One reality is the need to bid quickly on lines that are candidates for abandonment. Once a break in service occurs, traffic is diverted, often permanently. The entrepreneurs behind Pocono Northeast Railway in Pennsylvania, for example, became entangled in red tape for a year and a half while negotiating the purchase of the line from Conrail; by the time they finally opened for business in September 1982, the line had lost a large percentage of its traffic. Once shippers quit a railroad, it isn't easy to get them back.
Mowatt and his partners leapt over that pitfall. They made sure they were one of the first to bid on the Cairo line. Another group stepped in later and offered Conrail considerably more money, but it bungled its chance: It couldn't handle the railroad bureaucracy as adroitly as the three veterans from Conrail. A year after Conrail announced that the Cairo line was available for purchase, Mowatt and his crew were the owners.
At first, some of Cairo Terminal's potential customers were hesitant to rely on a railroad they feared might go bust any day. The only way to get them aboard, the owners of the line realized, was to offer them rates that were cheaper than local trucking rates. The Staggers Act of 1980 essentially gave railroads the freedom to set their own rates; before that law, rates were set by a government agency. A tiny short line like Cairo Terminal, however, lacks the economy of scale that allows large railroads to undercut the prices of truckers. Short lines have an average length of 28 miles, and are defined by the Interstate Commerce Commission as Class II carriers, those with yearly revenues of $10 million to $50 million, or Class III carriers, those with revenues of less than $10 million. To charge cheap rates, these lines must run on a shoestring.
Short lines save overhead on labor, often the single greatest expense of most railroads, particularly Class I carriers. Short-line managers, because they have flexibility, can secure arrangements with workers that are cheaper than those traditionally found at larger railroads, which have been plagued for years by expensive labor contracts, union featherbedding, and restrictive work rules.
At Cairo Terminal, the relationship between management and workers is surely one of the smoothest in railroad history. Mowatt, Cecil, and Hockgeiger employ only three full-time people -- themselves. Occasionally, they hire a couple of part-timers to help in a crunch. But most of the time, the company's top executives are the same men who drive the locomotives, switch the tracks, pound the ties, and hitch the cars. They strive to rotate jobs in an egalitarian fashion, but their posts tend to match their abilities. Cecil, with the most experience as an engineer, usually mans the locomotive throttle; Hockgeiger does the hitching and switching; and Mowatt wheels and deals and pushes paper.
"You might say we've got labor costs well covered," drawls Mowatt with a sly grin, pulling on his ever-present cigarette. "It costs us 75% less to run this line than it cost Conrail. We're not like the big railroads, where engineers can command $60,000 a year, plus fringes, and overpaid people will only work at their prescribed tasks."
With a lean operation, and the ability to charge competitive rates, Cairo Terminal began operations in early 1982. On the first day of business, a locomotive tottered off the rails. A few hours later, Mowatt and his men had the machine back on the track, and their careers as short-line owners were officially baptized. The date was April Fools' Day.
They laugh, three old railroad men sitting around a table, devouring beer and double cheeseburgers on a hot afternoon in Mack's B-B-Q, an eatery on Cairo's dusty, deserted thoroughfare. Country songs from a jukebox waft over the booths. The men tell their stories as though they had rehearsed them. Or maybe old railroad men just know how to tell good stories.
"I remember that cold snap we had last winter, when we were out on the line in the middle of the night, trying to keep one of the locomotives from freezing up on us," says Cecil. "My God, there must have been a wind-child factor of 40 degrees below zero. Never been so damn cold in my life. There we were, wrapping foam rubber around the pipes in the engine, trying to keep 650 gallons of diesel fuel from gelling, and pouring alcohol on the switches so they wouldn't freeze up, too. Can you imagine the overtime a large railroad would have had to pay to get its people out there to do all that?"
A willingness to provide service at any time, sometimes under harsh conditions, is one of Cairo Terminal's strongest marketing techniques. It is neither feasible nor economical for a large railroad to give the personalized, locally oriented service that is the specialty of short lines. Cairo Terminal's first customer, Burkart Foam Inc., needed that kind of service to survive. And Cairo Terminal, with no other customers in the beginning, needed them almost as badly.
"Without Cairo Terminal, we couldn't have stayed in business," states Carl Lasley, plant manager of Burkart, a $25-million automotive- and commercial-parts manufacturer in Cairo. The company, with about 300 employees, is the largest -- and virtually the only -- employer in town. It buys scrap foam, converts it into parts for carpet underlay, and ships it out again. Trucking in the scrap, in sufficient quantities, is too costly. "One boxcar equals almost two truckloads," says Lasley."My life is easier because of [Cairo Terminal]. Sometimes I need a shipment at odd hours, and they're available whenever I call them."
