CSX Acquisition of Pan Am Railways

PBMcGinnis wrote: ↑Sat Jan 01, 2022 11:50 am

newpylong wrote: ↑Fri Dec 31, 2021 8:43 am IMO that is a good analysis. Only time will tell what their play will be.

Regarding NS, I simply don't think they care. The evidence to me seems fairly clear:

Down to one train pair on the Tier
Continued "rightsizing" on the system due to PSR
Inability to or unwilling to help alleviate the PAS crew shortage to move their traffic, which resulted in the reduction of service. Maybe some traffic from he west will be left for interchange in Albany.
Inability or unwilling to maintain the Patriot Corridor to Class 3 which it was at the outset and was the stated goal
Lack of interest in owning PAS outright
Apathetic stance on selling PAR to CSXT as long as their key pair keep running

Sure there are others.

BINGO!!!! I have been saying this for well over a year. NS doesn't care that much about Pan Am Southern. Other than 22/23K and 11/16R they have thumbed their noses at every new opportunity they were given first dibs on for the past 10 years. They even tried to fight hauling trash out of Ayer to Alabama which was a 100% all NS route.

As for CP playing "White Knight" in regards to securing more traffic from the Irving's and away from Pan Am.....
Wait until they realize 65% of all U.S. traffic originating in Maine and Saint John terminates on CSX served consignees up and down the East Coast. That's going to be the first thing CSX takes right back on a direct route.

It makes me curious what CP will do with the D&H if much of the traffic that presently goes CMQ-Montreal-Albany is eliminated, Only NS Schenectady bound traffic will be left.

backroadrails wrote: ↑Sat Jan 01, 2022 2:48 pm

roberttosh wrote:In terms of CBR, post Lac Megantic, I'm not sure any of the shippers want to be moving trains over 5-10 MPH track, so once CSX upgrades the line, that issue is reolved. CSX should also be able to provide more competitive pricing now that it's a one line haul East of Chicago vs 2. BNSF originated CBR was competitive with Canadian product during the boom, so as prices continue to climb, I don't see any reason why it won't be again. As for the LPG, CSX can land product in Bangor out of the Marcellus cheaper than CP can out of Windsor or Alberta, so again, with upgraded track and service, it will be low hanging fruit.

CBR coming via CSX depends entirely on Irving. Recently they moved to receiving virtually all the inbound crude by ship and barge (since they own several maritime shiping companies). I want to say until around the 2018/2019 timeframe they were still getting trains of crude by CN, but that has ceased. Irving will probably be reluctant to crude through the states (Look at the number of protests that occurred when it came via Pan am and when the last batch of BOW coal trains ran). I am not sure if it has a big impact on Irving, but they also had to pay out a large amount for the involvement in the Lac-Megantic tragedy and they were fined for safety violations on EMR and NBSR. That was about the timeframe where Irving got the last oil train by Pan Am (around 2014 or 2015). Atleast in Irving's eyes it is more economical to ship crude by ship and barge due to the increased capacity and they likely ship crude in to Saint John, then reload the same vessel with petroleum products which are sent back to the original port.

https://atlantic.ctvnews.ca/irving-appl ... -1.4914417

Irving distributes refined petroleum products to northeast USA and eastern Canada via a special fleet of tankers that I believe it owns or controls. The super tankers delivering crude are not reloaded with refined product. The calculus for crude by rail vs super tanker from wherever in the world is simply the risk adjusted cost of one vs the other. If tar sands Alberta oil or fracked Dakota oil is super cheap, rail can be competitive. Note that Alberta crude has recently been pipelined to the Canadian west coast then tankered via Panama to SJ. Ships have huge economic advantages over rail.

Besides the NS traffic, the former D&H still sees Fuel oil, Ethanol and LPG going to and from the port of Albany, interchange traffic to the PAS at Mechanicville and not everything they interchange with CSX at Albany is coming over the CMQ, so there will still be significant CSX interchange traffic. Traffic they'll lose to CSX direct out of the Maritimes and Northern Maine probably only represents @ 20% of the manifest traffic they currently move over that line segment.

