Illinois railroad set to roll with deregulation
Railroad deregulation has joined airline and truck deregulation as a new feather in President Carter's campaign cap. The bill gives railroads new flexibility to raise (or lower) freight rates, new borrowing power to upgrade track and equipment, and -- according to industry spokesmen -- not only will rescue the railroads but will benefit shippers and the public by creating a far more cost- and energy-efficient system.
Congress passed the measure along to President Carter Oct. 1 for his signature. The same day, Illinois Central Gulf Railroad (ICG), which covers the increasingly important "grain corridor" from Illinois to Texas, showed how ready it is to cash in on the long-awaited freedom from government rate setting by the Interstate Commerce Commission.
At an ICG seminar in Chicago Oct. 1, railroad executives met with grain and coal company officials to discuss the benefits of deregulation. ICG spokesmen and shippers agreed that both gain whenever a railroad offers more dependable service. When goods are delivered according to a set schedule, shippers save money and so the shipper is ready and able to pay a higher rate for this service. Both sides cited examples showing that once shippers readjust to regular railroad service, railroads can increase their volume and lower overall rates.
Other railroads have hedged their support for deregulation, looking at some of the disruptions that followed airline deregulation in October 1978 and truck deregulation July 1 this year. But Illinois Central Gulf, with a new management team including men familiar with how Washington works, has spent a decade fighting for and gearing up for deregulation.
An early sign of ICG's determination to trade in its stodgy image came in 1968 when ICG and the grain exporting giant Cargill Inc. of Minneapolis, Minn., helped pioneer the unit train. These long trains running on a set schedule almost nonstop from loading point to unloading point had start-up problems -- often because roadbeds needed upgrading to handle the huge new hopper cars.
Today, with improved tracks and equipment, these unit trains play a major role in booming US export grain sales, according to Cargill's vice-president for merchandising, Daniel Huber. He says greater use of unit trains with their rapid turnaround time could bring great savings by cutting down on the number of hopper cars needed nationwide.
In what Interstate Commerce Commission official Richard Schiefelbein calls a "creative and innovative contract," Illinois Central Gulf has expanded the unit train concept this year. Under a 20-year service contract -- the longest ever signed by a railroad -- ICG will carry coal regularly from an Illinois mine to an Illinois power plant.
Long-term contracts are being encouraged by the government, says Mr. Schiefelbein, because of savings for all parties.