THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Wednesday, May 3, 1995 TAG: 9505030471
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY CHRISTOPHER DINSMORE, STAFF WRITER
LENGTH: Medium: 84 lines
Norfolk Southern Corp. is taking aim at trucks on Interstate 95 and is enlisting Conrail Inc. as an ally.
The Norfolk-based railroad said Tuesday that it will add two trains May 15 to its daily rail service with Conrail. The service runs between Atlanta and New York and Boston.
Norfolk Southern and Conrail hope the expanded service will help the railroads snatch away some traffic from the busiest trucking corridor in United States - Interstates 95 and 85.
The service will involve the use of intermodal containers, which can be readily transferred between rail cars, trucks and ships.
Intermodal shipping is Norfolk Southern's biggest growth business. It accounted for about 9 percent of the railroad's $4.6 billion in total revenues last year and grew by 18 percent in the first quarter of 1995.
There has been speculation for months that Norfolk Southern may try to buy Conrail, in part to improve its connections in the Northeast to better compete against trucking companies in north-south service.
The railroads have declined to comment on merger speculation but did say Tuesday that they will start offering a new pricing structure for their joint intermodal service. The new prices foreshadow the added efficiency that should come later this summer when the railroads complete raising clearances so they can stack one container on top of another.
``We can move greater volumes at lower costs with double-stack,'' said Marc Kirchner, Norfolk Southern's director of strategic planning.
With better pricing and more frequent service, the railroads hope to take market share away from trucking companies plying Interstates 95 and 85 between the populous Northeast where Conrail operates and the growing Southeast where Norfolk Southern's network is located.
``The pie is certainly growing, but we're probably going to take a share of existing highway traffic and put it on the rail,'' Kirchner said.
The two railroads operate one train each way between New York and Atlanta five days a week. They switch the trains between the railroads at Hagerstown, Md. They move about 40,000 containers and truck trailers a year and the expansion is expected to double that within a year.
The new service will add a second train each way per day and increase the service to six days a week.
``It's a very big market from the Southeast to the Northeast,'' Kirchner said. ``To some extent the train is experimental to test the market's potential, which could be huge.''
To encourage shippers to opt for rail service, Norfolk Southern and Conrail will offer shippers access to a fleet of 2,500 48-foot-long containers. The containers are part of a fleet owned by a partnership of the two railroads with Union Pacific Corp., a large railroad in the West. A container can be placed on a trailer chassis at a rail yard for local delivery.
The railroads also take truck trailers on intermodal trains, but want to encourage the use of the containers, which can be double-stacked to maximize their operating efficiency, Kirchner said.
Intermodal rail service is a high priority for Norfolk Southern. The railroad announced joint intermodal services with several railroads last year:
Between Dallas and Atlanta with Kansas City Southern Railway, which competes with truckers on Interstate 20.
Between Miami and Atlanta with Florida East Coast Railway.
Between Chicago and New York via Buffalo on the New York, Susquehanna and Western Railway for CSX Intermodal Inc.
Norfolk Southern also opened an intermodal gateway terminal in Kansas City last year to offer shippers a less congested link between eastern and western railroads other than Chicago.
This year, the railroad expects to raise clearances in several West Virginia tunnels that will shave nearly 150 miles off the route intermodal trains take between the port of Hampton Roads and an important midwestern market like Chicago. ILLUSTRATION: Map
JOHN EARLE/Staff
SOURCE: Norfolk Southern
Color photos
by CNB