Fruit Growers Express: The White & Yellow Fleet
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Fruit Growers Express (FGE)
(Read more about Fruit Growers Express; includes more history and equipment listings)
(Read the Wikipedia article about Fruit Growers Express)
There are no known books with the history of the Fruit Growers Express, especially covering the company's mechanical refrigeration era. The subject was briefly covered by John H. White in his book, "The Great Yellow Fleet" published in 1986.
Fruit Growers Express: The White & Yellow Fleet
(Following is a summary of the text on pages 143-147 of John H. White's "The Great Yellow Fleet.") (The complete text follows.)
The history of Fruit Growers Express can be traced from its 1920 creation out of an Armour antitrust divestiture, through its expansion with subsidiaries (Western Fruit Express, Burlington Refrigerator Express, National Car Company), its survival of the Great Depression, and its post-WWII struggles against truck competition. The text by John H. White focuses on the shift from ice-bunker reefers to mechanical refrigeration, the challenges of declining rail market share, and the company's eventual restructuring, commercial car-building ventures, and 1980s rebound.
Founding And Early Years.
Fruit Growers Express was incorporated in March 1920 after the FTC forced Armour & Company to sell its refrigerator car line. Southern Railway vice president Henry B. Spencer led a consortium of ten major railroads (including the Pennsylvania, Baltimore & Ohio, and Atlantic Coast Line) to acquire 5,200 cars, repair shops at Alexandria and Jacksonville, and various ice plants. By the mid-1920s, Spencer had created Western Fruit Express with the Great Northern and Burlington Refrigerator Express with the CB&Q, building a pooled fleet of over 26,000 ice-bunker reefers by 1936.
Pre-WWII Operations and National Car Company.
In 1928 FGE formed the National Car Company, partly to exploit ICC rate loopholes and attract new capital. National ventured into unusual services, such as National Fitch milk tanks (insulated containers on flat cars for New York dairies) and contracts with meat packers like Oscar Mayer. FGE weathered the Depression better than its railroad owners: gross earnings fell from $16 million (1929) to $11 million (1932), but the firm stayed solvent and continued dividends. By 1941 the combined FGE lines moved 282,000 carloads of perishables annually.
Post-WWII Peak And Early Warning Signs.
Traffic surged during the war and the post-war boom, peaking at 340,000 carloads in 1946. Gross revenues hit $25.9 million, but high expenses left a net income of only $30,984. A major modernization program began in 1945: by 1949, 6,000 old ice cars were retired and $47 million spent on modern replacements. Henry Spencer retired in 1948, succeeded by Pennsylvania Railroad veteran John C. Rill. At that time FGE employed 5,000 people and operated 21,000 cars.
Move Toward Mechanical Refrigeration.
Rill pushed the modernization program, purchased an experimental mechanical reefer, and began acquiring bunkerless insulated cars (RBs – heavy insulation; RBLs – loading devices, no ice bunkers). The last traditional ice car was bought in 1957, signaling the end of the ice era. FGE now counted 19 owner-customer railroads. However, unregulated trucks were already eroding rail's share of perishable traffic: in 1946, 70% of Florida produce went by rail; by 1960 only 30% did. Carloadings fell from 304,544 (1944) to 177,372 (1960).
Quinn's Dilemma And Restrained Mechanical Car Purchases.
When John J. Quinn succeeded Rill in 1959, shippers pressured FGE to invest heavily in expensive mechanical reefers. Quinn faced a quandary: major capital commitment looked risky long-term, but refusing to invest would lose customers immediately. He adopted a restrained purchase program. FGE's Alexandria shops built 5,500 mechanical cars, while Jacksonville was scaled back to a repair facility. In 1960 Quinn also invested in refrigerated trailers for piggyback service; by the end of the decade FGE had 3,500 trailers and still 6,255 serviceable refrigerator cars.
1970s Contraction And Ill-Fated Car Building.
By 1970 FGE's fleet remained impressive at 24,000 vehicles, but carloadings had sunk to 106,338, then to 41,045 by 1975. The company tried to salvage business by purchasing over 1,500 more refrigerated trailers. In the 1970s FGE also entered commercial car building, using a $50 million retained-earnings nest egg to expand the Alexandria shops and sell cars to Iran, Egypt, and Mexico. The car-building market collapsed by 1980, leaving Alexandria a “boneyard” of unwanted reefers; many subsidiaries (National, Western, Burlington) were closed or became independent.
