The Natural Order at Amtrak

Since before the turn of the century on through 1967, mail and express operations were critical to passenger train operations, contributing as much as 46% of private railroad revenue in the years before Amtrak’s existence. With that in mind, Congress permitted Amtrak to handle mail and express from its inception in 1971.

Today, the mail and express business is not only important to Amtrak’s continued passenger service, it is also part of the “natural order,” if you will, in passenger train operations.

When you consider the unique attributes of passenger train operations, the benefits of handling mail and express are obvious. Our trains run from city center to city center and at faster speeds than our highway competitors — up to 125 mph in the Northeast Corridor. Our trains operate on published schedules with reliable, on-time performance. For shipments that require expedited service and are transported at premium rates, Amtrak’s geographic coverage, speed and reliability simply can’t be matched by any other mode.

When Amtrak was given a new mandate — to achieve operating self-sufficiency by 2002 — the pieces were already in place to put mail and express on an accelerated curve. We began to implement an expanded program, and we have achieved some significant successes.

To meet the range of our customers’ needs, Amtrak’s fleet of reconditioned baggage and material-handling cars has been supplemented by 200 60-foot express cars, 50 50-foot express cars and 291 RoadRailers, including refrigerated units. That brings our total mail and express fleet to 807 units.

And it is growing. Our acquisition of 44 RoadRailer Mailvans will help us handle our rapidly expanding volume of U.S. Postal Service business. As you know, RoadRailers are essentially highway trailers that can quickly be mounted on railroad bogies for long-haul movements at the rear of Amtrak passenger trains.

The efficiency and speed of this service is also attractive for other shippers with similar requirements. And soon we’ll announce another equipment order that will mark our entry into another significant segment of the express market.

As we moved forward with our mail and express program, we reached an important milestone last May when the Surface Transportation Board ruled favorably on an Amtrak petition. In addition to clarifying our relationships with our railroad partners, the ruling removed an element of doubt that had been lingering with some of our potential customers. Business volumes have been rising at an accelerated pace ever since the ruling.

A critical element of our plans for the growth of our mail and express business is strong, healthy partnerships with the private railroads. On most of our intercity routes, Amtrak’s passenger trains operate over tracks owned by the major rail freight carriers, except in the Northeast Corridor, where Amtrak owns the entire operation. Elsewhere, without close cooperation in train scheduling and dispatching with our freight railroad partners, we would not have a service we could sell in the marketplace. This applies to both our passenger and mail and express operations.

Overall, our progress since the STB decision has been good. The freight railroads are providing a high level of service to Amtrak and are willingly negotiating with us to adjust and increase services. Our partners understand that we are not competing for their business and that our focus is on shipments that require expedited service.

This increased service also has had the effect of improving Amtrak’s financial performance. In results just released for fiscal 1998 (which ended Sept. 30), mail and express revenue was $83 million, an increase of 19% from $70 million in 1997. In 1999, we project the revenue to grow by 29% to $107 million.

To support our growth, we are investing in new or significantly expanded freight terminals in major Amtrak cities, including Chicago, Minneapolis-St. Paul, Dallas, Philadelphia and Los Angeles, among others.

As we’ve grown, so has our service to major shippers of time-sensitive goods of literally everything from soup to nuts, including first-class mail, periodicals, food products, electronics, auto parts, packages and less-than-truckload shipments. We carry these products for H.J. Heinz, Campbell’s, United Parcel Service, Dial and trucking companies such as Swift and Roadway Express, among many others.

We are examining our options for entry into the $15 billion annual perishables market. Our service characteristics of speed, schedule and reliability make Amtrak Express suited to capture significant volumes currently moving by highway.

Amtrak’s overall goal is to maintain a national rail passenger service, with the support of revenue from passenger and commercial enterprises. That’s why I’m particularly satisfied that our growing mail and express volume has resulted in more service for our passenger customers.

We have restored the Texas Eagle and increased its frequency to four times a week. We have extended the New York-to-Pittsburgh Three Rivers service to Chicago.

And we extended our Philadelphia-to-Pittsburgh Pennsylvanian to Chicago on Nov. 7, providing Amtrak’s first same-day mail express service between Chicago and Philadelphia.

This was a historic event for Amtrak.

Mr. Ellis is vice president of Amtrak’s Mail and Express Division in Chicago.

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