.. '"

-..

- -· - - - - ------- ,...__...__,.

THE MILWAUKEE ROAD STRATEGIC PLANNING STUDIES

PREPARED BY BOOZ, ALLEN & HAMilTON

TRANSPORTATION CONSULTING DIVISION

MAY 2, 1979

]Btc'JOZ ·AJLt·'"· , . .··lEN . . _·,:: . . .-' . •. . ·.. . . ·.

·• t ·' •

. ~-. -.\' . -~- . .. . . : - ·. . ... , • c , • , , . ' ,' ·, - , , , ..,. .... . .• :~' , -. ··, "'.• .- ,. I •

- c

PHASE I

PHASE II

STUDY OBJECTIVES

IS THERE A LONG TERM VIABLE RAILROAD NETWORK?

IF SO~ CAN THE MILWAUKEE RAILROAD GET FROM HERE TO THERE?

KEY ASSUMPTIONS

• PRELIMINARY STUDY BASED ON 1977 TRAFFIC LEVELS:

TRANSCONTINENTAL SYSTEMS WERE Nor PROFITABLE

MIDWEST STRUCTURE APPEARED TO HAVE GREATER PoTENTIAL

I NETWORK CONFIGURATIONS BEING STUDIED IN DETAIL

SYSTEM WITHOUT LIGHT DENSITY LINES:

MIDWESTERN HCOREH LEVEL SYSTEM

CORE EXTENDED TO MILES CITY

"SuB CoRE"

SUB CORE EXTENDED TO MILES CITY

SUB CORE WITH KANSAS CITY GATEWAY

LOUISVILLE-PORTLAND TRANSCON

TwiN CITIEs-WEsT TRANSCON

RouTE MILES

7)965 3)894

4)661 1)722

2)488

2)393 3)861

4)467

•

KEY ASSUMPTIONS (CONTINUED)

DETAILED STUDIES FocusED ON PROFORMA NET RAILWAY OPERATING INCOME:

STAND ALONE BAsis CRR ONLY - No DEBT SERVICE)

ICC BASIS (1977 FORMAT)

"NORMALIZED" MAINTENANCE

MARKETING OPPORTUNITIES

OPERATING EFFICIENCIES

fLEET AVAILABILITY

EcoNOMIC FoRECASTS BY CoMMODITY

8 ~ ., z 0 ;::: c ..J ..J c ..... (I)

~ ... ;:::

~ "' z 0 ... .J ;; ll:

"' .... z

- -.., .~

MILWAUKEE ROAD RAIL AND TIE INSTAllATIONS

a·.ooo.-.- - - -- - --- ---- - - - - --- - - - ---- - - - - - - - -------

a.ooo

•.•oo

1,000 ~~...L...::;L~j--7& -..=,;;;..-~~R~L~EO_I_9~ ~E~E~I~·~N~ 1_:! ::_:a~~;~ __ :<~ __ J -----------

aoo

o I c ;c ~ c ,c ( c , c r t; c , / <c. / r < c ( t;

~

''· '(<,~ 1940 it~O 1960

YEAR

' r> Li7 0

MILWAUKEE RAILROA 0

Tl[ INSTALLATIONS 1934--1977

1977

10-,- - - ----- - ---------------- - ---- ------

•o.....,.-- -- - - - - - --

•o

•o

~0

ro

10

0

/// . ---- ---:;~w:;:;:;</: ------ -1\-NORM:ZEO 1 97;:1~A~REOU:EM(rl;- -1 J...d.: . _ _ ...._._ . ---~- ------ .

· • '~ y /. I /·/ · ,· ;. _1_,- .· / rl (62 YeorNewi<OIILde) . ,...../ T j i-"7 .c--7 "-;r- /-/. r -~;r - - --- -- ---- -- ------ ____ _ // .· v ' .. . // / ( / 1/// /

', {.-~/);/~~> .. Y_,> </_/ .A'.-y_/;; , , 1 - i// , / I . t ' ' / ,/~-,1· //

· • ,o'- ' · /--' · • ' .,-- -./ -1 ---'---/ _r - - , :..LL ~ T-- -/ /·~/ ·A ---~ --- ------ -- - - - -- -/ v) /" '/· I · / /"'/ ,l-" ~ /c . . ·/,c /1/' /~ t ~/ . 1 v·// / ·/ ) --:_, ./· ///~/

/ l / r:. / . -'~/./ //~" ," L c/,0 -- yc/.( // ----· · - r , · -·- ·- --1.·--'- :--- ~~ ,.!_- 7,· /-;-',. •r- ~ _,/7=/- rr •-- --

.--1- I I , , r_ I · .· / / / j / ·~ // ·/' • , f/ ( / -' / / / ' r [ ·· . /,f~· j ·./·/_, I ·v / / . . f•/ ///>//,

/ / / ' // •/• .- ' / , // /I /_//_,_"..L_/ 1 ,·, /L,1,' • / • ~ //L.-/ /l.f, ·~L -' ¥',{ //,// r----r-·1 y · r· ·f - , /. . - ·t-rY y · T - ,---( ~-r----r

.. , '~ .. ,. 1940 ,,,0 1960 1970 1977

YEAR

MILWALIKE£ RAILROAD

NEW RAIL INSTALLED 1934- 1977

Tl'lom11t L'.. o,., , lt1 c .

