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Revenue Divisions Between Railroads

Bob Chaparro
 

Revenue Divisions Between Railroads

This is part of a discussion on the CB&Q Group about car routing. What caught my eye was the mention about revenue divisions between railroads being confidential. Seems to make good business sense.

Fred Crissey stated,

"Railroads divided revenue amongst themselves and these agreements were confidential. When I was in the Q Sales Department I dealt with the auto companies and other firms and when we tried to figure out our assigned car requirements we needed to know how much CBQ revenue would be generated for each assignment. The CBQ revenue division was a key number and the Divisions folks in Chicago (part of the Rate Department) would give me the divisions verbally only and with instructions that this was confidential information."

Bob Chaparro

Hemet, CA

Alex Huff
 

Confirming what Fred Crissey said, divisions of revenue between railroads were not governed by the ICC (at the time), they were privately negotiated between carriers.  When Michigan Northern Railway took over an ex-PRR line between Mackinaw City, MI and Grand Rapids, MI, it inherited by adoption (as required by the ICC) "all rates, routes and divisions".  This occurred on April 1, 1976, the same day Conrail started up.  Because MIGN had a connection with the Soo Line via the carferry Chief Wawatam at Mackinaw City, we had a gateway connection between the Western Territory and the Eastern Territory.  Chicago was another gateway.  After developing a fair amount of overhead traffic by declining to participate in an Ex Parte increase in freight rates during the Carter inflationary era, MIGN had to contact lots of railroads to get copies of division sheets.  Some were from a long undisturbed file apparently.  They had a musty odor and the division percent was hand written in ink in a Spencerian hand.  Partial deregulation in 1980 freed the railroads to renegotiate and/or cancel divisions.  Consolidation into the big six, BNSF, CN, CP, CSX, NS, and UP was one of the results.
Alex Huff, an incorporator of MIGN.                    

Doug Polinder
 

Alex, thanks for the post.  Some of us remember and lament the loss of the MIGN and Chief (I rode the former from Rockford to Cedar Springs).  Are you saying Chicago was a gateway for MIGN?  How did they get there?  I thought the southern gateway was Grand Rapids, interchange with CSX (also at Reed City), CR, and GTW (and AA at Cadillac).

After partial deregulation in 1980 divisions remained a subject of negotiation between the carriers.  Sometimes potential movements were never realized because one of the participating railroads was too greedy.  Sometimes there was no satisfactory intermediate point where the participants could interchange and each get an equitable share of the revenue.  I was with BN and was trying to negotiate with my counterpart at CP for a move from Seattle to Minot ND.  Turns out the only workable interchange points were Minot itself and Sumas WA, meaning one of the participants would get only a couple hundred bucks, so that move never took place.

I'm glad to hear Fred Crissey is still with us.

Doug Polinder
Poquoson VA

Alex Huff
 

Doug,
I should have been more clear when I wrote "Chicago was another gateway".  Chicago was another gateway between the Eastern and Western Territories.  Divisions were an arcane example of the importance of the the "paper" side of railroading.  MIGN hired an experienced divisions clerk who had worked for the GTW.  Her seniority district was limited to two floors and part of a third in the GTW General Office building.  One of MIGN's lesser interchanges was at Boyne Falls, MI with the Boyne City Railway.  Originally the Boyne City, Gaylord & Alpena, it connected with both the PRR and Michigan Central (NYC).  As an originator of a considerable amount of lumber traffic, the BCG&A was able to negotiate a 50/50 split on the total Eastern Territory revenue.  That was still in place when MIGN came into existence.  Fortunately for MIGN, the Boyne City Railway was effectively out of the freight business and we only interchanged a few carloads of inbound government surplus food.  I remember a carload of frozen turkeys.
Alex Huff