For sale by Conrail: 1,800 route-miles - railroad plans to sell underused track to short line operators - Brief Article

Railway Age, Feb, 1996

Conrail announced Jan. 25 that it plans to sell around 1,800 route miles of underutilized lines to short line operators and maintain relationships with those operators far stronger than in the past.

"We want to expand our partnerships with short line operators, because they've demonstrated the ability to provide the efficient, high quality, day-to-day local service that helps our mutual customers grow," said David M. LeVan, the railroad's president and CEO.

"What makes this different from our existing relationships with short lines," he added, "is that it will be much more like the way major airlines work with independent feeder commuter airlines.

"The independently owned and operated short lines will execute the all-important local delivery and pickup service on these lines, while Conrail will manage commercial aspects of transactions with customers, including billing, pricing administration, equipment supply and car tracing, among the many other administrative details of rail freight service."

Conrail said its decision to sell these lines came out of a study started more than a year ago "to identify lines that should remain part of Conrail's system." No additional "significant" line sales are anticipated.

More than 90% of the lines are grouped into 12 clusters or corridors. Conrail said it will retain freight service on lines connecting these areas with the rest of the Conrail system in the Northeast and Midwest. Four of the groups were previously announced as candidates for sale, in the Boston, Carnegie, Pa., Clearfield, Pa., and Connecticut areas. The Clearfield sale was completed Dec. 29, 1995. The remaining eight groups are:

* Battle Creek-Jackson-Ypsilanti, Mich., corridor and associated branch lines.

* Buffalo, N.Y.-Keating, Pa., and associated branch lines.

* Danville, Ill.-Terre Haute, Ind., corridor and associated lines.

* Penn Haven Junction-Mehoopany, Pa., corridor and associated lines, including those serving the Scranton-WilkesBarre area.

* Montreal-Syracuse, N.Y., corridor and associated branch lines.

* Niles-North Warren-Cortland-Brier Hill, Ohio., area branch lines.

* Selected southern New Jersey routes: Windsor-Robbinsville-Bordentown-Pennsauken; Mt. Holly-Moorestown-Pennsauken; Woodbury-Swedesboro; and Woodbury-Glassboro-Vineland-Millville.

* Williamsport, Pa., area branch lines. Conrail also plans to sell about 200 miles of lines not associated with the clusters.

The proposed sale is reflected in the net loss of $30 million that Conrail reported for the fourth quarter of 1995, compared with fourth quarter 1994 net income of $149 million.

The railroad reported net income for the full year 1995 of $264 million, down from $324 million in 1994. LeVan said that both fourth quarter and full year 1995 results include a special charge for disposition of the underutilized lines and "other operating assets."