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Rail News Home Rail Industry Trends

10/21/2002



Rail News: Rail Industry Trends

In transportation chain, railroads are most poised to prosper, NS' Goode says


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Because they now have the network, capacity, information systems, service offerings and partnerships to accommodate growth once the economy improves, Class Is are ready for a rebound, said Norfolk Southern Corp. Chairman, President and Chief Executive Officer David Goode during a speech Oct. 15 at the Western Railway Club in Chicago.


Although large roads continue to face pricing pressures and flat stock prices in the current stagnant economy, Goode believes the railroad industry is in better shape compared with the trucking and airline industries.


"Their challenges are far more critical, and many of them are in dire straits," he said. "The entire net earnings for the airline industry have been wiped out in less than a year. Last year, the airlines lost $7.7 billion … even with $5 billion in federal relief following the Sept. 11 tragedies."


For years, railroads envied truckers' competitive position and relative market-share gain at the expense of railroads. But that might be changing, said Goode.


"Frankly, with the state of the trucking industry today, the railroads are
one of the few sources of cost relief available to trucking companies," he said. "And shame on us that we haven't been more successful than we have in capturing more of that traffic."


Railroads still face many of the same challenges as airlines and trucking firms, such as insurance costs, but Class Is have improved service quality and reliability, which is attracting shippers to rail.


"If this were the TV show 'The Weakest Link,' the hostess would be bidding farewell to airlines and trucks," said Goode.


To take advantage of the situation, railroads should continue to improve interline service and productivity, and control costs.


"If good people are available due to the fallout from other parts of
the transportation industry, or from anywhere else like telecommunications
or technology, snap them up," said Goode. "Right now is a classic time for us to show what we can do."


Contact Progressive Railroading editorial staff.

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