OTHER ASSUMPTIONS AND ISSUES

1 1977 CosTs AND RATES - No INFLAT ION

I CURRENT REGULATORY CLIMATE

1 CuRRENT (1978) LABOR AGREEMENTS

• No LABOR PROTECTION

I AsSET TRANSFERS LIMITED TO ROLLING STOCK REQUIREMENTS IN

REDUCED SYSTEM CONFIGURATIONS (NO TRACK STRUCTURE)

• REHAB/EQUIPMENT REQUIREMENTS EsT IMATED

... _. .. -

ANALYTICAL PROCESS SYSTEM OVERVIEW

1977 MARKET REVENUE SURVEY - BASE

.... ECONOMIC MARKET DIVERSION

PROJECTIONS ASSESSMENT ~ - AND DIV ISION

~ ANALYSIS

MARKET OPPORTUNITIES

r-

POTENTIAL REVENUE BASE

0 / D FLOWS ADJUSTMENTS

t t 1977

CAR HIRE SIMULATION r.--- NETWORK COSTS AND

MODEL MODEL DEFINITION CYCLE TIMES

I I

' + FREIGHT CAR LOCOMOTIVE

REQUIREMENT REQUIREMENT

COST .... FINANC IAL I BASE MODEL

J REHAB

J REQUIREMENTS :

(TRACK & LOCOS) i

PRO FORMA ADJUSTMENTS STATEMENTS

NROI

t t 1977 NORMALIZED IMPROVEMENT

COSTS (R -1l MAINTENANCE ANALYSIS AND ESTIMATES ADJUSTMENTS

+ NROI

ADJUSTED

-' I I

INDEX

270

260

250

240

230

220

210

200

190

180

170

160

150

140

130

120

70

60

50

40

30

20

MILWAUKEE ROADS VS. BURLINGTON NORTHERN TON-MILE TRENDS

1970 TO 1977

• • • • • • • •

• • • • • • • • • • • • • • • • • • •

• • • • • ·-• •• •

• •

BN COAL

,_ ___ MILW COAL

•

••• •••• •• •

•

.• BN TOTAL

., - BN NON-COAL

~-·-•• • ....... INDUSTRIAL PRODUCTION ~ . ..,..... INDEX .

10

0

.- -/.... GNP (REAL)

1..::£?:'-J,.~ . ::"--.L '·:/" /.,.,....-•-MILWTOTAL

1 1 ~ «1 1 MILW NON-COAL

90

80

70

1970 1971 1972 1973 1974 I

1975 I

1976 I

1977

'::.ot.c ·~"'

I ! f ) I

i - - -

i

MILS

(

PROJECTED NROI COMPARISONS (WITH IMPROVEMENTS)

0~------------------------------------~~~--~~~~---------------_ .. -· . . ~·~~~.,.,.· .. -·· ... ,..-:::·· .,.,.. . .,.. .. ,.,. . . . . .,.. .,. ., . . . . . , """' . . """".. . . . .,.. ...... ., ,-

"'.. . • . :_ ....,., .., _..,. • • . _., .., .A .. . _.,.. ,....,. ,.-, .. ~ ,·-- --- .-· , . .t-,, .....-: ·····:....,.-- .,..,.. . ..,.,.- ,

J'- . ,.- .-· __ ., ~ :-····· ,...._..... _,.,. ,....-:. ..-- . , .,., / ·····~ / ,.-su BCORE.. _, •• •••• •:;_../ • .-

MILES CITY SUBCORE-'.• •• ······.:;........ )/' 1,, .. ., . . TWIN CITY TRANSCON···::,..,... • • ~ 1'

KANSAS CITY SUBCORE .; 1

MILES CITY CORE • I

I I

~ I

I I

SYSTEM'

. 1977 LEVEL

I I

I

I

I I

I

I I

I

MKT OPPOR MKT OPPOR SHORT TERM

MKT OPPOR LONG TERM

-

UP

•

j

~

J

THE MILWAUKEE ROAD CORE NETWORK

KCS ~73 Rl ROAD

., .. ~9 ~e KANSAS CITY ~g~ 174MKT~ e/~ 8\

175 TOFC

176

SLSF MP

100

NORTHFIELD MNS

MASON CITY

Y"'-'\ 13 /78

-~g .... / ~ELDON

... ._,.,.""-""

MARQUETTE

_y~~ ~e~ SOU LN TOFC

•

~

-

-.. ----r-----------------------------------'"---- -\~--.. ---·· - -- ___ _ ,....,. __ ·- ·- --· · --- '-'~ ·-

c A N D A A

THE MILWAUKEE ROAD

1977 SYSTEM

SYSTEM WITHOUT LIGHT DENSITY Ll : ----·'"'· l -~ l

I ·------.-- • ------------r--,----- I '-"-~-'-----.../·,___ I . . l

I I MINNESOTA I "· . 7 } .

1977 SYSTEM INCLUDES RED & BLACK LINES SYSTEM WITHOUT LDL INCLUDES ONLY BLACK LINES

i NORTH DAKOTA i I I

----- (

'· i I - 1 J ) '

. \ I .~ ~ . r·--------- ------, L. I D A H o -.......~ . ....1 '7 , OR£ coN

Bil liNGS

fAITH~ I , I . I , ! . I I I ' . • I

I I w y 0 M I N G f---. __ ----- . . . -- -"~------- I I I

I - ---- ' • --- - - I I 1 ·r------ -~

· · i I I I . ,

i i l _____ ,... _____________ j_ ___ l

S 0 UIT H

·------

' ' I ' . I I I . I 1 N E vADA I j N ~ B R A S K A

z i UyAH i \ . '

· I I \ . ' \ I I N I A \ ' •

~-~-------·----·---

· I I \ . \ I

\ \

• r--------------1. __ • I

"tt!!Ji."~'-

C OLoRADo I . I I

I KANSAS

• I

M I ·

ILLINOIS 1ND\A 't'

TERRE HAUll

\ I

r1 . /\. f t.-"'·y·v . { KENT

,,

I .

oRE coN

I -·--J

'· ) ' J

/" , L. I

I i . ---._ . I ----.,.____ I

1 -- I ·---

\'? ( i

c A

~.........1.