VRS officially withdraws opposition to the deal in exchange for some trackage rights. Guess you'll see more VRS trains around

https://dcms-external.s3.amazonaws.com/ ... 303472.pdf

Some excerpts from the above settlement agreement:

Section 2. Grant of Trackage Rights to GMRC

(a) White River Junction Trackage Rights
GWI shall cause NECR to grant to GMRC permanent trackage rights (the “WRJ Trackage Rights”) between Bellows Falls, Vermont, and White River Junction, Vermont (the “WRJ Trackage Rights Endpoints”). The WRJ Trackage Rights will be bridge (overhead) trackage rights, with no local service rights. The WRJ Trackage Rights shall be used by GMRC solely for the purpose of moving traffic in VRS’s revenue waybill account between the WRJ Trackage Rights Endpoints.

(b) Limited Use Trackage Rights and the PAS Operating Rights
GWI shall cause NECR to grant to GMRC certain contingent and limited use trackage rights (the “Limited Use Trackage Rights”) and CSXT and Norfolk Southern shall cause PAS to grant, to GMRC certain operating rights (the “PAS Operating Rights”) for the movement of VRS traffic between (i) Bellows Falls, on the one hand, and (ii) one of two connections with PAS – one being Millers Falls, Massachusetts and the other being East Northfield, Massachusetts, on the other hand (the “Limited Use Trackage Rights Endpoints”), for the sole purpose of interchanging traffic with, or delivering traffic to, PAS in East Deerfield Yard.

Because there is no effective location for the physical interchange of traffic between PAS and GMRC at either Millers Falls or East Northfield, upon commencement of B&E’s operation of the PAS rail lines, CSXT and Norfolk Southern shall cause PAS to grant to GMRC the PAS Operating Rights between (i) each of Millers Falls and East Northfield and (ii) East Deerfield Yard solely for the purpose of interchange of traffic with a prior or subsequent move over the Limited Use Trackage Rights.

The PAS Operating Rights over the East Northfield – East Deerfield Yard route will only be available for exercise by GMRC if the Commonwealth of Massachusetts Department of Transportation (“MassDOT”), as the owner of a portion of the route between East Northfield and Greenfield (the “Greenfield Route”), has granted its written consent to the same (“MassDOT Greenfield Route Consent”). Satisfaction of any MassDOT preconditions to the exercise by GMRC of the PAS Operating Rights over MassDOT-owned trackage shall be the sole responsibility, and at the sole discretion and expense, of GMRC; provided, however, that such preconditions shall not diminish, or require PAS to relinquish, PAS’s rights over such MassDOT-owned trackage. Unless and until MassDOT has provided the MassDOT Greenfield Route Consent and any conditions MassDOT has placed on the use of the Greenfield Route have been satisfied, GMRC shall exercise the Limited Use Trackage Rights solely via the Millers Falls route. GMRC shall be responsible for all costs and liability arising from its use of any MassDOT-owned trackage.

(d) The Limited Use Trackage Rights Special Provisions
The Parties have determined that the Limited Use Trackage Rights are intended for occasional, and not consistent and daily, use in part so that GMRC crews can remain qualified to operate over NECR trackage. Therefore, the Parties have provided for GMRC to use the Limited Use Trackage Rights, at its option, a limited number of times per calendar year (the “Discretionary Option Rights”). Further, the Parties have set certain timeframes as a pre-requisite to the use of the Limited Use Trackage Rights other than pursuant to the Discretionary Option Rights (the “Excessive Dwell Option Rights”). Finally, the Parties have determined to allocate certain costs with regard to the use of the Discretionary Option Rights and the Excessive Dwell Option Rights.

(i) Discretionary Option Rights
GMRC may exercise the Discretionary Option Rights up to twenty-six (26) times per calendar year, but not more than three (3) times in any month or more than one (1) time in any week. GMRC shall provide at least 24 hours’ notice to PAS that it intends to exercise its Discretionary Option Rights, and shall obtain the prior approval of PAS, not to be unreasonably withheld or delayed. In exercising these rights, GMRC shall be required to pick up all railcars made available to it by PAS (as operated by B&E or other GWI subsidiary) at East Deerfield Yard that were otherwise destined to be brought by B&E to GMRC at Bellows Falls or Hoosick Junction and bring them north. All such railcars shall be deemed interchanged to, and in the account of, GMRC upon the coupling of the GMRC locomotives to the train consist.

