Paducah & Louisville Railway by Lee Gordon
Formed from necessity by Kentucky entrepreneurs and rail customers Jim Smith and David Reed, Paducah & Louisville reincarnated a piece of trackage pruned by Illinois Central Gulf from its predominantly north-south system. In order to preserve rail service to their business interests online, the duo announced on February 26, 1986, that they would purchase ICG's Paducah to Louisville, Kentucky, trackage. As part of the deal settled later, Smith & Reed agreed to pay $70 million for 309 miles of trackage (including branch lines to Kevil, Clayburn, and Elizabethtown); 97 locomotives; and ICG's famous Paducah Shop facility. The new properties formed CG&T Industries, a Smith & Reed holding company. An operations team of veteran railroaders was brought in to establish a working headquarters for the spin off railroad at Paducah, which began operations on August 27, 1986.
Illinois Central Gulf's former Paducah Shop became VMV Enterprises, a CG&T subsidiary, and was later sold to interests outside of Kentucky. While it no longer has any connection with P&L, VMV continues to specialize in remanufacturing locomotives.
Once they realized that the young railroad could stand alone, Smith and Reed sold their shares of CG&T to a First Chicago Corp. affiliate in September 1988. In July 1995, ownership of the railroad shifted to Four Rivers Transportation Inc., a holding company owned jointly by CSX Trans portation and P&L management. Regardless of ownership and the amount of reinvestment, P&L has been a profitable property since its 1986 creation.
Since start-up, over $50 million has been spent on operations related issues, namely the upgrading of lines and elimination of slow orders. In fact, today nearly 100 percent of the main line is graced with continuous welded rail. As part of P&L's continuing commitment to capital projects, the railroad anticipates spending $3.5 million on track structure and locomotive maintenance and upgrading during 1998.
This intrastate carrier has shown its superiority in other areas as well. Rivaling equipment in use by Class I railroads, state-of-the art communication and car movement monitoring systems have been installed. Unusual for a regional, the majority of P&L trackage is either CTC- or ABS-signaled, allowing trains to flow expediently. Likewise, P&L has one of the best safety and customer service records in the U.S. rail industry.
Traffic on today's P&L is quite different than when the company began less than 12 years ago. Once the bread-and-butter of the railroad's traffic base, coal shipments have decreased. A number of factors, especially the passing of the Clean Air Act, have adversely affected the volume of coal rolling over P&L rails. Adapting to this change, the regional now carries larger amounts of other materials. Shipments of chemical products surged during 1996 and 1997. Despite efforts to diversify its customer base, P&L continues to seek out coal traffic, and has recently consummated agreements to move coal from CSX origins northwest of Madisonville, Kentucky. No matter what the traffic, P&L has had a fair degree of success discovering new business opportunities and enticing once-IC customers back to the rails during the past 11 years.
Approximately 15 million tons of freight carried by over a dozen daily trains were handled last year. Even though a respectable amount of P&L's traffic is originated or terminated on its own lines, the carrier has established strong relationships with other rail companies in the region through interchange with five Class I railroads and one shortline railroad. No doubt, P&L has found a niche in the Bluegrass State, one that will ensure its continued success. The proof lies within the company's mission statement: Small enough to meet the needs of the single-car shipper, yet large enough to meet unit train shipper needs, the P&L continues to be a leader among regional railroads committed to growth through partnership arrangements with customers.