THE MILWAUKEE ROAD

N D 1977 SYSTEM A A

SYSTEM WITHOUT LIGHT DENSITY LINES

----- I ·---- ·'""-. --r·-·- I 1 I ·---·-----.--·---' . \ \ . I .· . ' · ~.----. ( \. .......... ./.'-. I l i NORTH DAKOTA ! '!MINN E SOTA

i i \

1977 SYSTEM INCLUDES RED & BLACK LINES SYSTEM WITHOUT LDL INCLUDES ONLY 8 LACK LINES

·._..... I ) . \ I . r----------------~ 1 '\! I I D A /j 0 ........ ~ • .J I .

BilliNGS

. I I . . I I . SOUTH

. I .

I • I

MICHIGAN

• I ----· '· I w y 0 M I N G i---------i i -·-·r ; ,· ·-----. ._...,

. i i I . . i l _____ , ___________ -.1_ ___ -,

• I ,

\. \

IV£v4D4 \ . \ . \

NEBRASKA

.

\

L 4LIFoRJyl \.

\ 4 \

i i i ----1-·---!-...._, I i ~------. i u T A /j i I

i i COLORADo i . . I

tND\A.NA. \ ILLINOIS \ •

\\ \

\ •

I I . • I i i I

• t-------------1._ • I

. t : .... i ~F~!~' ''~. ~ -~

KANSAS URI

1ERRE HAUT(

\ I

r' . l\..

SEY!o10Ut·\.

l ,...,.y·V . { KENTucKY

j) ____:_.·. L ___ · - :\...:____ ____ "- h . \.;~~ .. .;,\;·\.; \r.,,, .. , , . '\ ·~ · ·:, ' * ... , ';; jdi ;'Jb\Wv

-..... . .__ ·-.... ___

---.. r·-r-"siiiNcroN'I;o~ i )

c A N D A A

---- -·-· ----------------~- .-....

THE MILWAUKE-E ROAD

CORE

MILES CITY CORE

' ' I ., "" I I ·

i \. I \

___ _J l ---.- .... ........ --·-- \ ~....... "\. -......

( ...... ../ ~!!! ~-~-~-----) <

! ~ !

MoNTANA NORTH DAKOTA

OREGoN

~ \ r·---------------1 ID"IIo '-.~4 , , I f I . • • I

I f i . ____ '""· --·-. I I w y 0 "' I N G i-·-·---·-· ~ -.......,._____ i i i ------ ' ' ---._ I I I t-·------~

I i f i i j l __ ·-·y·---------- -.l_ ___ l

$ ~if!{ ~ ~ ~ ~ ~ ~

SOUTH D A K 0 T A

' ' ' NEB A S K A

l ~ MINNESOTA \ . ( ·~

DELMAR

M

I I . I • I . I N E v " D ..\ I i 1-· -' \ I ur..t, I I \.\ i i C 0 L 0 R ..\ D 0 i CALIFoRN \\ I ! •

1 N 0 I A ILLINOIS

. . I 1

" • I I ! ' . I I o I

. --------- -- --1.---·

KANSAS

_..._, ________ ~

·- -·

c A N THE MILWAUKEE ROAD

CORE

MILES CITY CORE D

·"'-.

-.....__ ' ~ l --- --· -----..,._ - ---·----, ·, . ...,__"""""'-\. - -/·' 7 ---------------------r----- I i ....... ../A~j ~~'.o~ '\ • I J l ..

SI{INGTOJV\ i ) i \ MINNESOTA

.\. • H DAKOT I l I I NORT \

• • •

/ \, MoNTANA ~f .... "'""'-""'-·~-------) ~

A A

ORE coN ! ~ ! ; \ r·---------------J I D 4 II 0 '--.-.../'7 !

. I I I · . . I I I '

. I -- ~ /--. I i II' y 0 M I N G i------------ .

··----- . . . ·-----. I I I r-·--·--. . ----- . . ·-----~ -I I

I

·-··-- -· A S K A I I

I I . .

i i l _____ .,... ___________ --.L·---,

SOUTH D A K 0 T A

I I •

. I NEBR ' • I ' I I .

• J DElMAR

..

MICHiGAN

----·-,-...-· \ ;

\ . \

/ lV£v"-o 4 f /

\ I UT"" ! \ ! ! c~t 1

\ I I FoR.Nt.;, '1. • •

. 1--·-·-·---------~ ILLINOIS

JNDIA!oiA

I I • • I I • • ·--------------1._

COLORADo

•• ,., ,, " .. .., , ,, .. .)\'·:' < ·' ( ----.-·---~----- .. -·----.... \. --····-

. I . I • I • I

KAN AS

-r--

KAIIISAS CITY

MISSOURI

-------------~ ------------------ --+- --__ \ _______ _ - __ ..:...-a_______.,_-~~___,_.._~.,____~-__..:..~.-.........

c A N A D A

THE MILWAUKEE ROAD

SUB CORE

MILES CITY SUB CORE

SUB CORE INCLUDES ONLY BLACK LINES

\

·"·

..________ --·-1 l

----- --~ ~ ~ --.,.._ --- ----- \ '·---.. .\. . .._ ! ! ·------------------,._____ ' i ......... ./ . "' oe, 1 I j I

1

.AtsH,NGroN~ ,·, • • ! \ NESOTA

0 • I I MIN

MILES CITY SUB CORE INCLUDES RED & BLACK LINES

i (\ i NORTH DAK, OTA \ '""-""--·~-~---~ ( . . . . ( J \ MoNTANA I j · '; i

~

I " ~ if~ , . ~ " s~ # J \ I ~ \ § ~$ ~ • ~ • .. I

OREGoN

( ID \ .../~----·-·-·-·-·---~ SOUTH DAj<:OTA j .J

I A H 0 ..... ~. I i !! ~----------·-· ?l ! . I • .,

I ! i I . .... ·-. l I 0 w A -c. I I w y 0 M I N G i-·-·-·-·-·-·r- •./' ...,\ ) . . . ,)

r- -----. .._ __ ·-·-. . I l l DES MOINES 'l 1 r·-------1 1 NEB R A s A ..... }\ __ /

