Coal Outlook Conference
 
COAL TRANSPORTATION: HOW TO PROFIT
FROM THE NEW DYNAMICS
St. Louis, Missouri
April 7-8, 1998
 
"COMPETITION, SERVICE AND THE
CONRAIL SPLIT -- WHO'S IN CHARGE HERE?"
 
Presentation by
Kelvin J. Dowd
Partner
Slover & Loftus
Washington, D.C.
 
 
 
RAIL MERGERS AND CONSOLIDATIONS --
THE TRADITIONAL MODEL
 

Combinations and Acquisitions

  • Penn Central
  • Union Pacific - MKT Railroad
  • Competition Plays Second Fiddle to Economic Survival
 
Parallel Mergers
  • Santa Fe - Southern Pacific
  • Competition Counts -- If It's Overwhelming
 
End-to-End Mergers
  • The Great Northern Merger
  • Burlington Northern - Santa Fe
  • Union Pacific - Southern Pacific
  • Service Efficiencies Predominate
  • Conditions Become Standardized
  • The STB's Narrowing Focus
 
Modern Competitive Impact Analysis -- The Conditions Game
  • Wall Street + Efficiency = Basic Approval
  • 2-to-1 Conditions
  • Settlements and Their Disparate Impacts -- the Bunge Corporation Example
  • Service -- The Emerging Issue
 
 
THE CONRAIL PLAN -- A NEW MODEL
 

Background

  • Santa Fe Redux?
  • Chairman Morgan Points the Way
  • An Expensive Half-Loaf for CSX and NS
 
Dividing the Monopoly
  • Largely End-to-End
  • Guideposts: the Pennsylvania RR and New York Central Systems
  • Monopoly Begets Duopoly for Many Major Markets
  • Major Competitive Focus Is On Motor Carriers
  • The Limits of Commercial Negotiations
 
Service Considerations
  • More Detailed Operating Plans
  • Safety Implementation Plans
  • Conrail Contract Preservation
 
 
 THE SHARED ASSETS AREAS
 
Competition by Default?
 

The Key Areas

  • North Jersey
  • South Jersey/Philadelphia
  • Detroit
  • Monongahela Coal Region
 
The Concept
  • Pervasive Dual Access -- On Paper
  • The Shared Assets Operator
  • Unanswered Questions
 
A Legal Hybrid -- and a New Challenge for the STB
  • Commercial Division of a Monopoly Market
  • Competition -- Who Should Decide Where It Can Develop?
  • Market Divisions Generally, and Examples From Other Industries
  • The Significance of Conrail's History
 
 
WINNERS AND LOSERS -- COMPETITION
 

Winners

  • Detroit Area Shippers
  • North Jersey Intermodal Interests
  • Delmarva Power & Light, Et Al.
  • Pittsburgh Seam Coal Producers
 
Losers (Absent Conditions)
  • New York City and Long Island
  • Buffalo
  • PEPCO, NIMO, Et Al.
  • Wheeling & Lake Erie and Captive Shortlines
  • Coal Mines Left "Out of the Box"
 
Cases to Watch
  • Response of Eastern Motor Carriers
  • Great Lakes Coal Shippers
  • Guilford and the New England Market
  • Major Eastern Ports
 
Legal Outlook
  • Greater Pressure for Bottleneck Relief
  • Increased Rate Litigation as Contracts Expire
  • Potential Antitrust Exposure?
 
 
WINNERS AND LOSERS -- SERVICE
 
Winners
  • Southeastern Intermodal Traffic
  • The Canadian Railroads
  • Joint-to-Single Line Shippers
 
Losers (Absent Conditions)
  • Cleveland
  • Northern Indiana
  • Current Captive CSX and NS Shippers
  • Single-to-Joint Line Shippers
 
Cases to Watch
  • Northern New Jersey
  • The Monongahela Coal Region
  • Contracts Falling in the Section 2.2 "Cracks"
 
Legal Outlook
  • More Aggressive STB Oversight
  • Complaints Seeking Modifications of Operating Plans
 
   
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