CSX Acquisition of Pan Am Railways

gokeefe wrote:Very true. And in this case it seems as though the industry understands something that is fundamentally lost to us in this forum ... That is unusual for railroad.net. Although we certainly aren't the "leading edge" in general this place always seems to come up with the answer eventually.

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Looking forward a decade or two......northwest passage

In order for that to be true the railroads would have to be open to making decisions based on those extended timelines. It's certainly not impossible but they seem to have trouble taking a long horizon approach to existing business let alone something more than 10 years away.

Wouldn't put it past them ... Just saying it would be a significant shift from their usual approach ...

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Here's a more direct approach to answering the question of, "Why Maine?" ... Is the potash business significant enough for CP and CN to drive them to attempt to compete so ferociously with each other ... Is all the Searsport marketing simply an attempt to drum up supporting business around potash loads?

With regards to Pan Am what are the trackage rights implications between Mattawamkeag and Saint John?

Could it be that CN is making a move for Pan Am as a means of either interfering (in a competitive and legal way) or countering CP's (re)extension into Maine? Even that to me seems pointless ... Why spend a billion dollars (or less ...) on something that doesn't have much of a future? Potash really doesn't seem to be significant to Pan Am even if it was part of CN.

That makes far more sense to me but it seems impossible to understand without greater depth on their business.

If the "true" bottom line is "We need to grow" how could it be that this could happen in Maine or in this particular market?

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Cosakita18 wrote: ↑Fri Sep 04, 2020 8:57 pm Regarding Searsport, CP seems serious about investing in the former BAR and turning Searsport into a substantial export point for Potash and Grain. I wonder if this potential is the basis for the rumor that NS is interested in the entire PAR mainline. Moving Midwestern grain closer to export markets than their competitor (and potentially gain a piece of the Potash market?) via PAS to Searsport could be quite lucrative for them.

The answer to this question illustrates that the dynamic of this sale is really in the context of Class 1 networks and competition and why a single Class 1 takeover of the PAR-system might just not be a leading contender.

While CMQ might have played ball (via PAR), CP would not allow any other Class 1 to interchange Searsport traffic in Maine. Looking for the longest haul, they would demand a Detroit or Buffalo gateway, perhaps, though less likely, the Albany-area, but never Maine for Searsport traffic, taking this out of the potential mix of reasons NS might be interested in the entire PAR mainline.

Same with a CN purchase of PAR. They would force traffic to a Detroit, Buffalo, or Ontario/Quebec gateway, maybe Huntingdon or Rouses Point, but unlikely Ayer, Barbers and never Maine. Same with an NS purchase, they would force traffic to the Cincinnati, Buffalo, Lurgan gateways, maybe Rouses Point, but never Maine, Barbers or Rotterdam Jct.

It's one part of the reason NS had to defensively buy into New England- because CSX was raising rates on their traffic to New England handed off at gateways like Buffalo and Cincinnati. Or, why an earlier suggestion of PAR interchanging NS or CSX-originated propane traffic to CP's Rockland branch is a non-starter. It's all about the Class 1's with their ~93% share of New England rail freight and protection of their length of haul within this marketplace, which ultimately drives their level of competitiveness and participation.

The more-likely contender for a potential purchase will have to at least maintain the Class 1 competitive balance found with the current PAR-system in Maine, and if the purchase is Class 1, very likely some kind of carve-up or cooperative venture would be in order. Given this, and the likely absence of any big, newfound business driving Class 1 appeal, increases the probability of a non-Class 1 purchase. It's Otto by a neck!

If NS buys Pan Am do they gain trackage rights to Saint John or access by interchange with NBSR/EMR? It seems strange to think of three railroads all having rights over the same corridor but stranger things have happened ...

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Mr. O'Keefe, there is nothing automatic with trackage rights over a "foreign" road; they need to be negotiated bilaterally. However, I could foresee a possibility of the Surfboard imposing trackage into Saint John over the two Irving roads as a precondition of a Pan Am sale. However, I'm sure those two roads would be happy to interline shipments at "Keag" with whoever gets Pan Am.

But first, fix the "bloody" track.

Mr. Norman,

No question they are not automatic. However I am curious with regards to the section Mattawamkeag - Vanceboro.

This was formerly owned and operated by the Maine Central at one time (1889 - 1974). Take note of the fact that Canadian Pacific operated over this same segment using trackage rights purchased from Maine Central. Then in 1974 CP purchased the Mattawamkeag - Vanceboro section from Maine Central.

