I have always had a nagging question about the decline/fall of the Southern Pacific-stemming mostly from Trains’ SP-heavy issue after UP’s merger announcement. Coming of age in a post Penn Central era my mental image of the industry was that of overbuilt, financially weaker carriers in the northeast and upper midwest with other railroads generally faring better as one moved south and, especially, west-where less duplication of lines and longer hauls helped the picture. As such, I never really caught or understood the weaknesses of the Southern Pacific. On the face of it I would have expected UP-SP to be more of a merger of equals but obviously not. Certainly, I always thought of SP as a much larger, more stable railroad than, say, Santa Fe-but, again, t’wern’t so.
Specifically, I have wondered, when did SP stop being the powerful railroad that the UP fought to have and become the weaker railroad that the UP had to accept? I know that conditions change and relative positions ebb and flow but something seems to have crossed a qualitative line somewhere. I have assumed that the ‘tipping point’ was after the failed SP-SF merger, when SP was spun off minus much of its non-rail assets. That certainly didn’t help but was the die really cast before that? When did SP enter the downhill slide that it would no longer be able to pull itself out of?
Mark Hemphill wrote an article about this subject in Trains sometime in 2004 or 2005. Ifs title, if I remember correctly, was “And the Golden Empire Came Crashing Down.”. It was the 1970s that SP went from being being well to near death. The failed merger attempt that stripped SP of all of its profitable, non-rail assets only exacerbated the situation.
I read somewhere that part of the problem with SP at the time of the UP merger was the cost of maintaining the rail lines through the Sierras and the fact that a lot of maintenance had been deferred, which meant that UP had to invest a lot to get the lines and locomotives up to speed right from the get go. Fortunately UP turned all that around and is doing well! There is so much container traffic going through the pass now. $$$
While I am no expert on the SP or it’s history, I have some casual observations as to its possible demise.
First the SP in California would seem to be a costly operational nightmare. Almost every main route within and out of the California involved going up and over a mountain which required helpers:
Both Shasta Route mainlines to Oregon
-The Overland Route through Donner Pass
-The Coast Line between San Luis Obispo and the Salinas Valley
-The San Joaquin Valley Line over Tehachapi
-The Sunset Route out of the Los Angeles Basin through Beaumont Hill
While other railroad had their mountains to contend with, it seems that over it’s history the SP had to spend a great deal of wealth operating all these helper districts between the crews and locomotives needed. A lot of their branch lines, particularly in the northern part of the state where also very mountainous and steep and they too required helpers and almost dictate that the trains be short.
Secondly, a younger SP also drained a lot of its wealth in trying to create and protect a monopoly on transportation in California. There’s a reason why the SP gained the dubious title of “The Octopus” it was almost impossible to travel (before the highways and planes) without ride the SP or a subsidiary. Like the New Haven RR, the SP owned virtually all of the railroads in the state plus trolley lines, interurban companies, ferry boats and steamships. To have that sort of strangle hold on transportation was fine because your patrons really had no other choice. With that in mind, SP saw no urgent need to improve service or sink large sums of capital into improving their infrastructure because there was virtually no competition. It seems like SP did a lot “short haul” business within California unlike the Santa Fe, UP and WP who mostly relied on long hauling goods to and from California with little intrastate business. Unfortunately when competition did come in the f
Many forget that in the early 1970s, when it was still widely thought a winner, not a loser, SP sought to develop its internal microwave communications network into, well, not a nationwide, but a venture sufficiently broadbased to call it national in scope, telecommunications network. The venture made SP a little money, and so SP, naturally, decided to grow the network. It plowed a lot of capital into burying fiber-optic cable along its right of way, and, of course, revenues increased. The fact that the telecommunications network was called “SPRINT” and its owner was SP (get it?) was purely coincidental (!). There was only one problem to this idyll: telecommunications networks are as capital intensive as railroads, and the rate of return from SPRINT wasn’t much higher than that from SP’s rail business. Moreover, SP lacked the depth of pockets to bankroll both lines of business: as a practical matter, SP could be either a railroad or a telecommunication company, but it couldn’t be both because it lacked, nor could it generate, the capital to do so. Alas (I believe), it took SP management well into the 1980s before this constraint became clear to them (in retrospect, and in all fairness to company management, this assessment comes through 20-20 hindsight). However, they violated a fundamental precept of good management by venturing into a field – and then staying there – that they knew litt
“And then the golden empire came crashing down - how Southern Pacific fell apart”
by Hemphill, Mark W., from Trains, March 2005, p. 80
( “Magazine Index” keywords: history management SP )
SP had a decent share of California freight business. And very good long hauls.
Also the SP had the easiest routes to compete with on every route.
The Shasta route was a whole lot cheaper to operate then WP/SP&S route thru Bend,Or.
The Overland route went higher than the WP route thru the Feather River canyon. The overland route was in some ways overbuilt. . A lot of freight that SP originated in Northern California went over the hill to Ogden. A vast majority of the traffic that originated in California originated on the railroads that hauled it. Very little of it was interchanged near the destination.
What this did not include was a huge amount of traffic that originated in Oregon went south thru California then east over the Sunset route thru Arizona, New Mexico, and Texas to New Orleans, Memphis and St Louis for interchange to eastern carriers. This is the same routing that a lot of freight from the San Joaquin Valley and Southern California. This was the state of freight thru the 1980’s. Much of this freight did not make the SP a whole lot of money but collectively kept the railroad afloat.
Donner was an expensive place to operate. and when the UP started interchange with Western Pacific in the 1970’s the loss of traffic resulted in Ed Moyers single tracking the top and also the Yolo causeway west of Sacramento.
Sunset Route. This is the lowest crossing of the continental divide and has the easiest grades. Beaumont Hill has the lowest exit out of Southern California. The highest point, on the route, in Arizona, being under 4000 ft. Every other routing from the West Coast east has to climb to 7000 foot elevation or higher.
If you want to understand what happened to the SP in the late 70’s early 80’s, I strongly recommend joining the pay railroad forum at TrainOrders (buy the shortest subscription) go to the Railroader’s Nostalgia forum, the earliest (Last) pages, and read the Mad Dog Chronicles. They were written by MDO (Michael D. Ongerth) and cover his time with the Espee rising from a junior Assistant Trainmaster to Vice President of Intermodal at SP. He was a contemporary at SP with D. Mike Mohan (later President of SP), and Rollin Bredenberg (now at BNSF). He was right behind Robert Krebs at SP. His time as Asst. Superintendent of the Western Division and after an Interlude as Superintendent are central to understanding the decline of the SP. One of the big problems for the SP was the decline in manufacturing in California, particularly the loss of the Automobile Assembly plants and their very profitable inbound and outbound traffic. Following the UP takeover he was UP’s Vice President of Strategic Development before retiring.