A "sale" on railroad freight service, unheard of in America's rail industry, was approved yesterday by a special panel at the Interstate Commerce Commission.
Under the proposal approved by a "special permission board" of the regulatory agency, the Rock Island line will offer across-the-board discounts of 20 percent on certain trailer loads moving east from Denver between Thanksgiving Day and Dec. 31.
The flat-rate cut, unprecedented in an industry that has a special tariff for every imaginable commodity, will be promoted as a sale in the Denver and Colorado Springs area.
In contrast with normal freight rate procedures, the bankrupt Rock Island also is being permitted to introduce the experimental program rapidly.
Richard Sheets, director of pricing at the Rock Island's headquarters in Chicago, said yesterday that proposed rates by an individual railroad usually are submitted to a rate bureau, after which the ICC must act in a process that "takes months."
The Rock Island is a member of the rate-setting Western Traffic Association, along with other western railroads. Such rate bureaus often have been criticized as "cartels" but they are exempt from federal antitrust statutes.
In the case of the freight rate "sale." Sheets said his line plans to file a notice with the rate bureau and doesn't expect any other railroads to file challenges.
"It can't hurt anyone," Sheets said of the rate experiment, "although it might remove some truck traffic from the interstate highways" because the trailer traffic involved consists of highway trailers that can be hauled on flat rail freight cars.
Ralph Wiley, a Rock Island pricing officer, developed the promotion and won quick approval from his company's flamboyant president. John Ingram Wiley said yesterday that the Rock has a heavy volume of trailer shipments into Colorado but that 97 percent of the freight cars are returning east empty.
Ingram, a former Federal Railroad Administrator, plans to take part in a "sales blitz" for the rate cut, and Wiley said his firm hopes to use information on traffic during the sale period to pinpoint markets that might be served permanently with a different rate structure.
Formally called the Chicago, Rock Island and Pacific Railroad, Ingram's line has been promoting itself simply as "The Rock." The railroad filed for reorganization under the bankruptcy laws in 1975 but has been on the rebound since.
Revenues have increased steadily from about $340 million in 1975 to nearly $380 million in 1977. But losses also widened last year after being trimmed in 1976. During the past five years, the Rock Island has lost more than $85 million.
At the same time, the railroad has increased spending for adding equipment and improving its facilities.