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Coal Outlook Conference
COAL TRANSPORTATION: HOW TO PROFIT
FROM THE NEW DYNAMICS
St. Louis, Missouri
April 7-8, 1998
"COMPETITION, SERVICE AND THE
CONRAIL SPLIT -- WHO'S IN CHARGE HERE?"
Presentation by
Kelvin J. Dowd
Partner
Slover & Loftus
Washington, D.C.
RAIL MERGERS AND CONSOLIDATIONS --
THE TRADITIONAL MODEL
Combinations and Acquisitions
- Penn Central
- Union Pacific - MKT Railroad
- Competition Plays Second Fiddle to Economic
Survival
Parallel Mergers
- Santa Fe - Southern Pacific
- Competition Counts -- If It's Overwhelming
End-to-End Mergers
- The Great Northern Merger
- Burlington Northern - Santa Fe
- Union Pacific - Southern Pacific
- Service Efficiencies Predominate
- Conditions Become Standardized
- The STB's Narrowing Focus
Modern Competitive Impact Analysis -- The
Conditions Game
- Wall Street + Efficiency = Basic Approval
- 2-to-1 Conditions
- Settlements and Their Disparate Impacts -- the Bunge
Corporation Example
- Service -- The Emerging Issue
THE CONRAIL PLAN -- A NEW MODEL
Background
- Santa Fe Redux?
- Chairman Morgan Points the Way
- An Expensive Half-Loaf for CSX and NS
Dividing the Monopoly
- Largely End-to-End
- Guideposts: the Pennsylvania RR and New York Central
Systems
- Monopoly Begets Duopoly for Many Major
Markets
- Major Competitive Focus Is On Motor
Carriers
- The Limits of Commercial Negotiations
Service Considerations
- More Detailed Operating Plans
- Safety Implementation Plans
- Conrail Contract Preservation
THE SHARED ASSETS AREAS
Competition by Default?
The Key Areas
- North Jersey
- South Jersey/Philadelphia
- Detroit
- Monongahela Coal Region
The Concept
- Pervasive Dual Access -- On Paper
- The Shared Assets Operator
- Unanswered Questions
A Legal Hybrid -- and a New Challenge for
the STB
- Commercial Division of a Monopoly Market
- Competition -- Who Should Decide Where It Can
Develop?
- Market Divisions Generally, and Examples From Other
Industries
- The Significance of Conrail's History
WINNERS AND LOSERS -- COMPETITION
Winners
- Detroit Area Shippers
- North Jersey Intermodal Interests
- Delmarva Power & Light, Et Al.
- Pittsburgh Seam Coal Producers
Losers (Absent Conditions)
- New York City and Long Island
- Buffalo
- PEPCO, NIMO, Et Al.
- Wheeling & Lake Erie and Captive
Shortlines
- Coal Mines Left "Out of the Box"
Cases to Watch
- Response of Eastern Motor Carriers
- Great Lakes Coal Shippers
- Guilford and the New England Market
- Major Eastern Ports
Legal Outlook
- Greater Pressure for Bottleneck Relief
- Increased Rate Litigation as Contracts
Expire
- Potential Antitrust Exposure?
WINNERS AND LOSERS -- SERVICE
Winners
- Southeastern Intermodal Traffic
- The Canadian Railroads
- Joint-to-Single Line Shippers
Losers (Absent Conditions)
- Cleveland
- Northern Indiana
- Current Captive CSX and NS Shippers
- Single-to-Joint Line Shippers
Cases to Watch
- Northern New Jersey
- The Monongahela Coal Region
- Contracts Falling in the Section 2.2 "Cracks"
Legal Outlook
- More Aggressive STB Oversight
- Complaints Seeking Modifications of Operating
Plans
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