Someone tell me . . . .

Trains Magazine General Discussion
1

Someone tell me just WHY Conrail is no more? Last I knew they were making money. They ran a good railroad. The stockholder were happy and received dividens regularly, or so I thought.

Now they are gone. [:(] [V] [:(!]

Has railroad service improved where they were? From what I hear maybe not.

Are the other railroads doing as good a job as Conrail did? I think not so.

Has the face of Eastern railroading changed for the better because Conrail is gone? From what I have heard that is a mixed bag. I think, probally not.

WHY IS CONRAIL GONE?

WHY [?] WHY [?] WHY [?]

2

There are two sides to any sale of business property: a seller, who believes they’re not going to make as much money holding onto the property as they will by taking the purchase money and investing it elsewhere, and a buyer, who believes they can make more money with the property, even after paying for it, than they can by investing the purchase money elsewhere. At the strike price, the seller thinks the property is overvalued and the buyer thinks the property is undervalued.

In the case of Conrail, the shareholders received a huge premium over the value of their stock. They believed they were never going to make out as well holding onto the stock, so they very happily sold it.

CSX and NS, on the other hand, fully understood that the purchase price was at a big premium, but in their eyes they felt that adding 1/2 of Conrail to each of them made their existing properties significantly more valuable than they would be on their own, and they believed that the 1/2 of Conrail they each got also would become more valuable once combined into CSX and NS, respectively.

Time will tell who got the better side of the deal – Conrail’s shareholders, or NS’s and CSX’s shareholders.

So to answer your question, “Why is Conrail gone,” the answer is "Because people want to be richer today than they were yesterday. That is the only significant reason for its sale to CSX and NS.

3

…On the surface, just the way the operation looks here in Muncie…I wonder. We have the ex. New York Central double track line east / west through here and one of our family restaurants is along one of our main thoroughfares and the tracks are parallel to all of this…By observing [from the restaruant], over these past few years…this half is operated by CSX…and for one thing the power is not nearly as consistent that brings trains through here as was the Conrail lneup. It is my observance there is not as many trains on the route either. [Just my opinion, as I really don’t know], perhaps more might run at night…??? I notice the makeup of loads seems different too. Appears to be more auto racks now than was passing through before. End result, I suppose a question…from an observer’s view. For sure the power is not as good looking as for being the latesst wide cab six axle units as was running on Conrail. Seems to be units from several western roads and a scattering of older CSX units along with newer wide cab engines. A real mixed bag of power.

4

Re: Traffic. One thing that does happen when two railroads merge is that the new entity will use (usually) the “best” routing where there are more or less parallel routes. The old roads used their own “best” route, based on the track they owned. The new railroad may now have several paths between points A and B and will use the one best suited for the traffic. If a line is completely redundant, they’ll usually try to dump it.

5

NS and CSX wanted to make some more money and they each wanted it and they did what they want to get it and the next thing you know we’re stuck with black dash 9s.[:(!][:(!][:(!][:(!]

Really, I think it was because NS and CSX wanted it so much they’d pay anything to buy them.

6

What do you mean… Conrail is gone… last i knew they were up and about… Contreial engines are still around…

evedently i don’t get outside much…

How are they… GONE?

7

My simple answer to the initial question…CAPITALISIM AT ITS FINEST

8

Me thinks . . . . . CAPITALISM AT ITS ABSOLUTE WORST ! ! ! ! !

9

Conrail does still exist they own track in New Jersey, Philadelphia and Detroit. The track is split between NS and CSX. NS and CSX are trying to gobble that up so there would be no Conrail at all.

10

…Sounds like the concensus is it’s a bit of a mess to not much better than same routes before.

11

Mark [:)]

Can you tell us how the stock buyout worked? Was it a stock for cash deal or a share of stock for a share of stock? I would be interested to know this.

Conrail was a very good example of a railroad being managed well. They started with a mess (not meaning to demean any of the previous railroads) and began making money. Yes, they did get rid of some trackage. But they ran a good “ship” as they say.

12

Ns needed conrail to get to eastern ports.Csx needed Conrail to get back into St.Louis after letting the B&O line in Southern indiana and Illinois go to waste.
stay safe
Joe

13

Me?

14

Dougal (Mark) [:)]

Hey you are more than welcome to take a shot at it. [;)]

But I actually meant Mr. H.

I remember reading some things in the Trains mag and thought he might remember the details.

Losing Conrail does show how we become complacent in thinking what we have today WILL be here tomorrow. It also goes to show how we appreciate something more when we lose it. I would much rather have seen a railroad west of the Mississippi acquire Conrail or vice versa so the Conrail operation could have remained intact. If voicing my opinion would have made a difference in keeping Conrail or not I would have gradly done so. I doubt my opinion as a railfan would have made any difference to the surfboard. I doubt that I could come up with the cash necessary to influence them. OH, sorry, I was just thinking out loud. I am very sure that are not influenced by cash at the least bit. [;)] I believe they acted out of the good of the entire country. Don’t you?

