Rail Merger Expected
To Benefit ShipperYour editorial "Needed: A Larger Look" (JofC, Dec. 4) concluded that the Interstate Commerce Commission "should move swiftly to approve the Santa Fe Southern Pacific merger, now that the chief anti-competitive objections have been answered." You correctly based that editorial on the conditions Santa Fe Southern Pacific Corp. was prepared to implement with Union Pacific and Denver and Rio Grande Western to address competitive issues.
In another editorial a few weeks later, "A New Ballgame," (JofC, Jan. 21), you stated inconsistently that the ICC "should let its decision (denying the merger) stand."
This would leave SFSP with the prospect of starting the time-consuming merger process all over or selling off SPT, ATSF or both. It would generate uncertainty and clearly would not be in the interest of the shipping public.
On Dec. 4 you applauded the agreements with the UP and DRGW as going "a long way" in resolving most of the competitive issues. But then, on Jan. 21, you expressed concern about the SPSF giving away too many of the major benefits of the merger. Let me assure you that you had it right the first time.
The UP and DRGW will provide stronger competition under the proposed conditions as you have suggested, and that will be of benefit to shippers. The merged railroad will also be a stronger, more efficient competitor, again to the benefit of shippers. Thus, the shipping public will be the "clear winner" if the merger, with the settlement conditions, is approved and implemented.
Moreover, the major economic benefits of the merger are in fact preserved under the proposed conditions. While some of the increased revenues we projected to divert from other railroads might not be realized, the basic efficiencies and economies of merging the railroads, which the ICC found to be substantial, will remain.
Furthermore, significant additional operating and fuel savings are anticipated due principally to the 1,100 miles of trackage rights Union Pacific has agreed to grant to the merged SPSF Railway.
The source of the problem which led to your inconsistent editorial, I think, is that you have not had access to the facts concerning the extent of the benefits of a conditioned merger in terms of both enhanced competition and increased efficiencies. We have filed a petition asking the ICC to reopen the merger proceeding to give us an opportunity to demonstrate those facts.
That petition has been supported by thousands of shippers, key government officials and several other railroads. I think our request deserves the Journal's support as well. I am confident that the evidence will confirm your Dec. 4 conclusion that the proposed conditions will go a long way toward resolving competitive issues and will eliminate any concerns you may have had about the ability of the merged railroad to become and remain a vigorous competitor in the freight transportation market. All we need is an opportunity to present that evidence.
Frank W. Grossman Vice President Corporate Communications Santa Fe Southern Pacific Corp. Chicago
Got Start in Italy
This is in regard to the article, "USSR to Open Slurry Line Soon," by Albert Axebank, (JofC, Jan. 2.)
The key technology employed in the Balovo-Novosibirak coal-water slurry Russian project was developed by Snamprogetti, the international engineering contractor and technology company of the ENI Group in Italy, through more than a decade of pilot tests and design work. This coal-water slurry technology is called "Reccarb" and has been practiced on a commercial basis in other plants in Italy prior to its selection for the Russian project.
The risk of the slurry's freezing in cold climates and the possible use of methanol as an anti-freeze component was investigated at Snamprogetti's test facilities in Fano, Italy. Mixtures containing methanol were prepared and pumping tests were conducted on the test loops. Based on both technical and economic considerations, the decision was made to bury the slurry pipeline below the frost line rather than add methanol to the slurry.
Snamprogetti confirms that the Balovo-Novosibirsk project is progressing on schedule. The basic design has been completed and all the main equipment will be delivered in 1987 in accordance with the delivery schedule agreed upon with the Soviets.
Merry K. Pantano Public Relations Manager Snamprogetti USA Inc. New York
Rail Merger Expected