(The following editorial by Andrew T. Gillies was posted on Forbes.com on April 14.)
WASHINGTON, D.C. — No one promised David L. Gunn an easy ride when he took over as Amtrak’s chief executive two years ago. The government-owned passenger railroad, which last year lost $1.3 billion on sales of $2 billion, faced financial and organizational disarray, outspoken enemies on Capitol Hill, and at least a decade’s worth of deferred maintenance projects.
But Gunn–a Harvard Business School graduate who in his career has headed up transit systems in New York City, Philadelphia, Toronto and Washington D.C.–has on the whole earned high marks for his focus on fixing Amtrak’s bookkeeping, thinning its bureaucracy and coming clean with Congress about the railroad’s needs for staying viable. Gunn, 66, seems also to have won the admiration of one of Amtrak’s most important business partners: the freight railroads.
“He has certainly tried very hard to improve relations,” says Thomas White, spokesperson for the Association of American Railroads, the freight industry group. “I think we’re all appreciative of that.” H. Craig Lewis, vice president for corporate affairs with Norfolk Southern (nyse: NSC – news – people ), adds that “a lot of people from Amtrak and Norfolk Southern have had a part in improving this relationship, but the single most significant catalyst to it all has been David Gunn.”
Says Gunn: “I would characterize our relationships as pretty good.”
“Pretty good” looks downright remarkable given the evolution of freight and passenger rail in the United States over the last few decades. Amtrak, or the National Railroad Passenger Corporation, was created in 1970 when Congress, looking to save America’s inter-city passenger rail network, gave the big railroads a chance to unload their money-losing passenger operations. To do so, however, the railroads agreed not only to let Amtrak operate anywhere it wanted, but also to give preference to Amtrak trains on their networks.
Today, Amtrak trains run over a 22,000-mile network, 20,000 of which are owned by private railroads. The largest among them: Burlington Northern Santa Fe (nyse: BNI – news – people ), CSX (nyse: CSX – news – people ), Norfolk Southern, and Union Pacific (nyse: UNP – news – people ).
It isn’t hard to see why these companies would chafe at being forced to set aside their customers’ needs to accommodate Amtrak’s passenger schedules. By the same token, however, Amtrak’s on-time record–and its image as a good way to travel–suffers when its trains get held up by freight.
Complicating matters, incentive programs set up by Amtrak to ease the situation don’t seem to work very well. In December, a memo from the Department of Transportation’s Inspector General noted how one major railroad in 2002 found it more economical to pay $100,000 in fines for delaying Amtrak trains, while passing up $14 million worth of incentive payments to make sure Amtrak’s trains arrived on time. Amtrak’s on-time performance in that instance slipped below 70%.
AAR’s president, Edward R. Hamberger, complained before a Senate subcommittee last summer that fees received from Amtrak “do not come close to covering the full costs borne by the host freight railroads.”
Freight trends suggest the opportunity to step on each others’ toes will only increase in the coming years. By 2020, predicts The American Association of State Highway and Transportation Officials, freight tonnage hauled by rail will grow by 44%, or 882 million tons, over 2000 levels.
During his tenure, however, Amtrak’s Gunn has played down the competition between the two forms of rail use and instead pushed the notion of a “community of interest.” Says he: “There’s a symbiotic relationship, and my own view is that the freight railroads should take more advantage of that than they do.”
To illustrate, Gunn mentions how a passenger rail project attracted investment that doubled the capacity of an important BNSF line in California. A similar undertaking is the upgrade to high-speed capacity of a Philadelphia to Harrisburg Amtrak line, also used by Norfolk Southern.
The “community of interest” has particular significance for the latter, which alone among the majors depends on Amtrak-owned tracks to conduct its business, rather than the other way around. Still, Norfolk Southern’s Lewis has little difficulty making a broader case for why passenger and freight rail should work together.
“There is a growing reemergence of rail that has captured the interest of the traveling public, policy makers and those needing to move freight,” he says, “and the passenger and freight folks are much more likely to be more responsive to those constituencies if we are united.”
AAR spokesman Thomas White is a little more guarded, stressing that any expansion of passenger rail cannot come at the expense of freight. But he does point out that his organization has rejected the notion of breaking up Amtrak into pieces, as some Amtrak foes have suggested. “Inter-city passenger service ought to be run by one entity from an operational and safety standpoint, and that entity is Amtrak.”
As David Gunn battles on Capitol Hill for the $1.8 billion in federal subsidies for fiscal year 2005 he says his railroad needs to stay alive, that kind of goodwill should come in handy.