1980s Turnaround And Mechanical Reefer Revival.
Despite a soft rail market, FGE pushed aggressively for new business. Between 1983 and 1985 its market share increased 60%. A new subsidiary, Fleet Management, Inc., used computer management to improve productivity, backhaul loads, and scheduling. By 1985 FGE owned or managed 2,020 mechanical reefers, 10,917 RBLs, and 44 refrigerated trailers. The Alexandria shops shrank to five men doing only light repairs, but Jacksonville's shops were revitalized for heavy overhauls.
Ownership Change And Renewed Optimism.
The railroad industry's merger wave reshaped FGE ownership. CSX Corporation came to hold 73.4% of FGE stock, Conrail 23.5%, with the remainder held by Rio Grande and Norfolk & Western. Management expressed new confidence that they could win produce shipments back from truckers. The text ends on an optimistic note: “There is a feeling of optimism at the Fruit Growers Express headquarters which gives one new hope for the future of rail refrigerated transit.” This closing underscores how mechanical refrigeration, computer management, and fleet flexibility allowed FGE to survive an era that saw the extinction of many private refrigerator car lines.
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Complete Text
Following is the text from pages 143-147 of John H, White's "The Great Yellow Fleet," published in 1986.
Armour & Company received the bad news in 1919. The Federal Trade Commission ruled that Armour had gained an unfair advantage over competing beef packers, by operating a large fleet of refrigerator cars devoted to produce shipments. The FTC ordered the sale of the Armour subsidiary. This action was not unexpected because the whole business of private car lines versus the public interest had been underway for more than a decade. Armour's defeat was viewed as an opportunity by Henry B. Spencer (1872-1956), vice president of the Southern Railway — whose offices were, not so incidentally, located near the FTC headquarters. Spencer saw a unique business opportunity to put together a profitable refrigerator car line which would serve eastern and southern shippers. His proposal was shared by ten major railroads which included such giants of the industry as the Atlantic Coast Line, the Baltimore & Ohio, the Pennsylvania Railroad, and of course, Spencer's own Southern Railway. Spencer's father had been the first president of the Southern, so their support was not unexpected.
In March 1920 Fruit Growers Express was incorporated in Delaware* On May 1, the FGE, with Spencer as president, took possession of 5,200 cars, repair shops at Alexandria, Virginia, and Jacksonville, Florida, and various ice plants and ice stations scattered around the east coast, including 650 employees. Toward the end of 1920, the New Haven, the Norfolk & Western, and the Chicago & Eastern Illinois joined Fruit Growers Express and thus became stockholders as well as customers of the new firm.
[*In addition to its own name, Armour operated cars under a variety of titles which included Barbarosa, Brittain's Provision, Dubuque, Kansas City Fruit Express, Tropical and Fruit Growers Express. The FGE designation was used by Armour beginning in the 1890's. Spencer simply adopted the old name for his new corporation.]
While Spencer was consolidating and refining his eastern operations, he cast an eye to the west in hopes of creating a national operation. Harvest times across continental North America varied; FGE's operation was largely tied to the Florida season. While Georgia peaches and Central American bananas were coming into Charleston, and other southern ports, this produce helped to even out the traffic. Even with this added traffic, FGE cars were idle much of the year. The Pacific Fruit Express, a joint operation of the Southern Pacific-Union Pacific, and Santa Fe Refrigerator Despatch already dominated California and the southwest, so Spencer searched the Pacific Northwest for possible traffic. He found a willing partner in the Great Northern. In September 1923, FGE and the GN established the Western Fruit Express Company. Three thousand additional cars were added to the pool formed by these two associated companies. All FGE and WFE cars were exchanged on a need basis, during the respective nationwide fruit seasons.
The success of Western Fruit Express prompted the creation of the Burlington Refrigerator Express Company in May 1926. In this instance the Chicago, Burlington & Quincy Railroad was the cooperating railroad. It added nearly 2,700 cars, to the existing cars already leased from the Burlington to the FGE and WFE reefer pool. By 1936 the combined fleet of the three associated lines totaled 26,327 reefers, almost all of which were standard ice bunker cars.
The National Car Company, established in February 1928, was another major subsidiary formed by FGE. It was more closely tied to the parent corporation than either Burlington Refrigerator Express or Western Fruit Express and was openly listed as a subsidiary in the Equipment Register and Moody's Manual of Investments. Just why a third car line was created is not clear, however, a former railroad executive explained that probably the reason was the varying contracts and rates made with shippers.