Now about my swamp land in Arizona? Oh never mind.

15

Jim: I’ll have to ask tomorrow about the purchase details.

Some of the subsequent posts on this topic concerned the value of Conrail. In general terms, you can think of a railroad having three positive values, cash, real estate, and traffic. I don’t know what Conrail had in the prior two categories, but as I recall the principal attraction was traffic and a low operating ratio.

Consider the traffic position of CSX and NS. Both are essentially single-track railroads with many duplicate routes, none of which can be abandoned without severe hardship on the systems, CSX much more so than NS. Neither railroad had a position in New York City and North Jersey, the principal East Coast intermodal terminal and industrial complex, respectively. Coal was the money-maker at CSX and NS, but beginning several years ago it entered a period of steep decline that shows no signs of reversing.

Neither railroad was a major east-west intermodal player, in part because their routes are fairly indirect, in part because they connect very few major city pairs with a high-speed route (Cincinnati-Atlanta on NS is a noteworty exception), and partly because the principal east-west gateway city, Chicago, they approached from the southeast.

The gateway cities matter a great deal. If you look at a U.S. railroad atlas for a few minutes, consider how each gateway is approached. On all sides of Chicago, flat open country allows high-speed routes that have been built up with multiple track for high capacity. It also doesn’t have the Mississipp River to tussle with, which becomes more and more difficult to cross the farther south you go.

St. Louis is boxed to the west and south by the Ozarks, and while it has excellent approaches from the east, the western approaches are hilly and slow. It’s going nowhere as a gateway, and is avoided because of the high costs and slow transit times of its two terminal roads, TRRA and A&S. MoPac and Cotton Belt figured out how to go ar

16

I remember when the Cotton Belt 819 ran its last excursion. We returned on a Sunday afternoon. As we were unloading there was a discussion of what might happen in the future. Several of the club members were also SSW/SP railroad men. They figured then that UP would take them over. They also predicted that it would come down to about 4 major U.S. railroads. No one wanted to see this happen but it has and is.

17

It seems to me that in Northern New Jersey where CSX reigns supreme…service has not gotten better at all. Just take a look at what they do with other railroads locomotives. The Sothern Railroad of New Jersey had a loco sitting in the CSX Slekirk yard for a long while. It was not suppose to be there but there it stayed. When it finaly moved where did it go? West towards Ohio. So it final came back and went south and the SRNJ fianlly got their unit. Thats just one story. As for the breakup of Conrail. Before it happened the New York Susquehanna and Western Railway had a booming intermodal business. But after the break up the Hanjin traffic that the NYSW had went to NS and the Sealand traffic went to CSX. Now the NYSW just runs 6 long distance freights a week. So in Northern New Jersey the break up seemed to change the whole railroad scene. Thats just what i can gather on the whole break up deal. Any other input would be great.

18

It seems that more than one person is not quite up to date. Conrail has been gone for quite a while now (about 5 years). The reason it is gone is because, as you said, it was doing very well. This made it very attractive to possible purchasers. Norfolk Southern and CSX had a bidding war to buy it and had to call a truce, and split Conrail up between them. Of course there are still engines around, as someone else mentioned. Many railroads leave the old paint jobs and often the numbers too. It does become confusing when NS changes the numbers to their own numbers, but leaves the paint scheme, because CSX could have an old Conrail engine that has the same number and paint scheme.
Conrail does exist in the Newark area, it is meant to hold control over NS-CSX joint ownership places (places where they couldn’t decide who got it and both got it).
In conclusion Conrail has been gone for a few years, and I am a little surprised that after all this time you wouldn’t know about Conrail being purchased by NS and CSX. Maybe you don’t actually go out and ride trains back and forth across the U.S. and Canada as often as I do. If you don’t, think about trying it some time… It is pretty fun!!![:)][:)]

19

I certainly knew Conrail was gone. I read all the coverage about it in the Trains magazine that I could. There is very much a dislike over the split up of Conrail. Even today as you say, 5 years after the fact. But it seems to me that one word can sum it up very well–GREED.

And like other mergers in the past, this one has had its problems. NS seems to have done a much better job of handling its problems than has CSX. But from what I read “things” are not better because of the breakup.

When it comes down to it, I believe the Conrail stockholders may have made money in the short run, but possibly not in the long run. As for the railfans, we definitely got the short end of the stick.

20

well, it could be explained many was, as it has. Mainly greed, limit competition, greed, gred, and greed. also kind of a what goes around comes around deal. it ate up old dying systems, and was gobbled up itself.

to everything there is a season…