CSX Acquisition of Pan Am Railways

Here's an article from today's New Hampshire Business Review: "Pan Am Railways sale: What’s in it for NH tracks?"
It's a well researched and presented article but with little new information except for this one nugget:

Among the likely bidders Leishman [Peter Leishman the NH state representative who owns and operates the Milford-Bennington Railroad] favored NSR, not least for its record of increasing the number of shippers choosing to move products and commodities by rail. And he noted that the company’s chair, president and CEO is James A. Squires of Hollis, son of James W. Squires — a well-known New Hampshire physician who founded the state’s first HMO, served in the state Senate and once ran for governor.

OTOH, the article has this to say about NS current state of affairs:

While many place short odds on Norfolk Southern, others point out that it has the highest operating ratio among major railroads and recently closed a facility in Ohio to strengthen its financial position. And the company recently announced “we want only quality revenue,” not “lower-rated commodities.”

The article's conclusion says from the perspective of impact on NH rail freight traffic, the sale of Pan Am to whomever is not major given there is little interstate freight traffic originating/terminating in NH.

The plan [ie NHDOT's Statewide Freight Plan of 2019] projects outbound tonnage, primarily aggregates shipped by the Milford-Bennington and New Hampshire Northcoast railroads, to increase by 3% by 2040, and inbound tonnage to grow by 1%. Coal shipments on the NH Main Line to Merrimack Station in Bow, which accounted for half of all inbound tonnage in 2015, have steadily dwindled as the power plant increasingly operates sporadically, and with its future in doubt, possibly ceasing operations as soon as 2024.

So with such sparse demand for freight rail services, the impact of a sale of Pan Am rails in New Hampshire will likely be limited to the Capitol Corridor, where new ownership will play a part in the effort to return passenger service to the Merrimack Valley.

https://www.nhbr.com/pan-am-railways-sa ... nh-tracks/

Shortline614 wrote: ↑Tue Aug 25, 2020 2:51 pm I've been mostly a lurker here, and we've already done a poll. Could we do another on who we think will get Pan Am? CN, NS, G&W, WATCO, Fortress, someone else?

The poll has been up for a few days, and the results are interesting:
The biggest vote-getter is GWI; CN and NS are tied for second place. Watco is a distant third. CP is dead last.

This is sort of fascinating to me because the discussion here has focused mainly on the three Class I roads, and to a lesser extent Fortress. The handful of comments about GWI have mostly dismissed them as uninterested or unlikely due to regulatory issues.

It would be great if the "silent majority" GWI voters could join the discussion and explain why they voted that way.

Mr. Barlow, while I will not dispute the level of research done for the Business Review article you note, it still seems as if the author is more concerned about having "the B&M Doodlebug passing through Wolfeboro at Noon" restored.

Of course, any prospective buyer of Pan Am likely has no knowledge of what a "Doodlebug" even is.

Gennessee & Wyoming is an intriguing option that avoids a battle between Class Is but it seems to cause major problems with all of the shortline services. G&W would basically be the sole regional carrier in New England with the Class Is only serving as feeders to and from major interchange points. I realize there are several smaller operations (NEGS and others in NH) along with the VRS but in Maine this really leaves only one carrier in most of the state for both interstate and intrastate.

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newpylong wrote: ↑Sun Jul 26, 2020 2:17 pm I've taken 10 minutes to make a map of owned (red) and trackage rights (blue) of all GWI owned roads should such a full sale be proposed. I think you're on another planet if you think this would not get a serious look. Yes, it could go through with concessions, but it would be scrutinized heavily, at the very minimal.

A map illustrating an STB-view of a GWI-PAR/PAS (half or whole) purchase has to not only be accurate, but most importantly must show how it fits in with the North American Class 1 network. If you want to credibly raise the issue of "heavy" STB scrutiny of a potential transaction, that should be done with suggestions of a single Class 1's takeover of PAR.

Shortline614post_id=1548799 wrote:Sun Jul 26, 2020 6:51 pm
I recall in the early 60s, shortly after the bankruptcy of the New Haven, there was a proposal to merge the MEC, B&M, and the NYNH&H. Al Perlman of the NYC even offered up the old Boston & Albany to the new railroad. The idea was to form a New England version of Conrail, 10 years early. It obviously never went anywhere, but the basic idea has remained (except without the B&A).

If G&W does buy Pan Am, I can see NS and CN supporting such a transaction, since those two Class I's are the closest allies of G&W. CSX would definitely fight such a merger, saying that New England would come under majority control of a "non-neutral" (hint: NS-aligned) railroad. CP could be swayed to support or oppose such a transaction. VRS would want to seek some sort of condition (direct connection to CP and CSX at Albany, trackage rights over the Conn River Line).

A New England regional railroad comprising the NYNH&H, B&M, and MEC has had a few re-visits during the past 110 or so years, though never materializing due to earlier competitive or corporate issues during very different times. With existing overall CSX-GWI interchange half again that of NS and over two times that of CN, like Perlman reportedly did not fear a combined New England system, doubtful CSX would either.

From the article:

So with such sparse demand for freight rail services, the impact of a sale of Pan Am rails in New Hampshire will likely be limited to the Capitol Corridor, where new ownership will play a part in the effort to return passenger service to the Merrimack Valley.

Which railroad(s) would be more or less hostile to new passenger service? Especially if it isn't Amtrak? I imagine all the Class 1s would object, but some smaller railroads would be okay with passenger trains running.

If the NH Mainline had lots of freight customers, I could understand why the new owner—whoever it is—might be hostile to passenger service, but the article points out that freight service on the line is sparse, and becoming more sparse every year. In a situation like that, there's much less reason for hostility. The new owner would enjoy having part of their railroad rebuilt on someone else's dime, and they don't lose anything from a freight standpoint because there's hardly anything left.