I

I I I --- ) 0 Is • • • • . ---· I I L L I N

I ! L.---.,. __________ --.L... __ ! \

I N £ v A 0 A I . 1-· -. -- (

. . ' . I \..r KAUAI CITY u R I

' I UyAH I I MISSO

\

. . . I \ ! ! COLoRADo ' K 1 NSAS '

c~LIFo 11 N 1 A \\ ! I I

I I I • 0

I J ,

----------- ----.1.. __

-...~--

M l

INDIA

•

c A N -..... . ...._ . ...._ . ...._ A

.~ .. ~

D A

THE MILWAUKEE ROAD

SUB CORE

MILES CITY SUB CORE

SUB CORE INCLUDES ONLY BLACK LINES

--._,_____ --·----"\i, '·""""·-·, '\..-! ! ·-------------·-·---,---·--- i ............ ./ . ..,. ~ I I j 1l A.sH,NcroNrt,~ ,· ., • 1 NESOTA

0 • I ' MIN

MILES CITY SUB CORE INCLUDES RED & BLACK LINES

·"· ~-·---' l

; ( ; NORTH DAKOTA •\ ' \ . !( . I \ MoNTANA J ~ L.'-.._...._.~.~-----z. ( I

J I

.1 \ I ORE coN

( " r------------·---, I IDA H 0 '"'-~ • ../) ' ________ .J_

. I ! f·-·-· ? I . I t., i I . i w A "t'' • ' I - ....... ,...__ \ I 0 ) I I w y 0 M I N G i---·---·---- '# "'

·-..... . ...__ ,. . . / --·--. I 1 r

(·--------.,_______ . , I l .~, ""'"" ' -r-·--·-·--·--! I N E B R A s K ... ·····}\

~ ~ ~

~ ~ ~ ~ ~ ~ ~ ~ ~ ~ .... ct)

SOUTH DAKOTA

I I I I I ·-·-·-· ' ' • • I ·---' 1 l. ___ ·r·-·---·--·-- --L·-·-, ·

i i i i -·-·-·---~ I

N £ \1 A. D A. I ,. 1--· -. -. -- (

• ' ' , \.r KAMIAJ an U R I \.\ i i C 0 L 0 R A D 0 i K A N S A S •

1

. . I A L I I' 0 l! N I A \\ I ! .

\ I !

ILLINOIS

MICHIGAN

----·r--· \ • \ \ .

INDIANA

~

\ I ! ! \ r-' ·------ I \ I

' ----...... --.~-\ ;

•· ·-·----~ ___ ........ ··-·~ ... ,,,_ ....... ....- ........... ~~· ., .-

._ ......

\

A

·"-

________ _ __ _J I

----~ ----T ~ ~ . -- --- '-~- -. ----- ----- --' I ---------------,. i '-. .....___, I I · · IY•sifltvcrotv ' \ I I I, sorA

• 0 I ' I ' I MINNE ........ ' [ • DAKOTA '\ I \ I NORTH I . i \ 7

MoNTANA i ' \ ) . I . -..... .._ . ..__.~------. ...._ rL. ---------·J

' i . ------- ,/ / '1 ! .,1 J . I . . \ I / ' r·---------------, k T A '

L. ID \ .J\! I SOUTH DA

0

I

I

4 H o ....___ 1 • , __ -· _.

I I j_ --i I · ,---------· . . I . I I ' 1

. . I - -- ..._ .r--. ..,_\ --- ! I IVy 0 M I N G i----------- . 'lo'"'""

--- ' ' ' ----.,.______ I ! I I -,

I ------- ' I \

1 ·-·r--------1 ! ", •• As •

1

A OMAHA. . , I I o I I ' ' I

i i L.----~-------------L.. __ , ' . . '

I I i ! -------·--1 IV£v•o

4

f 1 !--·----\ I urA H i I

\_ i i COLORADo j \ . ' i C A L I F 0 R IV I A \_\ ! ',' · I I \ ' '

\ I I

\ ~-------------~---\ I

. I

D

THE MILWAUKEE ROAD c A N A KANSAS CITY SUB CORE

ORE coN

MICHIGAN

I 0 W A

ILLINOIS

\ \

INDIANA\ •

KANSAS

".J'-· KENTucKY

j ,;

Iii

I '·

c A ----·----·--------·------­. I

• ~-"Sif,N '\..~I

N A D

..............

A THE MILWAUKEE ROAD

LOUISVILLE TRANSCONTINENTAL

J ·"'· ___ _j I --·-- --,- . - . .

