The Men Who Loved Trains: The Story of Men Who Battled Greed to Save an Ailing Industry

24. John Snow, CEO

24 John Snow, CEO Norfolk Southern may have lost the round, but the war was by no means over, and while NS licked its wounds, McClellan assessed its mistakes. Quickly he concluded that in the next confrontation he and the others would concentrate on the media and geographical targets that were important and try not to spread themselves so thin. Furthermore, they would not let themselves be constrained by price. Norfolk had more money than CSX. It should be willing , if needed, to outspend its opponent. In the meantime, Norfolk Southern expanded by acquiring a moving van company. Of much greater importance, the railroad bought the rights to a new kind of highway trailer that was designed so that railroad wheels could be attached to it, thereby enabling it to run both on the road and on the tracks, where it was pulled along on the back of a train. Since NS’s corporate symbol was a racehorse, the marketing department named the new enterprise Triple Crown Service. The innovative van would some day help boost Norfolk’s intermodal revenues to the point where they excelled income from every commodity the railroad carried, except coal. 262 The Men Who Loved Trains CSX also was expanding, guided by a bold mandate from Hays Watkins that it become an international multimodal freight company . In 1983, to the surprise of many, the company had acquired Texas Gas Resources Corp. The acquisition offered CSX a hedge against rising fuel prices. It also gave the company entrance into another transport mode, for Texas Gas owned the nation’s largest barge line. Watkins was pushing the change on CSX at some cost. Since he was from the finance department rather than operations, he had never been totally accepted by the company’s operating officers. Now Watkins was fueling their dislike further by taking CSX into nonrail ventures that the old-time railroaders did not understand and saw as a threat to their power in the corporate hierarchy. “Things he was trying to do for CSX were very widely hated at the railroad, I mean totally widely hated,” said one of the railroad’s vice presidents. “It was very, very onerous to traditionalist types of executives.” Yet he pushed his vision through. Within days of his victory over Norfolk Southern, Watkins went global, buying Sea-Land Corp., the world’s oldest and one of its largest container shipping lines. With terminals in virtually every major port from Rotterdam to Hong Kong, Sea-Land changed the way people in CSX’s executive suite thought. While all other railroaders continued to consider foreign countries little more than customers for their coal, Watkins, Snow, and the others at the top of CSX were now viewing the rest of the world as an integrated transportation market . Watkins’s vision of CSX was a multinational corporation that would provide what the company touted as “one-stop shipping,” hauling goods door to door all over the world by whatever mode was convenient. The flexibility, security, and speed of container shipping were creating a global economy, and Watkins’s dream was that CSX would be its linchpin. Moreover, since fuel was a major expense for transportation companies, owning a gas company would give CSX a competitive edge when fuel prices rose. Sea-Land had pioneered the business of container shipping only 30 years earlier. The containers are 20-foot and 40-foot boxes that look to most people like highway trailers. Each is carried over the road atop a detachable chassis. Filled with everything from wine and clothing to auto parts, they are loaded at the factory or 263 John Snow, CEO warehouse and driven to an intermodal terminal or a rail siding where a crane or mobile lifter picks the box up from its highway chassis and places it on a flatcar. The railroad hauls the car to the port, where the container is placed on a new chassis, driven to dockside, lifted off, and stacked inside the container ship, often a mammoth vessel capable of carrying hundreds of 40-foot boxes. This is called an intermodal business because it uses more than one mode of transportation. By the time CSX bought Sea-Land, the container lines were using U.S. railroads in growing volumes. In particular, Sea-Land and the other lines were picking up containers in the Orient that were bound for Europe, and to save time...