Once established, rates, under Interstate Commerce Commission regulation, could not be easily altered. A new private car company, however, had relative freedom in establishing new and presumably more profitable charges. Hence, there was a tendency to create new car lines in order to take advantage of this regulatory loophole. In addition, new companies attracted new capital. If the parent company had sold all of its stock as restricted by its capital limit, then forming a new company permitted the issuance of new stock. This was a cheaper means of raising capital than selling bonds, or assuming equipment trusts, or direct bank loans. All private car line operators understood this way of doing business. This explains why so many car lines were created, and why so many were actually little more than straw corporation. National, for instance, shared office space and personnel at the Fruit Growers Express's old headquarters at 1101 Vermont Avenue, N.W., Washington, D.C. National tended to be more adventurous than FGE and became involved in such unusual operations as the National Fitch Corporation.** This firm, created in February 1940, took over the operation of large insulated tank containers used for the bulk shipment of milk to New York City area dairies for processing. The New York, Ontario & Western, the Lehigh Valley, and the New York Central railroads used National Fitch milk tanks carried on special flat cars, equipped with high-speed passenger car trucks and furnished by the National Car Company. The tanks were made in 3,000 or 4,000 gallon sizes. They were carried by motor trucks to and from rail terminals.
National also contracted refrigerator cars to meat packers such as Kahn, Roth, and Oscar Mayer, and thus, Fruit Growers Express was able to capture a greater portion of the refrigerated traffic other than produce. By 1951 National's fleet grew to over 1,100 cars. At the same time trucks began to cut into its traffic. The Fitch milk tanks were soon rendered uneconomical and were abandoned in the late 1960's. The equipment and assets of National were taken over by the parent company in 1972.***
The Fruit Growers Express survived the Depression of the 1930's better than many of its railroad owners, several of whom slid into bankruptcy. Fruit Growers suffered some deprivations but nothing that was catastrophic. Its gross earnings slid from $16 million in 1929 to $11 million in 1932. The firm's surplus fell from $1.1 million to $813,534 during the same period but dividends continued in a steady stream with assets remaining relatively steady during a period when most of the nation's rail systems faced financial ruin. FGE remained a solvent cash cow, insulated from the awful financial turmoil that surrounded it. By 1941 the FGE and its associates were moving 282,000 carloads of perishables a year. Traffic grew rapidly during the war years and as the post war boom started, carloading peaked at 340,000 in 1946. Gross revenues reached a heady 25.9 million dollars but expenses were unusually high as well, so that net income was a meager $30,984. Profits rebounded the next year and remained steady for another decade. The firm began a much needed modernization program in 1945. By 1949, 6,000 old cars were retired, and $47 million dollars was spent on modern replacements.
Many changes came in the post World War II years. Henry Spencer retired in 1948 and was succeeded by a seasoned employee of the Pennsylvania Railroad, John C. Rill. When Spencer stepped aside, FGE was employing 5,000 people and operated 21,000 cars. Rill pushed the modernization program, purchased an experimental mechanical reefer and sought new customers. By 1950 Fruit Growers Express counted 19 owner/customer railroads. In the early 1950's, the firm began to acquire bunkerless insulated cars to meet customer demand for RB's (No ice bunkers and heavy insulation) and RBL's (No ice bunkers and loading devices). The last ice car was acquired in 1957. In April 1959, John Rill retired after a decade of FGE leadership. His successor, another Pennsylvania Railroad man, John J. Quinn, inherited a prosperous and well managed property, but it was clear that hard times lay ahead. The national economy had never been better, consumption of perishables had never been greater and yet, while the market expanded, the railroad's share of the traffic began to decline at an alarming rate. In 1946 trucks carried 30 percent of Florida perishables with the remainder going by rail. By 1960 the roles had reversed and only 30 percent was going by rail. The decline, measured in car-loading is perhaps an even more graphic indication than the percentages offered by Quinn. In 1944 Fruit Growers moved 304,544 carloads of produce, in 1954 — 254,839 carloads and by 1960 — 177,372.
[**A scheme devised by Benjamin F. Fitch, president of Motor Terminals Company.]
[***Western Fruit Express became independent in December 1975 and continued until the early 1980's. Burlington Refrigerator Express was merged into Western Fruit Express in 1970. Western Fruit Express is now part of the Burlington Northern system.]