-------·---,..._____ \ '·-· .\. .1'-"'.-

' I -~./·~-~ I . . I ,

·' N 0 R T H D A K 0 T A )\ M I N N E S 0 T ~ULU~Yl1 '~!,.; •

~~~ I \. ~... . 7

"'-'-·-....·~------., r

•~tco!d~q~/f!4J.,. c roN'-' •

. . } .

, • CliJQIJ(JQ .. I ( J I o--'1 - I / \ j - ~ \ r----------------,

OREGoN

"

SOUTH L. IDA H 0 '--.~ . ..1'1 • ---·-· I . I , _1 ·-·-· . I · I ,---1 . I .

i I j-.,} ._. ( 1 j IVY 0 M I N G t-·-·---·---- · ~ -\to -·- • <, I -- . . .. / -- --~------L_______ - ! ! ll. I \ ,;, ...... c;

1- r---------1 I NEBRASKA ...... \ ,..1

i i f ! L __________ )

MICHIGAN

. . l 1._ l . . I I -----,·------------ ---, , 'l. \

i i j i -·---·---~ '\ i NEvADA I i r------- ~-rKAISASCITY I" . . ' I 0 u R \ I UyA H I i MISS

\ i i COLORADo i KANSA ~ \ . . I I CAL \ I I . I ''o•NtA \ · • 1

\ ! ! . \ I I

\ ~-----------~--\ . . I

I 0 W A ~::JnE~fR;.t ~·· j ~--·-· .,._--

\ \ \

INDIANA\

\ • ILLINOIS

-; d:· : · :~~~>!\'

·.; .~ .,.

~"ltt:-...

c A N A D A

THE MILWAUKEE ROAD

TWIN CITIES TRANSCONTINENTAL

--- - --- ----·--- I ~ -~--------·-,---,--. • ....J ., i . . ....... ___ _

. ) ( '\. ........ ./'\--. I I I . I \, } .

--~ (

j ~ I

i N 0 R T H D A K 0 T 'A \ M I N N E S 0 T A . \ \

) \ i r \ r·---------------1 L_ I D A H 0 '-.~--AJ , I . I

f I · . . I I I . ' , . I - -- -/ I w y 0 M I N G i-----------

-·r-------. I i i -....... .. _____ -1 . I ·--~------- I . ' i i I I • .

i i l.----~----------- --L. __ I . ' ' '

I I i ! _ I N £ v A D A I i r-- -. ----z i UTAH i I

OREGoN

SOUTH RAI'IOCITY

NEBRASKA

r

t\ ;-I OMAHA~ 0\

I OW A

0 DES MOIIES

L----·---·-· ~-

-------~ ( \..

\_\ i i C 0 L 0 R A D 0 j CAL \ I I I IFoRNIA \ , ' I

\ I ! . \ I I \ ;.._ ____ - ; r KAISAS CITY i MISSOURI KANSAS

. ' - -----..... __ _ \ . I I

r

IIADIIOI o

ILLINOIS

__ ... -4,_.--· \ \ \

INDIANA\ I

\

}·, _;:.. .....

OPERATING ASSUMPTIONS

I MILEAGE OF MAIN AND YARD TRACKS WAS ADJUSTED TO REFLECT 1978 CHANGES

AND PoTENTIAL CHANGES APPROPRIATE TO THE SYSTEM STUDIED

I RUNNING TIMES WERE REDUCED TO REFLECT REHABILITATED MAIN TRACKS

ROAD CREW COSTS WERE REDUCED TO REFLECT ELIMINATION OF RE­

LIEVING CREWS AFTER 12 HOURS OF SERVICE

ROAD CREW OVERTIME WAS REDUCED TO 1973 - 1976 AVERAGE LEVELS

I TRAINS WERE RESTRICTED TO 120 CARS AND ALL RoAD AND YARD CREWS REFLECT

THE SAVINGS OF REDUCED CREW SIZE UNDER THE 1978 AGREEMENT

I BLOCKING PATTERNS WERE OPTIMIZED WHERE PRACTICAL WHEN FLOWS WARRANTED

OR WHEN EXISTING YARD FACILITIES BECOME OVERBURDENED

No CAPITAL FACILITY WORK FOR YARDS IS REQUIRED IN THE OPERATING

PLAN EXCEPT FOR FIFE YARD AT TACOMA ' IN APPROPRIATE SCENARIO

I MILWAUKEE TERMINAL OPERATING COSTS WERE ADJUSTED TO REFLECT THE Ex­TENSIVE ECONOMIES ALREADY INSTITUTED

• RoAD THROUGH TRAINS AND YARD CREWS WERE ADDED oR DELETED DEPENDENT

UPoN TRAFFIC VoLUMEs AND SERVICE REQUIREMENTS

OPERATING ASSUMPTIONS ...

• AssiGNMENT oF LocoMOTIVE UNITS REFLECTS REPLACEMENT OF LowER HP

RoAD UNITS WITH FEWER HIGH HP UNITS WHEN PossiBLE

I ORIGINATED AND TERMINATED TRAFFIC To AND FROM STATIONS ON LIGHT

DENSITY LINES IS TREATED AS IF 100 PERCENT IS LOST TO THE MILWAUKEE

ROAD

I EXISTING RoUTES WERE RETAINED AND TRACKAGE RIGHTS OPERATION BETWEEN

CLINTON-TAMAJ BLuE IsLAND-TERRE HAUTE) AND CuLVER-PoLo WERE NoT

INCLUDED IN NETWORK MoDELS

I DERAILMENT RELATED COSTS WERE REDUCED TO REFLECT NORMALIZED TRACK

CONDITIONS BASED ON THE REPORTED EXPERIENCE OF WESTERN RAILROADS

• JoiNT FACILITIES AT PoiNTS Nor INCLUDED AND THEIR RELATED 1977 CosTs WERE ELIMINATED FROM THE STUDY OF REDUCED SYSTEMS

CARHIRE ASSUMPTIONS

