Railroad adapting in a deregulated world

By Richard C. Grayson President and Chief Executive Officer Burlington Northern Railroad

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ern Railroad has long been a hauler of the nation's forest products. Two ofour predecessor lines, the Great Northern and Northern Pacific, opened up vast timberland resources in the Northwest to an expanding nation during the late l9th century.

Today, our railroad is the nation's largest rail carrier of forest products, in terms of revenues and sales. Forest products normally account for about 20a/o of our non-coal revenues each year.

Our state-of-the-art transporta-

Story at a Glance

Deregulation's eflect on pricing . . an uptum in April or May if interest rates do not increase . . smaller housing units a gradual economic increase.

tion network is useless unless it meets the needs of its shippers, efficiently and economically. Helping us to do so is today's less-regulated transportation environment.

These changes have enabled BN Railroad to "venture into uncharted transportation territory" in an effort to become more responsive to individual customer needs.

To date, we've negotiated 25 rate and service contracts. Our customer is guaranteed a stable rate level and car supply; we're guaranteed a certain traffic volume.

Lumber reload centers combine energy-efficient, long-haul rail transportation with flexible, doorto-handle truck delivery, and BN Railroad has designated three independently operated centers: Sioux City, Ia.; Harvard, Ar. ; and Chicago. Attractive rail car rates compete with comparable truck rates, giving shippers another transportation option for their forest products shipments.

We're working with the plywood industry to increase bundle size, which will increase car capacity by as much as 2090. We're selectively disengaging from business that we cannot haul efficiently or economically.

We've the freedom to adjust rates more quickly-as the marketPlace demands. For instance, last April we announced truck-competitive rates on lumber, plywood and particle board shipments that we feel saved shippers an average of $400 Per carload.

High interest rates and a nationwide recession have devastated the U.S. construction industry, which last year weathered its fourth con- secutive year of depressed prices and slack demand-some say its longest and deepest recession since the Great Depression. Recovery won't come overnight.

If interest rates remain at current levels, we expect a slight upturn in April or May, as construction gets underway.

Housing starts this year could reach 1.3 million, although much of that will be the smaller housing units and condominiums. We expect a gradual recovery in the industry for 1983, as lower interest rates prompt a release in the pent-up home building market.