RAIL INTERESTS URGED TO SAFEGUARD BOXCARS

RAIL INTERESTS URGED TO SAFEGUARD BOXCARS

Railroads and rail equipment suppliers meeting here were called to arms to protect their boxcar business.

"We have a major threat of the government looking at trucking size and weights again," said Ralph von dem Hagen, vice president of customer service for Consolidated Rail Corp., or Conrail. "The last time the government looked at trucking equity issues . . . it cost railroads about 300,000 carloads."Mr. von dem Hagen was referring to the last reauthorization of the federal highway program, which also loosened some of the size and weight restrictions historically placed on trucks. The changes gave motor carriers the ability to increase the size and capacity of their equipment and allowed them to make inroads on traffic that, because of its size and weight, usually went by boxcar.

The federal highway program is due to be re-examined in 1992, Mr. von dem Hagen told attendees at Rail Equipment Finance '90 in Chicago. It is likely that motor carriers will use that opportunity to try once again to secure some favorable changes in the law, he said.

"Rail carriers and carrier suppliers need to get together on competitive equity issues in Washington," Mr. von Dem Hagen said.

Paul A. Lechner, vice president of GE Railcar Services, agreed.

"We as a group need to increase pressure in Washington to make sure the highway trust fund is a transportation trust fund and that there is a level playing field between trucks and railroads," he said.

There are about 87,000 general service boxcars - one of the main segments of rail equipment directly competitive with trucks - in the railroad railcar fleet, according to figures provided at the conference by John Robinson, senior assistant vice president in the transportation division of the Association of American Railroads. The average age of the general service boxcar, he said, is about 15 years.

While railroads have a major investment in boxcars, business with them has not been booming in recent years.

Executives speaking at the rail equipment finance conference, however, indicated that they were expecting boxcar loadings to cease their decline and hold steady in the near future. They also predicted that the boxcar fleet, which has also been on the decline, will stabilize as well.

"We forecast that boxcars will have continued use in the marketplace," said Jack Thomas, vice president of sales for Chrysler Rail Transportation Corp.

The paper market represents the best hope for improved boxcar business, boxcar experts speaking at the conference said.

Mr. von dem Hagen said Conrail's recently launched paper warehouse program - where paper loads are hauled by rail to warehouse for subsequent distribution - had netted 4,400 carloads a year. "All of that came from trucks," he added.

Robert Guess, assistant vice president for CSX Transportation, said nine paper mills on the CSX system plan to expand operations. CSX has started a major rehabilitation program to make sure it has top-quality boxcars to meet the increased demand, he said.

Wisconsin Central Ltd., a large regional railroad started in 1987, also expects paper business to pick up, according to Bob Grinrod, assistant vice president. Seven of the 27 paper mills it serves plan expansions, he said.

Like CSX, Wisconsin Central has a rehabilitation plan under way on its fleet of about 2,700 boxcars. It also plans to purchase an additional 600 to bolster its ability to serve the market.

Changes in publishing might bring an advantage to boxcars in their battle against trucks for freight, Mr. Grinrod said. Newer presses use larger paper rolls, which cannot be easily handled by trucks, he said. Boxcars could become the mode of choice for handling these new rolls, he said.

Another change is likely to benefit railroads in the paper business, said Larry Herdon, manager of Railbox and special equipment marketing for Trailer Train Inc.

"Recycled paper looks to us like it has some potential," he said. The waste paper needed to supply recycled paper production could make an attractive backhaul for boxcars bearing finished paper goods to urban areas, he said.