• A NoRMALIZED MILWAUKEE FLEET CMILW MARKS) WAs AssuMED To BE AvAILABLE

• FoREIGN CARS WERE DISPLACED BY MILWAUKEE CARS) TO THE EXTENT PERMISSABLE

UNDER CAR SERVICE RuLES) WHERE SucH DISPLACEMENT WAs EcoNoMICALLY BENEFICIAL

OR NECESSARY TO PRESERVE MARKET SHARE

• FREIGHT CARs REQUIRED TO DISPLACE FoREIGN CARS AND SuPPORT THE GROWTH IN

TRAFFIC WERE OBTAINED THROUGH ADDITIONAL LEASES

ADDITIONAL LEASE COSTS WERE BASED ON THE AVERAGE LEASE COST OF

THE MILWAUKEE LEASED FLEET IN 1977 IN THE EVEN OF AN EXCESS OF CARS) LEASES WERE CANCELLED WITHOUT

PENALTY

• THE 1977 PER DIEM AND MILEAGE RATES APPLICABLE TO MILWAUKEE CARS WERE

ADJUSTED TO REFLECT THE NORMALIZED CONDITION OF THE FLEET) AND THE DIFFERENCES

IN THE AGE AND OWNERSHIP PROFILES OF THE REQUIRED FLEETS AND THE 1977 FLEET

• No IMPROVEMENTS IN YARD OPERATIONS WERE AssuMED) HowEVER) REDUCTIONS IN

TRANSIT TIMES RESULTING FROM AN OPTIMIZED OPERATING STRATEGY AND REHABILITATED

PLANT WERE INCORPORATED

LOCOMOTIVE ASSUMPTIONS

• LocoMOTIVE REQUIREMENTS WERE BASED ON SPECIFIC TRAIN OPERATING AND YARD

REQUIREMENTS

SELECTION OF DROP-OUTS WAS NOT AFFECTED BY OWNERSHIP STATUS

No NEED WILL EXIST FOR SHORT TERM LEASE UNITS

• REQUIRED FLEET WAs AssuMED TO BE REHABILITATED- REHAB CosTs WERE EsTIMATED

AVAILABILIT.Y IMPROVED TO 90 PERCENT

MAINTENANCE EXPENSE AT NORMALIZED LEVEL REFLECTS TYPE OF SERVICE:

THROUGH) LOCAL) UNITJ AND YARD SWITCHING

NORMALIZED OVERHAUL FREQUENCY WILL BE AT 4 YEARS (GE) OR 5 YEARS

(EMD) INTERVALS) OR 45QJQQQ MILES) WHICHEVER OCCURS FIRST

• FUEL CONSUMPTION WILL REMAIN CONSTANT AT 1.9 GALLONS PER MGTM BEFORE AND

AFTER CONVERSION

1 LEASE AND DEPRECIATION CHARGES WERE CALCULATED BY AcTUAL UNITS SELECTED

To REMAIN IN EACH INDIVIDUAL SCENARIO

MARKETING ANALYSIS

• CusTOMER SuRVEY

• •

PRoJECTION OF NEw TRAFFIC BY MILW. SALEs/MARKETING DEPT .

REVIEW OF SUCCESS PROBABILITIES

• AssuMPTIONS GovERNING SuccEss PROBABILITY DETERMINATION

I ADJUSTED CARLOADS AND REVENUES FOR SEVERAL SCENARIOS

• DIVERSIONs/DivisioNs AssuMPTIONs

FoR REDUCED SYSTEM CONFIGURATIONS, 1977 TRAFFIC THAT HAD BOTH ORIGIN AND DESTINATION IN THE SYSTEM UNDER STUDY WAS RETAINED IN ITS ENTIRETY. IF BOTH WERE OUT, THE TRAFFIC WAS DELETED FROM CONSIDERATION , IF ONE END WAS IN AND ONE END OUT OF THE SYSTEM UNDER STUDY, TRAFFIC WAS CONSIDERED AS SUBJECT TO DIVERSION

TRAFFIC SUBJECT TO DIVERSION WAS REVIEWED AND EITHER DROPPED AS NOT RETAINABLE OR RETAINED WITH A NEW u!Nu GATEWAY REPLAC­ING THE "OUT" END OF THE ORIGINAL MOVEMENT WITH AN APPROPRIATE DIVISION OF REVENUE,

EFFECT OF MARKET

OPPORTUNITIES AND ECONOMIC FORECAST

PERCENTAGE SYSTEM MCITY MCITY KC LVLLE TCITY ... f

INCREASE IN: wLo LDL (ORE CORE SuB CORE SuB(ORE Su~CORE IB~SC~ IRNSCN -

% % % % % % % %

MARKET OPPORTUNITIES Vs 1977 LEVEL

(ARLO ADS 25 26 25 23 22 23 22 13 REVENUE 34 32 31 26 26 27 30 26

1986 EcoNOMIC FoRECAST

Vs MARKET OPPORTUNITIES

LEVEL

CARLOADS 8 9 9 11 10 10 9 4

REVENUE 9 11 10 13 12 13 11 8

LONG TERM COMPOUND

EFFECT Vs 1977 LEVEL

CARLOADS 35 37 36 36 35 36 33 18

REVENUE 47 46 45 42 41 44 44 35

INDEX

270

260

250

240

230

220

210

200

190

180

170

160

150

140

130

120

110

100

90

80

50

40

30

20

10

0

90

80

70

1970

MILWAUKEE ROADS VS. BURLINGTON NORTHERN TON-MILE TRENDS

1970 TO 1977

BN COAL

,---- MILW COAL

I

1971

• • • •

• • • • • • • • • • • • • • • • • • • • • • • •

• • • • • . . • •• •

• • •

•• •

•• •• •• ••

.• BN TOTAL

• _ BN NON·COAL

"-•• ~··- ...-INDUSTRIAL PRODUCTION ~·-- INDEX .

~ ... -GNP (REAL)

