Show r r rt BUSINESS t in WHICH WAY FOR RAILROADS In this Bicentennial Year the railroad industry can look back with pride at its contribution contribution con con- contribution to the building of the nation While there were no railroads In 1776 1778 their development began not too many ye years rs after t that t date Certainly settling of the western sections of the country would have been een severely hampered without a network of rail lines Jines across the prairies and mountains LOOKING AHEAD What Wha t are the prospects for the he railroads First looking back we have seen a rapid the fortunes of many lines Passenger traffic has ha's nearly dried up because of competition n from the airlines and ton-mile ton freight revenues have been eroded by rival truckers A solid interstate highway system laces the country and has helped the truckers trucker step Up their position Ph i something Obviously Obviously ly something ng li like uke coal cannot be e shipped in fn volume economically by truck but there are few other com com that cannot adapt to the road transfer One solution for the rail carriers may be adoption of containerized containerized con con- shipments of freight similar to those used by ocean shippers The recession was a negative factor in terms of freight shipments but they can be expected to improve in the months ahead as the economy perks up However rising costs of railway maintenance fuel fuel and labor may outstrip gains in revenues and profits for the lines The most pressing need of the roads is replacement of worn equipment and up catch-up on on long-deferred long maintenance Nearly 6 billion will be required to replace worn ties and rails alone Some eastern roads roam are in hi particularly horrendous condition with accidents fr frequent and speed limitations necessary on much of their PAYING TIlE THE BILL Raising money for equipment and maintenance is becoming more more and more of a problem for forthe forthe forthe the nations nation's railroads In many cases unable to display any reasonable return on investment investment investment in in- vestment the lines are facing increasingly wary lenders If the banks and institutions shut their financing doors to the railroads it is doubtful that many lines could continue to operate without some form of federal bail MERGER ER POSSIBILITIES One solution to the current dilemma of the roads may be bethe bethe bethe the merger of certain lines There is currently considerable interest in this approach especially in the South and West In spite of the Penn Central fiasco there is solid support from the government in favor of rail mergers The administration would like to see a network of mainline rail routes similar to the Interstate Highway System This would weed out the weaker lines eliminate duplicating competition and foster combinations combinations com com- of regional railroads One bellwether partnership now under consideration would pair the Missouri Pacific and the Southern Railway Systems The two lines are contiguous and the combine would cover a avast avast avast vast area of the southern and western sections of the country Such a competitive edge could trigger other mergers in self self- a defenses trend which should strengthen the railroad industry industry industry in in- as a whole if consummated consummated con con- summated with care OTHER POSSIBLE REVENUES Today there are few lines J which depend solely upon n railroad operations as lis a source of revenues Other activities include natural gas pipelines real estate data processing and a wide range of diversified enterprises Such sources of income will probably provide the greatest part of the growth in earnings in the years ahead unless there is a dramatic turna turnaround in railroad fortunes Federal assistance will help the Ule weaker and bankrupt lines through Conrail Corp initiated earlier this year to fund rehabilitation and to ease restrictive regulation Thus wt while le their present status b Is shaky the future of the railroads would appear to be pe favorable |