A relieved Southern Pacific Lines, turning back a determined effort by Atchison, Topeka & Santa Fe to snare a large chunk of its business, has won the multimillion-dollar contract to provide Sea-Land Service Inc. with intermodal train services out of Los Angeles.
The agreement will bring over $100 million a year in revenue to the railroad, the company's executives said. SP had hoped for more, seeking a 10- year package. Without releasing details, officials noted the Sea-Land contract was for a significantly shorter period.SP executives, riding a special excursion train with reporters last week, were reluctant to discuss the contract in any great detail. Sea-Land wants to handle its own announcement, they explained.
Yet the contract is a small example of what the railroad is going through on a larger level. It is getting the immediate business it needs for day-to- day survival, but is still struggling for the business relationships that will be critical to its long-term success.
SP knows that and is trying to change it. Hence, the excursion train - a small consist of SP rail equipment and classic passenger cars. SP has been taking the train around the country to wine and dine customers, rail analysts and reporters.
On the train the company is billing itself as "The New SP," trying to polish an often lackluster reputation for service built over the years of on- again, off-again mergers.
"We are obviously trying the change the focus of the company," said Don Orris, executive vice president of distribution services for the railroad. ''We're not sitting here telling you we've made a complete turnaround, but progress is being made."
The railroad garnered $2.6 billion in revenue last year, revealing that some business goes to SP despite its questionable service reputation. Some traffic - Northwest lumber and certain chemicals traffic - lends itself naturally to SP routes. Some shippers, SP executives suggested, also throw some business the railroad's way to maintain a competitive lever against their main transportation providers.
But these days SP officials are wondering what the revenue figures would be like if shippers actually wanted to move goods over the SP. That prodded the company into taking a hard look at itself.
"Our attitude was a root cause of the customer service failure in our business," Mr. Orris said.
SP has done some major reworking in its upper ranks to start a top-down change in attitude. Mr. Orris came to the company just two years ago from American President Cos., a major SP customer. His lieutenants are also relative newcomers.
The company also has done some major surveys of customers and analysis of basic service functions. Predictably, the company sees room for improvement in a range of areas from on-time arrival to responsiveness to equipment quality. It also wants to improve items that go beyond its own control to the entire industry like pricing.
"The industry needs to simplify pricing," said Michael Uremovich, vice president of marketing for SP. "The problem is in this industry every price is unique."
While the railroad is busy benchmarking itself on customer service, it is also campaigning to cut costs in its operations. Moves like individual labor contracts and SP's direct takeover of its intermodal yard in Los Angeles are part of that overall effort, Mr. Orris said.
The company also is negotiating special equipment deals, including a lease- back agreement with General Motors Corp., to bring operating costs down further.