-- ;--•- MILWTOTAL . ~ k L . MILW NON-COAL

I 17/4 I

1972 1973 1974 I

1975

I

1976 I

1977

... <! .........

INDEX

185

180

175

170

165

160

155

150

145

140

135

130

125

MILWAUKEE ROAD TOTAL TONS CARRIED

I I I I I I

MILW COAL TRAFFIC

,. ,. ,.

,. ""'----

I 120 I

I I

115

I I MILW TOTAL TRAFFIC

110

L 4:---- ~I ·' . --.1 100 I I > ........ I / I ~ 105

95 \ '·------............-......._... I

\ -90

85

80

75

70

1970

\ --,-\ ,. \ ,. '- __ _,

,.

I

1971 1972 I

1973 I

1974 I

1975 I

1976

~·"'""-·

I

1977

INDEX

165

160

155

150

145

140

135

130

125

120

115

_....,

RAIL TONNAGE vs.

REAL GNP

---US RR TONNAGE , ' 110

105 - , ,, j~ --L,·-' 1 I X "'!, 1.~ I 'q;~- .,.=:1

100 -· .~ -._' ,.~ .,, --

95 I .__,...-MILW RD TONNAGE

90

85

80

75

70

I

19G8 I

1969

I I I I I I I I 1970 1971 1972 1973 1974 1975 1976 1977

..........

INDEX

200

195

190

185

180

175

170

165

160

155

150

145

140

135

130

125

120

115

110

105

100

951 . . 90

85

80

75

70

I

1970 1971

WESTERN DISTRICT CLASS I RAILROADS NET TON MILE INDEX

I I

I

1972

1970 TO 1977

I / ..

IBN :

I /'· I

/.· -~ :

I

1973

··~ UP

"\·· .. .\/' . . .. ·

I

1974

\ "'

I

1975

...........__ ___ CRIP

1976 I

1977

1977 LEVEL STATISTICS

;·

GROSS fREIGHT REVENUE MILES OF ESTIMATED NUMBER t

REVE~UE (f1IL2 C8RL08DS (0002 ~08D 0EEB8IED OE EMELOYEES {0002 f

BASE 434.8 467 9)566 11.4

SYSTEM w/o LDL 423.6 "--845 7)965 10.7

CORE 248.2 645 3)894 6.6

MILES CITY CoRE 269.4 683 4)661 7.1

SuB CORE 146.3 444 1)722 4.4

MILES CITY SuBCORE 168.1 480 2)488 4.9

KANSAS CITY SuBCORE 182.0 498 2)393 5.1

LOUISVILLE TRANSCON 271.1 572 3)861 7.0

TwiN CITY TRANSCON 168.8 270 4)467 4.3

LONG TERM LEVEL STATISTICS

GROSS fREIGHT REVENUE ESTIMATED NUMBER REVENUE (MIL) CARLOADS (000) OF EMPLOYEES (000) .f·

t

SYSTEM w/o LDL 621.6 1)138 12.6

CORE 361.8 885 7.8

f1ILES CITY (ORE 390.2 930 8.3

SuB CORE 208.5 605 5,1

MILES CITY SuBCORE 237.4 648 5.6

KANSAS CITY SuBCoRE 261.9 677 6.0

LOUISVILLE TRANSCON 390.7 763 8.2

TWIN CITY TRANSCON 228.6 318 5.0

FREIGHT CAR REQUIREMENTS

------------------------THOUSANDS OF CARS---------------------

SYSTEM MC MC KC LVLLE TWINCY w/o LDL (ORE (ORE SU6CORE SuBCORE SuB CORE TRt:lSC~ TRNSCN

I f

TRAFFIC RECOVERY TO 1977 LEVELS

DIFFERENCE FROM 1977 NoRMALIZED FLEET 5.8 (1.7 ) (1.4) (5.5) (5.3) (4.4) (2.9) (5.9)

TRAFFIC ADJUSTED FoR MARKET OPPORTUNITIES

DIFFERENCE FROM 1977 NoRMALIZED FLEET 12.8 4.1 4.5 (2.6) (2.2) (0.5) 2.1 (5.1)

MARKET OPPORTUNITIES AND GROWTH To LoNG TERM LEVELS

DIFFERENCE FROM 1977 NoRMALIZED FLEET 14.7 5.4 6.0 (1.1) (0.6) 1.1 4.0 (4.7)

OVER 40 YEAR OLD DROPOUTS* ___Ll 1.8 2.5 L1 1.~ 1.4 2.3 1.8

ToTAL ADDITIONAL CARS REQUIRED 17.8 7.2 8.5 0.8 2.5 6.3 (2.9)

*40 YEAR DRoPours HAVE Nor BEEN INCLUDED IN THE NROI PROFORMAS

LOCOMOTIVE SUMMARY-TOTAL UNITS REQUIRED

1977 ACTUAL - 705

1977 BAsE NoRMALIZED - 628

NC MC KC LVLLE TwiN CITY SvsTEH CQRf. Ulli.E. SuaCoRE Sua CoRE SuaCoRE TRANS CON TRANSCON

TRAFFIC RECOVERY TO 1977 LEVELS 563 349 376 217 246 257 346 209

TRAFFIC LEVEL WITH MARKET OPPORTUNITY RECAPTURE 664 400 426 241 271 285 399 235

TRAFFIC RECAPTURE AND GROWTH TO LONG TERM LEVEL 703 422 451 255 284 303 416 240

SYSTEM LESS

CORE

MC CORE

SuB CoRE

r1C SuB CoRE

KC SuB CoRE

PLANT REHABILITATION ESTIMATES MILLIONs ' OF DOLLARS

TOTAL REHABILITATION

REQUIREMENT TO BRING TRACK To CoM­

PETITIVE LEVELS AT THE END OF 1977

WITHOUT CooR- WITH Dit:IATIQ~S CooBDit:l~IIOt:~s

LDL 482 447 248 213 285 251 125 108

153 145

159 128

NET REHABILITATION

