Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, May 3, 1995 TAG: 9505030056
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: CHRISTOPHER DINSMORE LANDMARK NEWS SERVICE
DATELINE: LENGTH: Medium
The Norfolk-based railroad said Tuesday it will add two trains May 15 to its daily rail service with Conrail. The service runs between Atlanta and Boston via New York.
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 transferred readily among 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 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 they will start offering a new pricing structure for their joint intermodel service. The new prices foreshadow the added efficiency that will come this summer, when the railroads finish 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.
The expansion won't increase rail service in the Roanoke Valley, nor will Norfolk Southern add jobs here. The trains that comprise the new service will run only as far west as Lynchburg, NS spokesman Bob Auman said.
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.
``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 now 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.
``To some extent the train is experimental to test the market's potential, which could be huge," Kirchner said.
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 container can be placed on a trailer chassis at a rail yard for local delivery.
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 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 Hampton Roads and important Midwestern markets such as Chicago.
Staff writer Jeff Sturgeon contributed to this story.
by CNB