In 1995 CP sold this section to Eastern Maine Railway (JD Irving) as part of their sale of the former International Railway of Maine. This leaves CP all the way back to where they were in 1889 with an interchange (operational only ... probably not way billed) at Mattawamkeag.

Maine Central (Pan Am Railways) still has a gateway to Saint John due to the Mattawamkeag interchange with EMR. So this also means that any Class I purchasing Pan Am also gets access (via a neutral shortline) to Saint John.

I'm sure we have all been aware of this all along but I find the sudden rush to the ports to be quite surprising.

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Please check the Pan Am system map and routing guide. You can see that Pan Am has haulage rights over NBSR right to Saint John, and they have since I moved to Maine in 1998. They list a CN interchange route in Saint John. NBSR acts as a terminal railroad to both CP and Pan Am and my understanding is that they do not appear on the waybill for either railroad.

CP doesn't have anything to do with Keag. fwiw, MEC does still have long dormant trackage rights to McAdam.

Gilbert B Norman wrote: ↑Sun Sep 06, 2020 3:31 pm Mr. O'Keefe, there is nothing automatic with trackage rights over a "foreign" road; they need to be negotiated bilaterally. However, I could foresee a possibility of the Surfboard imposing trackage into Saint John over the two Irving roads as a precondition of a Pan Am sale. However, I'm sure those two roads would be happy to interline shipments at "Keag" with whoever gets Pan Am.

But first, fix the "bloody" track.

STB can only act within its jurisdiction-- the United States. So there is no way they could impose trackage rights into Saint John anyways even if they wanted to.

I agree Mr. CN; "sorry for telling half-baked tales out of school". Try as hard as I do to emulate New York Times level of journalism here, I'm only human.

Obviously, I'm putting forth a "vision" of having all Atlantic ports in the region - Portland to Saint Johns - served by two Class I roads. Every other US "Deepwater" port outside of Florida "can make that claim" - and in the case there, FEC Ry is serving their best interests by ensuring that Jacksonville is truly "open" by ensuring swift interchange with both CSX and NS.

Now I realize "up there" that both Halifax and Prince Rupert are only served by the CN - and I really doubt if CP has any kind of "Ace in the hole" to play in order to force open access to either. But let's accept that the maritime companies like having two roads available - and they can sail wherever they wish, as last time I checked, God hasn't got a Surf Board or a Transport Canada within His bureaucracy.

Finally, I realize that over at the KCS Forum, I have talked about the potential for the Port of Lazzaro Cardenas, Mich. Of course, I noted that Mexican political stability comes first, but if that day comes, might the Port be more successful if Ferromex also attained access?

May I recommend a reading of "The Big Shift" appearing in October TRAINS. This article, having been written far enough into the Neo-PANAMAX era to measure its impact upon the shipping community, makes reference to Saint John. An Intermodal CP VP refers to such as its potential "Vancouver of the East".

Not said is what I believe we have consensus here is that the two Irving roads - Eastern Maine Railway and New Brunswick Southern - along with the CP-M had best start fixing track before stepping into the ring.

I think this article, by TRAINS long standing journalist Bill Stephens, (related to you, mtuandrew?), went to press prior to the announcement of the possible Pan Am sale.

CP has already brought two rail trains onto the system over the weekend, one is dropping east of Farnham today in Magog. The other dropped their rail train at Moosehead siding yesterday, with the same two barns (9011/9017) that led a ballast train onto the US side on Saturday. They aren't wasting any time with upgrades for this shipping lane, that's for sure.

Notable to me that Saint John could potentially have service from three Class I railroads if "Topper" can get to the pole first. That is a rather compelling scenario. Not sure it's realistic that there would be enough traffic but it certainly seems significant.

If CN is the winner they would be able to serve the New York area market with service at Naugatuck, CT connecting to steamship lines out of Saint John via Mattawamkeag. Same goes for NS of course but CN seems like they might have more to gain from that scenario. NS already has their own lanes into that area.

Some of this is starting to make rational sense ...

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Good to know, Mr. NHV, and "wow" to know how "big picture" you think. Mr. O'Keefe. So far as I'm concerned. "Timmy", just wants some ready scratch to buy an Ambassorship in the Trump Second Term.

Apparently the "Gods in Edmonton" are preparing for a Class I to acquire Pan Am; and they "want a leg up" in having their road to handle Saint John traffic before such Class I gets their "hoofs" on Pan Am.

Now to the extent that SOO/CP (too my knowledge, all CP properties in the USA are under the SOO "shell") is prepared to upgrade their entire CP-M from Eddie Burkhardt's Class 2 (if that), remains to be seen.