The Acquisition of Consolidated Rail Corporation

3. A break-up fee of $300 million charged to Conrail. This guarantees that CSX will not lose the money they used to pay for the deal’s fees while compensating the Company for their time spent and reputation involved with the deal. This demotes Conrail to consider other bidders or to decline the merger in such a late stage of the deal process. On the other hand, this could also benefit Conrail because if another bidder emerges then that new bidder would be required to pay at least $300 million extra to Conrail to cover the break-up fee.

The major reason of railroads abandoning significant number of miles of track (over 260,000) has been the rapid inter-model transportation competition. Since the gradual deregulation of railroad industry, the two major industry segments in motor carrier transportation have been truck load (TL) and less-than truck load (LTL) industries. TL and LTL industry segments have rapidly developed after the US government reregulated the transportation industry. There has been an increasing competition of rail boxcars with trucking industry. The improvement of water ways carried out by the engineering corps of the U.S army has also led to increased competition between inter-modal transportation carriers. The trend is

railroad has allowed the rail industry to provide a more tailored service to its customers. It has also

We are committed to investing for the future, which includes our infrastructure, facilities, rolling assets such as locomotives and rail cars, and technology. We invest about $1 billion every year to maintain and upgrade our infrastructure, to ensure safe, reliable service for our customers.” (Sanborn, 2016, p. 1) Ms. Sanborn is very right on this subject as long as money is being allocated properly. Utilizing lean thinking techniques and implanting a Six Sigma program where the upper management is committed to the goal of constant improvement, waste reduction, and total quality management is a necessity. (Wisner, Tan & Leong, 2012) One of the processes that needs reassessed is that of track maintenance. Normally a large crew with many pieces of equipment will work replacing railroad ties, ballast (rock) and sometimes the rail itself. The difficult part is that trains may need to run on alternate schedules or be rerouted a whole different direction for sometimes several weeks while track work is being done. Having the latest technology in equipment coupled with highly trained employees can make a huge difference in productivity. A second aspect is a refocus on the customer. This means delivering rail cars when there needed, and damage free. Talking with the customer to

In the same way, there are some principal companies who serve as fundamental pieces of the industry today. These main companies are referred to as Class 1 Railroads. In order for a railroad to be classified as Class 1 it must have an operating revenue of $433.2 million or more. There are

Question one: The railroads were a brilliant and expensive project. They spread all the way from California to Florida and helped move around raw materials, agriculture, and stimulated mining. The railroads were so expensive, but with the help of private banks, who were a little reluctant, and land grants from Congress they were able to build them. Due to private banks being a little fearful that railroad companies couldn’t pay them back in a fashionable time Congress decided to step in and give land grants for them to sell. This was a win win situation because they got money to pay the bank back and it helped improve settlement in the West. They helped with four of the five transcontinental railroads.

My first reason to pass this “commerce” act is that the railroad industry discriminates against other companies and people. Some of us may have wondered, How are monopolies harmful? Well, “monopolies are generally viewed as harmful because they obstruct the free competition that determines the price and quality of products and services offered to the public,” (Our Documents 1). Those selfish snobs like Cornelius Vanderbilt, should understand what they do negatively affect other people and that it’s not right, they are ruining the american dream with their unjust ways. Conditions for railroad workers were very bad, wages averaged a dollar per day and many workers injured themselves on the

Comparatively, by 1869, the railroad industry reconstructed the transportation of goods and people conveniently and securely across the United States of America (Schultz, 2016). Additionally, railroads helped to shape the western economy not only through it's more dependable means of transportation of goods but also to the new developments of towns located near its stations (Schultz, 2016). Historically, the transcontinental railroad began by the signing of the Pacific Railroad Act on July 1, 1862, by

In May of 1869, the "golden spike" was driven into the Utah desert which signified the completion of the first transcontinental railroad. Since then, rails across the nation sprung up, but were privately owned. In 1971, The National Railroad Passenger Corporation was formed which merged most railroad companies here in the US. This corporation is better known as Amtrak, which is a government-funded American passenger railroad service. When Amtrak was founded, it was seen as a huge investment and success, but as they entered the 21st century, issues arose. As railroads get older, they need repairs just like roads and bridges. In a 2004 Congressional deadlock, Amtrak was forced to defer maintenance. In 2006, the company requested $1.8 billion

As the time progressed highways and roads started to improve. Airline industry started to grow and this made the rail road passengers to decline slowly. From the picture below we could see how the railroad traffic started to decline.

State legislatures and the national government all provided aid to the railroad companies by decreased the tax on rail iron. During this time period, manufacturing also boomed. New ideas and inventions made it faster to produce products. However, it is because of these new modes of transportation that this was ever able to occur.

Due to the high fixed cost of operating and maintaining a railroad, and considering that companies had to build and maintain their own tracks there were certain routes that were not profitable. Before1980, economic regulation prevented railroads from any flexibility in pricing needed to meet both intra as well as intermodal competition. Regulation also prohibited carriers from restructuring their systems, including abandoning redundant and light density lines, a necessity for controlling cost. Added to these problems was the industry’s inability to cover inflation due to the regulatory time lag in rate adjustments. As a consequence, nine carriers were bankrupt, the industry had low return on investment and unable to raise capital, and faced a steady decline in market share.

The strategy was to have Credit Mobilier, which was totally controlled by the same individuals, charge the Union Pacific for the expenses of developing the railroad. There was no "business sector worth" of the work, as there were no different bidders, so UP paid a great deal more than Credit Mobilier spent. As a traded on an open market organization, Credit Mobilier could indicate

The domestic US airline industry has been intensely competitive since it was deregulated in 1978. In a regulated environment, most of the cost increases were passed along to consumers under a fixed rate-of-return based pricing scheme. This allowed labor unions to acquire a lot of power and workers at the major incumbent carriers were overpaid. After deregulation, the incumbent carriers felt the most pain, and the floodgates had opened for newer more nimble carriers with lower cost structures to compete head-on with the established airlines. There were several bankruptcies followed by a wave of consolidation with the fittest carriers surviving and the rest being

In an industry beset by limited options to consolidate domestic rail traffic, CSX looked at Conrail as an avenue to increase market share and gain access to the North East rail network. With air travel, road travel and trucking taking an increasing share, significant revenue growth became difficult. As Conrail became profitable, Congress explored ways of privatizing it, giving CSX an opportunity to acquire Conrail. Though Conrail suffered from performance inefficiencies it had certain strengths relative to CSX and Norfolk with respect to highest revenue per mile of track operated, per carload originated etc. Conrail with operating revenue of $3,686