f1INIMUM REQUIREMENT IN ExcEss oF

TEN YEAR NoRMALIZED MAINTENANCE

WITHOUT CooR- WITH Dlt:l8IIOt:IS CooRDit:l~IIot:~s

231 215 103 87 131 115

51 45

74 58

72 51)

L'VILLE TRANSCON 249 232 13Lt 128

TC TRANSCON 258 25~ 130 131)

POTENTIAL IMPROVEMENT

COMPONENTS

I OPERATING IMPROVEMENTS IN MAJOR TERMINALS SIMILAR TO THOSE ACCOMPLISHED

IN MILWAUKEE

• TRAFFIC DEPARTMENT EXPENSE REDUCED TO 1977 CNW-RI RATIO OF 2.1% OF TOTAL REVENUES

• GENERAL EXPENSES REDUCED TO 1977 CNW-RI RATIO OF 4.6% I POTENTIAL CONTRIBUTION OF THE EXPERIMENTAL SPRINT OPERATION BEYOND

TRAFFIC WHICH IS INCLUDED IN THE MoDEL

I LONG TERM BENEFIT OF WELDED RAIL IN REDUCING NORMALIZED MAINTENANCE

ExPENSES

• INCOME PoTENTIAL FROM MARKETABLE MILWAUKEE OwNERSHIP CARS AND Loco­

MOTIVES THAT PROJECTED TRAFFIC LEVELS Do Nor REQUIRE.

..,..,, r_.

NET RAILWAY OPERATING INCOME ESTIMATES ..

($ ~1ILLIONS)

NRnr NROI 4DJUSTED

NROI lr'1PRD I FIJR DEPRN. SYSTEM LESS LDL 1977 LEVEL (60.9) (55.3) C42~!J)

LONG TERM (3.9) +8.4 +2215

CORE 1977 LEVEL (41).2) (33. 2) (23. 3) LoNG TERM (9.5) +2.3 + 12.8 MC CORE 1977 LEVEL (ll215) (36.0) (25.7) LoNG TERM (6. 8) +4.9 +1518

SUB CORE 1977 LEVEL (2616) (15 I 6) (7.5) LONG TERM C11. 4) +3.8 +1212

MC SIJB CORE 1977 LEVEL (2813) (18.4) (lf),l))

LONG TERM (6.5) +7.5 + 16.2

KC SUB CORE 1977 LEVEL (32.4) (22.6) (1319) LONG TERM (10.6) +3.5 +12.4 L'VILLE TRA~SCO~ 1977 LEVEL (36 ,1) (2910) (18. 7)

LONG TERM +2.9 + 15 II) +25.8 T.C. TR~NSCO~

1977 LEVEL (31.2) C21.ll) (14.5) LoNG TERM ( 10 I 3) +5.5 +13.5

I ITEMS OF POTENTIAL IMPACT OUTSIDE THE IMMEDIATE CONTROL OF TRUSTEE AND

Nor INCLUDED IN DETAILED STUDIES

PRICING FREEDOM AND ABILITY TO ESTABLISH RATES THAT WILL BE FULLY

COMPENSATORY FOR ALL TRAFFIC BEING HANDLED

MAJOR REVISIONS IN LABOR WORK RULES

INFLATION AND AB ILITY OF RATE ACTIONS AND PRODUCTIVITY

IMPROVEMENTS TO OVERCOME THE HISTORICAL LAG

PosiTIVE OR NEGATIVE VALUE OF RECENT AND CONTEMPLATED

CHANGES IN RULES AND RATES GOVERNING DEMURRAGE AND

PER DIEM

EFFECT OF RECENT FUEL PR ICE CHANGES AND THE ENERGY SITUATION

EFFECT OF RocK ISLAND REORGANIZATION OR NEW PUBLIC OR PRIVATE

SHORT LINE RAILROADS

EFFECT OF INCREASES IN CAR CAPACITY

Cl)

2 c :::::i _, -:! 2 -Cl) a: s ...... c c

400

I 300

I

200

I

100

40

20

NET PLANT EXPENDITURE AND ADDITIONAL EQUIPMENT VALUES ASSUMED COMPARED TO NROI

326

~· ~

I 237

I I ~~

(1977 DOLLARS)

395

"''"'-'1

~~

~ EQUIPMENT VALUE

D PLANT EXPENDITURE

(:-:-:-:1 NROI RANGE

149

335

ol I Ng I 6?, I F, I tg I ~ I bk, I bJ I b6

(55)

SYSTEM W/0 LDL

CORE MILES CITY CORE

SUBCORE MILES CITY KANSAS CITY SUBCORE SUBCORE

LOUISVILLE TRANSCON

TWIN CITY TRANSCON

t f

MIL$

PROJECTED NROI COMPARISONS (WITH IMPROVEMENTS)

. " .. .. -.. -/; ... - /,·· ~ -·- ~·· ~ .-··-r" ., ·""

0~--------------------------------------~~~~--~~r'~-----------------_ .. -· .· ... ....:~ ..... ,·

(1 0)

(20)

.. -·· ...... ~·· ~· _,_ •• --- ••• ... -""'.···#Ifill' ·' _..... . . .. ...,.,. ... ·· ""...-""""" . . - ... ., r ,/· . • . :..-- . . _, A . . - -- ,./' ··""' , . .,...~ ..,.__..,.,. . ...,.. ,

/ ... ~ ······ -- .-·-- , , .. ...- .-· , / .. _ . ·-- -· ,.,..., .,.:.• .. ,. . ,., , .,. ...,-:. .. . .,. SUBCORE .. " ./ ••• ····:;;." / __ , , ••• tlfll!" • __ .,.

MILES CITY SUBCORE/ •••• ······_:,....-:. :/' 1,--.. , . .

TWIN CITY TRANSCON ···::,_, • • ~ / KANSAS CITY SUBCORE / 1

LOUISVILLE TRANSCON •• ·/..A

CORE/.

MILES CITY CORE . / I

I

I I

I

;;!: I

I I

SYSTEM'

1977 LEVEL

I

I I

I

I I

I

MKT OPPOR MKT OPPOR SHORT TERM

MKT OPPOR LONG TERM