2005

The Burlington Northern and Santa Fe Railway Company (BNSF) today announced that its coal transportation contract for the James H. Miller Generating Station of Alabama Power Company, a wholly owned subsidiary of Southern Company, has been renegotiated and extended until at least 2005.

BNSF started serving one generating unit of the Miller Station in 1995 with low-sulphur Powder River Basin (PRB) coal from Wyoming.  A second unit was added in 1997 allowing BNSF to deliver more than 5 million tons a year to Alabama Power.  By 2000, Alabama Power expects a burn rate of 12 million tons annually of low-cost, low-sulphur PRB coal delivered from BNSF, as they convert all four units to Western coal.

"This new contract is an affirmation that PRB-origin coal together with an efficient delivery system will position both BNSF and PRB mines for the new competitive, deregulated utility environment," said Gregory T. Swienton, BNSF senior vice president, Coal and Agricultural Commodities business unit.  "In addition, we appreciate both the close working relationship we have established over the last few years, as well as the confidence to continue to provide reliable transportation into the future." -BNSF

CSX REPORTS FIRST-QUARTER EARNINGS OF $91 MILLION

CSX Corporation today reported first-quarter earnings of $91 million, 41 cents per share on a diluted basis. In the prior-year period, the company earned $151 million, 69 cents per share on a diluted basis. Excluding the effects of the Conrail transaction, earnings for the 1998 first quarter would have been $134 million, 60 cents per share.John W. Snow, chairman and chief executive officer, noted: "This was a tough quarter. Generally weak coal demand hurt railroad earnings, while dislocations in Asian economies adversely affected Sea-Land's cargo patterns."Looking ahead, we are encouraged by Sea-Land's aggressive cost-reduction initiatives and indications that ocean rates in the Pacific are strengthening. CSX Transportation is focused on building its merchandise business and driving out more costs. Most important, we continue to make excellent progress preparing for the Conrail integration, which will redefine our rail market position and offer substantial opportunities for revenue growth."First-quarter operating income totaled $287 million, vs. $324 million for the 1997 period. The company's operating revenue remained level at $2.6 billion. Operating expense totaled $2.3 billion, vs. $2.2 billion for the prior-year period.Yesterday, CSX announced that it is conveying a majority interest in its barge company to a new venture for $850 million. -CSX Corporation

MORE PIPE FOR NEW ENGLAND

The next 8-858 unit pipe train is due in to Binghamton at 08:30 ET this morning.  These trains have been operating with Union Pacific-family locomotives from Chicago through to a Guilford Interchange.  -Mike Collins

CPR POSTS FIRST QUARTER RESULTS

Canadian Pacific Railway Company (CPR) today announced first quarter operating income of $150 million, up $88 million, or 142% over the same period in 1997. This strong performance was a result of continued robust freight revenue growth and excellent operating performance. The latter reflected more normal winter operating conditions and the benefits of the network revitalization program that commenced last year. This more than offset the absence of income from the Kansas City and Corn Lines (KCCL), sold in the second quarter of 1997. Net income for the period was $70 million, up $65 million over the same period last year.

Revenues increased to $861 million, up $34 million or 4% from $827 million last year. Revenue from ongoing operations was up $80 million or 10%. This more than offset the loss of KCCL revenues as freight revenues from ongoing operations increased across virtually all commodity groups.

Expenses for the first quarter of 1998 decreased to $711 million from $765 million in 1997, an improvement of $54 million, or 7%. Expenses fell reflecting the more normal winter operating conditions as well as the beneficial impacts of recently purchased new locomotives, infrastructure investment and lower fuel prices. Transportation operations were very fluid in the first quarter with average train speeds up over 21% from last year and on
time performance of primary trains being greater than 98%.

The resulting operating ratio improved to 82.6% from 92.5%.

