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GWI shuts down Speedlink despite solid third quarter

Genesee & Wyoming Inc. (GWI) Sept. 30 ceased operating Speedlink, a logistics subsidiary formed April 30 in partnership with Union Pacific Railroad that offered door-to-door box-car shuttle train service between the Pacific Northwest and Southern California.

"Due to the weak U.S. economy we have made the difficult decision to cease operations of our logistics subsidiary on the West Coast," said Mortimer Fuller III, GWI chairman and chief executive officer, in a prepared statement. "Although we still believe in the Speedlink concept, we have concluded that the challenges of building our shipper base in a weakening business climate would require a long-term commitment of resources that we are not prepared to make at this time — this is particularly true in the current environment in
which we continue to see attractive acquisition opportunities.''

GWI shuttered Speedlink despite encouraging third-quarter financial results. The short-line holding company Oct. 30 reported $4.5 million in net income — or $5.4 million excluding results of the logistics subsidiary — compared with $3.2 million in third-quarter 2000.

Also, GWI's North American revenue increased 3.6 percent to $42.0 million compared with the second-quarter's $40.6 million. The company's 87.9 third-quarter operating ratio rose slightly compared with the second-quarter's 86.3, however, excluding Speedlink's $1.2 million operating loss, GWI's quarterly operating ratio was 84.8.

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