Unregulated trucks, often individually owned, were running away with the produce business. While traffic by rail declined, shippers continually pressured FGE to invest in expensive mechanical reefers. Quinn and his associates faced a quandary — major expenditures on new cars looked like a poor long term commitment of capital but not to invest would surely result in a more immediate loss of customers. And so, a fairly restrained program began for the purchase of new mechanical cars. The Fruit Growers Express shops at Alexandria built 5,500 mechanical cars. The Jacksonville shops were scaled back to a more modest repair facility and its main shop building was moved to Alexandria. In 1960 Quinn decided to invest in refrigerated trailers for piggyback service. By the end of the decade FGE had 3,500 trailers. At the same time it still had 6,255 serviceable refrigerator cars. During this decade of readjustment, Quinn managed to sign on two new customers. In 1967 the Western Pacific, long a Pacific Fruit Express patron, joined Fruit Growers Express. A glimpse of Western Pacific involvement with PFE may be found in the following chapter. The Denver & Rio Grande Western also followed suit during the following year.
Fruit Growers Express served 60 railroads by 1970. Fees were fixed on a mileage basis with 5 cents a mile for a common ice refrigerator car, 5.9 cents for an insulated car and 5.8 cents for a mechanical reefer. The rates were established by the Association of American Railroads in concurrence with the Interstate Commerce Commission. FGE's car fleet was still an impressive 24,000 vehicles in 1970, but its carloadings were down to 106,338. Within five years it was down to a meager 41,045. In such a deteriorating situation, the firm's management sought ways to salvage their business, and purchased over 1,500 refrigerated trailers for piggyback service. By 1976 the car fleet was slimmed down to 14,000 units and most of them were insulated RBL's (No ice bunker and loading devices) rather than reefers. It was also decided that Fruit Growers Express should go into the commercial car building business.
The Fruit Growers Express shops at Alexandria had produced reefers for years, and were now underutilized. The car market was flush during the 1970's and FGE had a $50 million nest egg in retained earnings. Part of this capital was invested in expanding the Alexandria shops and promoting the sale of new cars of all types. It seemed a wise decision at first, with sales to domestic lines bolstered by contracts with Iran, Egypt and Mexico. But the car building market is a fickle one, much given to booms and busts, and the market collapsed by 1980, FGE found itself with something of a white elephant. It required no new refrigerator cars and orders for box, flats, cabooses and other styles of cars produced for outside customers, evaporated. Alexandria became a boneyard for unwanted reefers, some not very old, and is now once again used only for repairs.
Destined for extinction like all other private refrigerator operations, Fruit Growers Express began to cut back in all areas of its operation. Its subsidiaries — National, Western, and Burlington — were closed down or became independent during the 1970's. By 1980 the parent firm's car fleet was down to 3,182 cars and was smaller than at any time in its history. The recession of the early 1980's called for more cuts and a tighter, leaner, and meaner operation. These economies began to pay off at the same time the firm's management sensed a good business opportunity. While everyone knew the refrigerator car was a dying industry, some shippers and railroads still found them economical. This is particularly true for non-refrigerated but heavily insulated RBL's (Car with no ice bunkers and loading devices). And so, while everyone else was abandoning the field, Fruit Growers Express decided to expand its operation.
Despite a softness in the rail industry market and decline in mechanical refrigerator car loadings, Fruit Growers Express pushed to gather new business. Aggressive marketing resulted in a 60 percent increase in their market share between 1983 and 1985. A new subsidiary, Fleet Management, Inc., took over the operation of 2,000 cars and expects to double this number during 1986. Computer management insures better productivity, return loads and a more precise scheduling of equipment. FGE's car fleet grew remarkably at a time when other operators were closing down. In 1985 FGE owned or managed 2,020 mechanical reefers, 10,917 RBL's (Cars with no ice bunkers and loading devices) and 44 refrigerated trailers. While Alexandria shops are down to five men and light repairs only, the Jacksonville, Florida, shops have been revitalized for heavy repairs.
During the times of contraction followed by expansion, the railroad industry itself was in a state of upheaval. Mergers affected not just operating railroads but their subsidiaries, like Fruit Growers Express. FGE ownership was affected by the CSX Corporation who now holds 73.4 percent of FGE stock. Conrail holds the next largest number of shares (23.5 percent), with the remaining stock being held by the Rio Grande and the Norfolk & Western. The current managers believe they can now take produce shipments away from truckers. There is a feeling of optimism at the Fruit Growers Express headquarters which gives one new hope for the future of rail refrigerated transit.
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