Consolidated Rail Corp. officers warned yesterday that unless federal economic regulations over railroads is abolished, substantially more federal funding will be needed to subsidize losses.
Major portions of current operations can't be profitable even if there is improved efficiency and an upturn in freight volume, they emphasized, adding that the need for taxpayers support of railroads will become a nationwide problem.
Although they declined to say so in specific terms, the Conrail officials' message added up to call for eliminating industry regulation by the 91-year-old Interstate Commerce Commission - the nation's oldest economic regulatory body, set up specifically to prevent monopoly abuses at the end of the last century by railroads, then but not now the dominant intercity transportation network.
Separately, Conrail reported yesterday a slight decline in losses during the third quarter of 1978 compared with last year. Conrail, set up under a government plan to reorganize bankrupt railroads in the Northeast, has been in business for some 32 months.
The railroad company's sharp attack on federal regulation is being presented to Carter administration officials as a major conclusion to extensive marketing studies over the past two years.
Conrail officials involved, who also spoke with reporters yeasterday, specified that they not be identified and that no direct quotations be made from their presentation.
Their study comes as the entire railroad industry is up in arms about ICC regulation over the past two years. Moreover, the Carter administration is preparing major legislation that will propose significant deregulation of surface transportation - on the heels of successful airline regulatory reform, which was achieved in recent legislation that had its roots in the previous administration of President Ford.
Leaders of nearly all major railroad companies and unions have been invited to an unpublicized meeting in Hershey, Pa., later this month by Rep. Fred Rooney (D-Pa.), chairman of the Commerce Transportation Subcommittee, to map strategy and discuss plans for proposing an end to most ICC regulation over railroads.
In their presentations here. Conrail officers are emphasizing the following conclusions from their marketing studies:
General merchandise boxcar business, which accounted for $630 million of revenues last year, basically is a money-losing business. To provide such service - individual parcels and shipments piled together in boxcars compared with bulk commodities in specialized cars such as oil tankers - Conrail now uses 24 percent of revenues but only one percent of contributions to long-term profitability.
Conrail must eliminate such unprofitable business, rates must be boosted sharply or a new form of shipper subsidy must bep provided to continue in the general merchandise business, which truckers often can handle with greater efficiency. Discontinuance of some boxcar service could lead to abandonment of little-used branch lines.
Such operations cannot be eliminated, under current ICC requirements because the agency determines what services and prices are mandated.
ICC regulations prevents direct railroad response to changing market conditions and inhibits management efficiency by not permitting rail firms to reduce unprofitable branch lines of freight services.
In the earnings statement yesterday. Conrail posted third-quarter losses of $48.5 million compared with a $54.7 million loss in the 1977 period. Revenues rose to $905 million from $328 million for the nation's largest rail transporter.
That brought nine-month losses to $325 million on revenues of $2.6 billion compared with a loss of $290 million on revenues of $2.5 billion a year ago. The third-quarter revenue gain was attributed primarily to increased freight rates.