ROANOKE TIMES
Copyright (c) 1997, Roanoke Times
DATE: Tuesday, April 8, 1997 TAG: 9704080094
SECTION: BUSINESS PAGE: B-6 EDITION: METRO
DATELINE: PIKEVILLE, KY.
SOURCE: ASSOCIATED PRESS
Railroads can no longer afford to be arrogant.
Coal hauling accounts for about a third of CSX Transportation's business. Still, coal has occupied a sort of second-class status on the rails.
``The railroad has often treated coal traffic as unscheduled business,'' said David Rohal, a CSX general manager in Lexington, Ky. ``We didn't know in advance what the mines are going to load. ... Coal trains would come or not come, and we wouldn't know to expect them.''
Ray Sharp, vice president for coal sales and marketing at CSX Transportation, CSX's rail division which has its headquarters in Jacksonville, Fla., said there was a bit of arrogance thrown into the mix.
``We have realized that, throughout the railroad history, for the most part, we provided a product and expected our customers to work their schedules around ours,'' he said. ``I mean, after all, we were the railroad.''
But deregulation is coming to America's utilities, bringing the prospect of fierce competition to an industry accustomed to regional monopolies. And CSX and others can no longer afford to take the same attitude, Sharp said.
``We have to care for the customer's needs, and he can find an alternative,'' he said. ``They certainly have alternatives.''
In an effort to help keep its utility and coal customers competitive, CSX has set up the Appalachian Service Lane. It's not a new railroad - just a new approach to getting the most out of already established routes.
``Our aim is to enable our shippers to compete with their competitors,'' said Rohal, who is in charge of the lane.
The 938-mile service lane starts just south of Cincinnati, passes through eastern Kentucky, Virginia and North Carolina, and ends up in Spartanburg, S.C. CSX serves 56 active mines producing 273,000 carloads a year along the lane.
The lane handles about 40 percent of CSX's coal carloads, or about 80 percent of the traffic on those lines. Trains on that route also handle chemicals, metals, forest products and other bulk commodities from more than 500 customers.
With railroads merging - CSX and Norfolk Southern Corp. are dividing up Conrail Inc. - and newly unfettered utilities seeking to broaden their markets, consumers are likely to see prices drop. But what's good for the utility customers isn't necessarily good for the coal industry.
American Electric Power Co., the nation's largest supplier of coal-generated electricity, is bracing for changes.
``AEP expects that with an increase in competition, there'll be downward pressure on electric prices,'' said spokesman David Hagelin. ``So we'll be working closely with our coal suppliers and transporters to lower their prices as well.''
LENGTH: Medium: 56 linesby CNB