Consolidated Rail Corporation

Consolidated Rail Corporation (“Conrail”) is a terminal and switching company jointly owned by Norfolk Southern Corporation and CSX Corporation. It operates shared freight rail service in and around Detroit, Philadelphia, and northern New Jersey, where both parent companies rely on Conrail to provide neutral access to customers in dense metropolitan areas. Once a major long-haul freight carrier, Conrail today functions as a shared-assets subsidiary created during the 1999 breakup of its core network.

Conrail’s formation, federal rescue, and 1987 IPO

Conrail was established by the U.S. government under the Regional Rail Reorganization Act of 1973 to take over six bankrupt northeastern railroads. Conrail commenced operations on April 1, 1976, with major portions of the Central Railroad Company of New Jersey, Erie Lackawanna Railway Company, Lehigh & Hudson River Railway Company, Lehigh Valley Railroad Company, Penn Central Transportation Company, and Reading Company.

Conrail carried freight traffic in the northeastern and midwestern states, on tracks extending from the Atlantic Ocean to St. Louis and from the Ohio River north to Canada. All passenger traffic was turned over to Amtrak or to regional transportation authorities in 1983.

Conrail was set up to be an independent profit-making corporation, although in its early years—even with the aid of federal loans—it lost more than the bankrupt lines had lost before consolidation. Stockholders in the roads taken over received Conrail stock in exchange. By 1983 the company had become profitable for the first time after major reforms under CEO L. Stanley Crane.

In 1987 the government sold off its entire ownership stake in an initial public offering (IPO)—one of the largest IPOs of its time—with shares listed on the New York Stock Exchange under the ticker symbol CRR.

Breakup and transition

In the late 1990s Conrail became the target of a takeover battle between the two dominant eastern freight carriers, Norfolk Southern and CSX Corporation. After competing bids and regulatory scrutiny, the two companies reached a joint acquisition agreement in 1997, approved by the Surface Transportation Board in 1998. Under the deal, Conrail’s assets were divided between Norfolk Southern and CSX, with the formal breakup taking effect in 1999.

Norfolk Southern acquired 58% of Conrail’s assets, while CSX received the remaining 42%. The division gave both carriers access to critical routes and terminals in the Northeast and Midwest. To preserve competition and efficiency in the densely populated regions of northern New Jersey, Philadelphia, and Detroit, the companies agreed to keep portions of Conrail’s network under joint operation. These “shared assets areas” continue to be operated by Conrail as a neutral terminal and switching company, providing equal access to both parent railroads. Although Conrail no longer runs long-haul trains, it continues to play a strategic behind-the-scenes role in some of the most congested freight markets in the country.