OUTLOOK
CPR is continuing with its strategies of cost reductions and reinvestment to support revenue growth. Freight demand is expected to be mixed for the balance of the year, with some softness for grain, offset by continued strength in other sectors such as automotive and domestic intermodal movements. Operating expenses are expected to continue their decline due to operating efficiencies resulting from the acquisition of new locomotives and other cost reduction initiatives as well as lower fuel prices.

OTHER DEVELOPMENTS
US Northeast Restructuring
The Surface Transportation Board is making a ruling in June 1998 on the application by Norfolk Southern (NS) and CSX railroads to acquire Conrail.  CPR has negotiated agreements with NS and CSX which would give it more
direct access to markets such as New York, New Jersey and Philadelphia if the ruling goes in favor of NS and CSX. This improved access will benefit shippers and is expected to substantially improve the operating and financial performance of the Company's Delaware and Hudson railroad.

CTA Hearings
The Canadian Transportation Agency (CTA) commenced hearings at the end of March in response to a complaint filed by the Canadian Wheat Board (CWB) alleging that the Company and CN had failed to meet level-of-service
obligations in the movement of Canadian grain during the 1996/1997 crop year. On April 17 CN announced that they have reached a commercial settlement of the dispute with the CWB which includes financial compensation and rate-related arrangements.

Labor
To date, agreements have been ratified by five of seven unions in Canada representing more than 70% of unionized employees, including train crew personnel, clerical workers, rail traffic controllers, signal system maintainers and track maintainers. Negotiations are continuing with unions representing shop employees and police.

In the U.S., to date, including tentative agreements, settlements have been reached with 21 of 30 bargaining units. Six bargaining units are currently in mediation, including the union representing trainmen and conductors. -CPR

COAL TRAFFIC IS UP

Freight traffic on the nation's railroads posted a strong gain during the week ended April 11, the Association of American Railroads (AAR) reported today, especially given the Easter holiday weekend compared to a non-holiday week last year.  Originated carload freight totaled 342,299 units, up 2.7 percent from the corresponding week last year. Loadings were up 1.0 percent in the East, and 4.4 percent in the West. Intermodal traffic totaled 163,504 trailers and containers, down 2.8 percent from the corresponding week last year. Total volume was estimated at 26.1 billion ton-miles, up 3.2 percent from last year. Eight of nineteen commodity groups registered increases from last year, with coal up 11.0 percent (13,311 cars), nonmetallic minerals up 1,648 cars (19.9 percent) and motor vehicles and parts up 1,561 carloads (7.2 percent).  Petroleum products were down 1,091 carloads (17.4 percent) and grain was down 3,686 carloads (16.1 percent).  The AAR also reported the following cumulative totals for the first 14 weeks of 1998: 4,845,756 carloads, up 2.2 percent from the comparable period last year; 2,312,922 trailers and containers, up 1.6 percent from last year; and total volume of 378.4 billion ton-miles, up 2.8 percent from last year.  Railroads reporting to AAR account for nearly 93 percent of U.S. carload freight and 98 percent of rail intermodal volume. Railroads provide about 40 percent of the nation's intercity freight transportation, more than any other mode, and rail traffic figures are regarded as an important economic indicator. Canadian railroads were slightly down in both carload and intermodal freight during the week ended April 11. Canadian carload origination's totaled 51,676 units, down 0.5 percent from last year. Intermodal volume totaled 24,929 trailers and containers, down 1.3 percent from the comparable 1997 week.  Cumulative origination's for the first 14 weeks of 1998 on the Canadian railroads totaled 768,480 carloads, up 4.0 percent from last year, and 351,162 trailers and containers, up 3.5 percent from last year. Combined cumulative volume for 14 weeks of 1998 on 19 reporting U.S. and Canadian railroads totaled 5,614,236 carloads, up 2.4 percent from last year and 2,664,084 trailers and containers, up 1.8 percent from last year. -Association of American Railroads

Please check this location daily, as new information will be posted, as it becomes available. If you have news to report or information regarding railroads in the Eastern United States, please send e-mail to Kevin Burkholder at KBurkholder@psghs.edu