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ERIE - LACKAWANNA MERGER STUDY

Carload Freight - Effect of Rerouting Freight Traffic

Study IV

The purpose of this study was to determine the joint through routes that would be used in event of merger, the freight traffic that would be rerouted. and the effect of such rerouting on expenses.

An analysis was made of the available alternate routes taking into consideration mileage, ruling grades, helper operation, crew requirements, direction of flow of traffic, service requirements and, in some instances, comparative out-of-pocket costs. Consideration was also given to changes in operations contemplated under merger, as described in Studies I and II. The table attached as Schedule A shows the principal through freight routes and mileages selected for the merged company, and both principal and secondary freight routes are shown on the map accompanying the report, Number IV-A.

The location of the principal yard at Hornell required the use of the Erie line between East Buffalo and Corning, although the Lackawanna line is six miles shorter.

Similarly, between East Binghamton and Croxton the Lackawanna route is 28 miles shorter, but the Erie route has more favorable grades and shorter helper districts. Because of the large differences in mileage, out-of-pocket costs per gross ton mile for the two lines were computed as follows:

                                  Erie         Lackawanna

               Eastbound        $0.1061          $0.1141
              Westbound          o.1412           0.1391

Since the predominant movement of tonnage is eastbound, the Erie route was selected.

On the other hand, traffic to and from the anthracite area has been routed over Lackawanna lines since they represent the shortest route.

When the new routes were known, traffic susceptible to rerouting was determined from the waybill study and the net change in gross ton miles was computed and projected to an annual basis including an allowance for empty cars handled and locomotive ton miles. The increases or decreases in gross ton miles for each road and the estimated net decrease in freight train out-of-pocket costs of $272,526 based on costs per 1,000 gross ton miles as described in Appendix C, are summarized in the table below:

                                                    Freight Train
                                           -------------------------------
                                          Out-of-Pocket       Gross Ton
                                            Costs         Miles (000's)
                                           -------------------------------
Erie traffic moved:to Lackawanna lines           $101,476 G     100,085 D

Lackawanna traffic moved to Erie lines            171,050 G     416,806 I
                                               ---------------------------
                                   Total         $272,526 G     316,721 I

Estimated increases or decreases in private line car miles were
taken into account in Study VII-F, Equipment  Pools   Freight Train Cars.