By Staff
Nov. 26, 2000
History occasionally provides pleasant surprises. I remember with great clarity a conversation with Southern Pacific's Ben Biaggini a quarter century ago about the outlook for the Illinois Central Gulf route from my hometown of Meridian, Miss., to Shreveport, La.
Traffic was down to two to four freight trains per day and I doubted the line would survive.
With typical fearlessness, Biaggini asserted that the Meridian-Shreveport line eventually would rank as one of the most important rail corridors in North America. He called it "the bridge" and said that the railroad controlling this route would hold a significant advantage.
If any railroad executives had been eavesdropping, I suspect they would have questioned his sanity.
Bankrupt systems
At the time, more than half the Northeast's rail system was bankrupt, the economic cancer spreading into the Midwest, and corporate hit-lists were identifying mainlines with far greater volumes as scrap heap candidates.
ICG's Meridian-Shreveport bridge had a few factors in its favor. Crossing the Mississippi River at Vicksburg, it was one of only three spanning the waterway in the 500 miles between Memphis and New Orleans. At Meridian, the line connected with Southern Railway and Meridian and Bigbee, which in turn was linked to Louisville &Nashville about 50 miles eastward. Shreveport was a gateway to SP routes serving Dallas and the Texas Gulf Coast.
A bargain buy
ICG management didn't share Biaggini's enthusiasm, and eventually put the line up for sale. Norfolk Southern Railway considered buying it but decided the asking price was too high due to the extensive rehabilitation required.
Ed Moyer and his Midsouth Group purchased it as the spine of their new operation. Critics scoffed at the notion of paying $20 million. Others concluded the price was more than reasonable for a 300 mile route with good connections in light of other transactions taking place.
Midsouth preserved the line and Moyer rapidly built traffic volumes. In time, this feat attracted the interest of Kansas City Southern Railway Co, which purchased the line about a decade ago. Today, more than 20 freight and intermodal trains traverse it daily.
Biaggini's forecast wasn't so wacky after all. Other routes that once functioned as low-density mainlines have rebounded in recent years. Prime examples are NS' Shenandoah Valley line and Mexico's entire rail system.
Explanations for these routes'  recent prosperity go beyond the industry's recent traffic-growth patterns.
In part, they have taken in greater value because the industry cut too deeply elsewhere. The downsizing of the 1970s and 1980s was overdone. It left managements with track and terminal capacity shortages, as well as inadequate operating flexibility to offer efficient service. We are now curing the capacity problems with massive capital investments, some of which could have been avoided.
A number of revitalized routes also parallel Interstate highways. The proximity of mainline railroads and interstate roadways long has been recognized as an important factor in the location of some types of industry, motor vehicle assembly plants, steel mini mills, plastics manufacturing sites, chemical refineries and grain processing facilities. New industry bolsters on-line carloadings.
The Interstates also define the flow patterns for most of the nation's truck traffic. The containers and trailers hauled by those semi rigs now represents the railroad industry's best hope for future profits. Without the opportunities intermodal traffic affords, most Class Is would be in deep trouble.
Lessons to be learned
Biaginni's prophecy suggests some important lessons.
There is value in possessing vision. Although he voiced his prediction when much of the rail industry was floundering, the Sunbelt was gaining population and industry. The Meridian-Shreveport line was in the right place.
There is wisdom in being able to think beyond the next quarter's earnings. Given the lengthy useful life of the railroad industry's huge infrastructure  and the perpetual life of its rights-of-way 25 years isn't such a long time. Circumstances change. The Meridian-Shreveport line has proved vital to three states' economies, as well as to the fortunes of the route's owners.
Finally, railroad managers should resist temptations to cut costs by downsizing. At some point, the economy will soften. Industry planners will consider scrapping track and right-of-way to offset lower revenues. By doing so, they will jeopardize future business and compel their successors to spend vast sums of money to fix their mistakes.
Before embarking upon such courses of action, they would be well to recall Ben Biaggini's prophecy.
Gil Carmichael, of Meridian, is former Federal Railroad Administrator. He chairs the Amtrak Reform Council and Intermodal Transportation Institute. E-mail him at MissouthD@aol.com. Reprinted courtesy of Progressive Railroading.