Unloading the Express

Since the end of World War II, the Railway Express Agency and its rum bling green trucks have been rolling toward a dead end. Jointly owned by 58 railroads, the sprawling company has been plagued by inefficiency and red tape. The main reason: its ties to railroads impose on it the same night marish maze of regulations that the Interstate Commerce Commission ap plies to REA's parents. Without special ICC permission, REA cannot haul goods from city to city by truck; instead it must put the goods on a train -- no mat ter how bad the connection -- and ar range pickup and delivery at the other end. Last week its railroad owners at last gave up, and offered to sell the operation to the highest bidder.

Seven Become One. Efforts have frequently been made to vitalize the 128-year-old American institution whose roots go back to the stagecoach. In its present form, REA's history dates to 1917 when, to speed up transportation to the World War I effort, the Government forced the seven major express companies to merge. In 1929 the transportation assets of the amalgam were purchased by the railroads and designated Railway Express Agency. After World War II, the combination began to fail, and in 1959 there was even talk of nationalizing it. Giving in to pressure from Washington, the railroads in 1961 changed Railway Express from a cooperative to a profit-and-loss company. Though still railroad-owned, it was granted a more liberal routing and pricing structure. To shed the railroad image and to give more emphasis to the best performing division, Air Express, its trade name was changed to REA express.

All this helped--but not enough. On sales of $450 million, REA this year is expected to show a loss of $6,000,000--partly because of a spate of wage increases, and partly as a result of decreasing volume. REA now carries only 2% of its traditional specialty, small shipment haulage, while faster, more efficient truckers have cornered virtually all the market. What's more, it is now meeting competition from the Post Office Department's Parcel Post, once forbidden to carry parcels heavier than 20 Ibs., but under new regulations moving into heavier goods.

Property for Sale. Thus it is not surprising that the railroads want to unload. The market for buyers seems to be limited to interests outside the transportation field; a recent bid by Greyhound for a 20% share of REA was knocked down in the courts. The buyer will get 14,000 pieces of automotive equipment, 11,000 trailers, and 7,000 terminals in 50 states. With a new, more flexible approach to the use of those assets, and without the stringent regulations that guide it as a rail holding REA might very well be an interesting property.

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