SP in 1997?

[ericsp]

Here is the question someone suggested that Gabe ask, with a modification. "What conditions would have needed to be different, and different decisions made, for SP starting in the year" 1967* "for a reasonable person to perceive that in 1997 it would make more money as an independent railroad instead of selling itself to another railroad with deep pockets?"

* I chose 1967 because, if I remember correctly, SP was the largest and most profitable railroad in that year, or so I have heard.

I leave it to someone else to start the "Are people crazy?" thread.

[MP173]

Ok, I will bite.

GIven what I have read on the SP and what I have read on teh Milwaukee Road post, I make the argument that SP should have purchased the PCE as far east as possible and obtained trackage rights into Chicago. They could have structured the trackage rights/PCE purchase to include first right of purchase should the Milwaukee fail.

It appears the base of traffic was profitable and would have given SP a much more direct routing east for the lumber it generated out of the NW.

Plus, with the financial strength it had in the late 70's, it could have upgraded the PCE and been a force for the upcoming double stack container business that was just around the corner.

Of course, a little 20-20 hindsite is always helpful!

But, the SP would have ended with a line from the NW to the midwest, a line from Socal to New Orleans and St. Louis and not much of a chance for the Central Corridor thru Sierra. 2 out of 3 would have been ok. Sell the Central Corridor and roll the dice on containers out of Long Beach and Pacifiic NW. Let BN handle the grain.

Build your financial base on the lucrative Texas/Louisiana petrochemical business to finance everything else.

ed

[Anonymous]

Ed,

I will counter with the merger I think had merit, one which would have made today's Western U.S. rail picture nearly perfect from a standpoint of rail competition and rail profitability: SF + Milwaukee. Much of the same logic as your SP + PCE is inherent, except that SF had the better LA to Chicago corridor. The drawback would be the absense of an I-5 rail corridor for SF + Milw, and then it becomes a question of who gets the SP. BN + SP would then have been the logical choice, and with a BN + SP merger it is likely the STB would have required BNSP to grant trackage rights to both UP and SFM on the I-5 corridor. Thus,.we would have ended up with three strong railroads serving up and down and across the West today instead of two, and all the current issues of Montana rail captivity would then be moot. Three running LA to Chicago, three out of PNW to Chicago, and three running PNW to LA, with two taking care of the central corridor. Not bad, not bad at all.

The only remaining drawback for SFM would be the issue of access to PRB, and it is conceivable that SFM would have had to get to PRB down from Montana via the valley of the Powder River itself, or from south of the Black Hills from the Rapid City area as DM&E is doing now.

[ericsp]

Am I correct in assuming PCE stands for Pacific Coast Extension?

[MP173]

Dave:

Excellent points. You took the SP issue one step further and addressed the entire western issue.

Lets see, we would have, under your plan:

UP, sans SP
SFM
BNSP

UP, sans SP would have been into Texas via MP, but would have ended at El Paso.

SFM would have either had to invest some serious $$$ from Rapids City west to get to PR coal, and then upgrade then entire line east. Their Bay Area Chicago route would have been weak, and their Texas coverage would have been weak. But, they would have controlled the Long Beach - Midwest container business and possibly the Pacific - Midwest container business

BNSP is just way too many mental lines on a map for me to analyze, but it probably would have resulted in strong Texas/Chicago and if they could have gotten the Rock from Kansas City to Tucumcari, would have given SF a reasonable run.

BTW...whither the ROCK in all of this?

I am getting new maps from Deskmap this week, I may have to go make copies and pull out the markers and have a little fun.

ed

[Anonymous]

Ed,

I am assuming the Rock's main assets being absorbed by CNW, who then are absorbed by UP. MP to El Paso would become less valuable to UP, possibly becoming a regional.

[ericsp]

QUOTE:
Erik: I didn't mention 1960 by accident. By 1967, the world changed quite a bit. Choosing that year takes a number of options off the table.

Okay, let us change the the 1967 to 1960.