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CSX, Norfolk Southern launch ads to help get government funding

(The following story by Mark Szakonyi appeared on the Jacksonville Business Journal website on November 13.)

JACKSONVILLE, Fla. — CSX Corp. is taking a different approach to the government.

For years, the railroad industry wanted to keep government out of its affairs. But an increase in advertising by CSX (NYSE: CSX) and Norfolk Southern Corp. (NYSE: NSC) is an attempt to make voters and policymakers aware of rail’s benefits, said Anthony Hatch, a New York City-based transportation analyst.

“The industry had been going through the pains of deregulation and was trying to do as much as they could to be ignored by the government,” he said. “That began to change over the past decade as railroads began to see the advantages” of government partnerships.

The payoff could come in the next federal transportation bill and with public-private collaboration on improvements to the railroads’ infrastructure. Hatch expects the transportation bill, which is expected to be passed next year, won’t focus on road infrastructure as in the past, but will be more comprehensive by including rail, water and air transport.

The increase in advertising also comes as Congress holds hearings on the rail industry’s rate charges and safety and infrastructure improvements. During tough economic times, it’s also worth telling the public about your positive impact, especially for an industry whose earnings are up 20 percent, Hatch said.

Much of CSX’s advertising focuses on the environmental benefits of rail. It’s similar to the marketing push for its National Gateway project, a $724 million public-private infrastructure initiative to create an efficient link between Mid-Atlantic ports and the Midwest.

By improving its rails, CSX will be able to double-stack transportation containers on routes from east to west, saving fuel, cutting down on pollution and increasing train use. For every $1 invested, the public will receive $8 in benefits, said CSX Vice President of Corporate Communications Vance Meyer.

Hatch said the advertising isn’t directed at drumming up support for the initiative, but is part of a broader strategy to make the company’s worth known. Through TV, radio, online and print advertising, CSX is making the case that rail reduces the amount of truck-trailer traffic on the roads, making roadways safer. Plus, rail transport produces fewer emissions than truck-trailer transport.

Meyer declined to say how much the company had spent on advertising in the past year, but said there has been “a significant change in the intensity of our communications with the public.”

He said the commercials also help boost employee morale and work as a recruiting tool.

Because CSX, like other companies that run large transportation networks, needs a license to operate, advertising is aimed at asking citizens for that endorsement, Meyer said.

The advertising is aimed at “engaged citizens,” who are more likely to vote, he said. This target market tends to follow the news, so TV commercials run on CNN, Fox News, The Discovery Channel, National Geographic Channel, The Weather Channel and The History Channel.

CSX also advertises on National Public Radio, ABC Radio Networks, CNNMoney.com, Yahoo.com and FoxNews.com. Its print advertisements have run in regional and national newspapers such as The Florida Times-Union and The Wall Street Journal.

Norfolk Southern Corp.’s seven-digit advertising budget hasn’t changed, but has been more focused toward “engaged viewership,” said Frank Brown, the company’s vice president of corporate communications. The company’s previous advertising was focused on its customers and financial readers, but now its ads run on CNN, Fox News, Economist.com and Huffingtonpost.com.

Brown said advertising aimed at the public was increased this fall as it took advantage of the involved viewers’ interest in the presidential election. Norfolk Southern advertised in Congressional Quarterly and sponsored programs at the Democratic and Republican conventions.

Similar to CSX’s National Gateway project, Norfolk Southern has started a $266 million project to enlarge several dozen rail tunnels between Norfolk, Va., and Columbus, Ohio, so double-stacked trains can pass through. It is just one of many public-private partnership initiatives the company is pursuing.

The advertising “is nothing more than it appears,” Brown said. “I think that the more people know about railroads’ benefits, then you would hope regulators make the right decision.”

Friday, November 14, 2008

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