They might even opt to sell the line to the state, retaining all freight rights, and getting a quick infusion of cash to boot.

QB 52.32 wrote: ↑Fri Aug 28, 2020 11:46 am

newpylong wrote: ↑Sun Jul 26, 2020 2:17 pm I've taken 10 minutes to make a map of owned (red) and trackage rights (blue) of all GWI owned roads should such a full sale be proposed. I think you're on another planet if you think this would not get a serious look. Yes, it could go through with concessions, but it would be scrutinized heavily, at the very minimal.

A map illustrating an STB-view of a GWI-PAR/PAS (half or whole) purchase has to not only be accurate, but most importantly must show how it fits in with the North American Class 1 network. If you want to credibly raise the issue of "heavy" STB scrutiny of a potential transaction, that should be done with suggestions of a single Class 1's takeover of PAR.

Shortline614post_id=1548799 wrote:Sun Jul 26, 2020 6:51 pm
I recall in the early 60s, shortly after the bankruptcy of the New Haven, there was a proposal to merge the MEC, B&M, and the NYNH&H. Al Perlman of the NYC even offered up the old Boston & Albany to the new railroad. The idea was to form a New England version of Conrail, 10 years early. It obviously never went anywhere, but the basic idea has remained (except without the B&A).

If G&W does buy Pan Am, I can see NS and CN supporting such a transaction, since those two Class I's are the closest allies of G&W. CSX would definitely fight such a merger, saying that New England would come under majority control of a "non-neutral" (hint: NS-aligned) railroad. CP could be swayed to support or oppose such a transaction. VRS would want to seek some sort of condition (direct connection to CP and CSX at Albany, trackage rights over the Conn River Line).

A New England regional railroad comprising the NYNH&H, B&M, and MEC has had a few re-visits during the past 110 or so years, though never materializing due to earlier competitive or corporate issues during very different times. With existing overall CSX-GWI interchange half again that of NS and over two times that of CN, like Perlman reportedly did not fear a combined New England system, doubtful CSX would either.

The onus is on you to prove how a GWI purchase would/should be approved without receiving serious scrutiny - pretend you are applying. Until then, you're in the minority - I have yet to speak with anyone who sees such a move as a slam dunk.

If you feel you can provide a more accurate visual, please provide one.

MEC407 wrote: ↑Fri Aug 28, 2020 1:38 pm If the NH Mainline had lots of freight customers, I could understand why the new owner—whoever it is—might be hostile to passenger service, but the article points out that freight service on the line is sparse, and becoming more sparse every year. In a situation like that, there's much less reason for hostility. The new owner would enjoy having part of their railroad rebuilt on someone else's dime, and they don't lose anything from a freight standpoint because there's hardly anything left.

They might even opt to sell the line to the state, retaining all freight rights, and getting a quick infusion of cash to boot.

The largest roadblock to passenger service is the liability.

Yup, insurance liability. And class-1s' have deep pockets.

The MBTA owns the NH mainline up to the NH state line. North of the Gallagher Terminal what track class are they required to maintain?

Whatever class they want.

MEC407 wrote: ↑Fri Aug 28, 2020 1:38 pm If the NH Mainline had lots of freight customers, I could understand why the new owner—whoever it is—might be hostile to passenger service, but the article points out that freight service on the line is sparse, and becoming more sparse every year. In a situation like that, there's much less reason for hostility. The new owner would enjoy having part of their railroad rebuilt on someone else's dime, and they don't lose anything from a freight standpoint because there's hardly anything left.

They might even opt to sell the line to the state, retaining all freight rights, and getting a quick infusion of cash to boot.

The customers are potentially there, it's a matter of service provided on the PAR end over the years. The NA crews are plagued with limited hours and poor track causing them to not be efficient at serving customers along the Northern Mainline, and that's not the crew's fault. There have been several prospects, and potential customers, but in the end, the service on the PAR end has been the death blow to these potential customers that have needed more than a 1 day a week interchange. With a PAR sale, and new trackage deals/ownership there is a lot of potential for freight to return to the Northern, some of which you will see shortly.

QB 52.32 wrote:With existing overall CSX-GWI interchange half again that of NS and over two times that of CN, like Perlman reportedly did not fear a combined New England system, doubtful CSX would either.

Even if this is true (which I doubt it is ...) the problem is with the shippers becoming captive. Take for example the paper mills and warehouses in Maine. A GWI purchase of Pan Am would make virtually *all* of the paper warehouses in Maine captive to the same railroad.

What little intermodal traffic exists would also be locked into the same railroad (all currently operating intermodal ramps in Maine are on Pan Am). GWI would also have Auburn in reserve.

Propane from Canada which currently arrives primarily by SLR and PAR would also loose competitive routing options.

Other outbound forest products loads that could be affected include lumber (centerbeams) and pulp for export. Similar problems could occur with numerous other commodities in Northern New England.

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Railroads are a network business and non-Class 1 New England railroads to varying degrees are a part of the Class 1's networks, where most of the action takes place. For the most part, PAR is CSX's and NS' access vs. SLR/CN vs. what was once CMQ/CP to the northern New England marketplace. Class 1 access, Class 1 competition to the northern New England market, the crux of railroad competition, does not change with a combined system and no one is "captive" since the majority of the market heads to/from a Class 1 gateway. Additionally, there are Class 1 competitive options with transloading and intermodal (in this day and age you don't have to have a physical presence to serve a marketplace), as we see with the robust NS and CSX participation in Maine's paper market without needing PAR. I'm perplexed why you and others kick up a fuss about competition with a combined New England regional, but take no issue with a single Class 1's purchase of PAR, clearly where serious issues would come into play.