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Rail Industry Shake-Up: Norfolk Southern and CSX Finalize Conrail Split

Strategic Insights

— 1 min read

Norfolk Southern Corp. and CSX Corp. are set to officially break up Conrail Inc. on June 1, marking a significant shift in the US rail industry. The two companies have notified the Surface Transportation Board that they will begin operating their shares on Conrail, with Norfolk Southern taking over 58% of the company and CSX's rail unit, CSX Transportation Inc., gaining 22,700 miles of rail network.

Key Takeaways:

  • Norfolk Southern will operate a 21,000-mile railroad in 22 states, Washington, D.C., and Ontario, Canada, with 35,000 employees after the split.
  • CSX's rail unit, CSX Transportation Inc., will become a 22,700-mile railroad in 23 states, Washington, D.C., and Ontario and Quebec, Canada, with 34,500 employees.
  • The companies' employees will remain with their respective companies after the split.
  • The rail industry is experiencing labor troubles, with the 17 trucking companies that haul new cars and trucks experiencing labor disputes.
  • Ford Motor Co. is maintaining close contact with the Teamsters and the trucking companies to address the labor issues.
  • American Airlines has reached a tentative agreement with its flight attendants' union, which includes pay increases and improved scheduling flexibility.
  • Ingalls Shipbuilding, a shipyard unit of Litton Industries Inc., is facing a strike by some of its workers after rejecting a contract offer.
  • The strike at Ingalls Shipbuilding is separate from the ongoing strike at Newport News Shipbuilding, where Local 8888 of the United Steelworkers of America has been on strike for seven weeks.

Statistics:

  • 58% of Conrail will be taken over by Norfolk Southern.
  • 35,000 employees will work for Norfolk Southern after the split.
  • 61% of Conrail's rail network will be retained by CSX (22,700 miles out of 37,000).
  • 34,500 employees will work for CSX's rail unit, CSX Transportation Inc., after the split.

Sources:

  • [Source: Norfolk Southern Corp. press release on Conrail split]
  • [Source: CSX Corp. press release on Conrail split]
  • [Source: Ford Motor Co. press release on labor disputes with Teamsters]
  • [Source: American Airlines press release on tentative flight attendant contract]
  • [Source: Ingalls Shipbuilding press release on strike]

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