If I read this right... and maybe I haven't... the below is the scheme:

VRS can run Bellows Falls (BF) to White River Junction (WRJ) without issue. This connects WACR to the rest of everything without having to rely on NECR. Pretty simple and makes sense.

VRS can run Bellows Falls (BF) to East Deerfield (EDFLD) on a limited rights agreement (LRA) basis over NECR, not for daily use but occasionally. PAS will modify its haulage rights so that there are two new interchanges at EDFLD, both a CSX-VRS and NS-VRS paper connection.

B&E plans to run 4 days a week from EDFLD to BF (from Appendix A service table) and VRS will if I had to guess run once a week to clean out traffic at the yard and keep crews qualified. B&E also will run Mech to Hoosick 3 days a week and RJ to EDFLD 5 days a week for VRS to/from traffic.

There are then discretionary rights that basically give them 26 bonus trips a calendar year to move time sensitive traffic (LPG, salt, ect) to/from interchange point at East Deerfield. It seems as though that would likely happen October to April, and there are service provisions built it with the procedure (in writing, 72 hours, ect) laid out clearly.

We'll see how this pans out, should be fun to watch VRS (GMRC?) crews coming into Deerfield every so often.

I think paragraphs two and four are one and the same in your above analysis, CN.

Other than avoiding dwell times, and connecting two separate lines, I'm lost on what benefits are gained here by handcuffing VRS to how many times they can run between ED- wherever the cars are moving.

Sounds great for the seasonal traffic, but it's not like they're moving 50 cars, let alone 25, on a daily basis between BF-WRJ.

Maybe those limited Deerfield rights are for the slurry train.

I suspect that most VRS interchange traffic is going to go via the Rotterdam Junction-Mechanicsville-Hoosick Junction haulage rights trains.

It seems to me all these new trackage rights do is move the VRS-G&W interchange to a more convenient location. Sure VRS will be getting a second indirect interchange with NS through the new haulage rights but that doesn't matter much if it's limited; however, considering VRS, for the most part, is a "loose car" kind of railroad, it's entirely possible, likely even, that there isn't enough traffic to justify coming down to East Deerfield more than once or twice a month.

I also thought that with the Bellows Falls-White River Junction trackage rights Newport could be made into a somewhat viable gateway again, but CP and VRS already interchange most of their traffic at Whitehall so I don't know if this is all that likely.

Getting closer to the STB decision date. It's February 28th.

Totally underwhelming result from VRS for putting up that entire hissy fit. I would have asked for more… doesn’t mean you have to use it but at least you got it if you can get rights all the way to Mechanicville or Rotterdam Jct (Selkirk even?). Oh well, it’s settled now

roberttosh wrote: ↑Mon Jan 03, 2022 3:06 pm Maybe those limited Deerfield rights are for the slurry train.

The one that hasn't run in about a year or so now due to low need for the product? They just tack those cars on the BFED/EDBFs.

It mentions seasonal salt/LPG traffic right there in the filing. The idea of weekly unit trains (with other WRJ bound traffic tacked on) in the fall/winter comes to mind, but that's all I can think of as an observer.

CN9634 wrote: ↑Mon Jan 03, 2022 3:37 pm Totally underwhelming result from VRS for putting up that entire hissy fit. I would have asked for more… doesn’t mean you have to use it but at least you got it if you can get rights all the way to Mechanicville or Rotterdam Jct (Selkirk even?). Oh well, it’s settled now

They can barely run the trains they have now down to the junction, I can't see them being able to effectively operate way out to XO or RJ. Plus that is just more rules and territory that $14/hr crews need to qualify for...

The big tamale for them is to get the NECR out of the equation WRJ to Fellows Balls. Remember the litigation and STB intervention on this some years back.

Really getting hard to see how this whole thing is going to be as bleak as originally thought for PAS. I think it is going to open up some GWI specific routing opportunities and allow them to go after local traffic with better service that just hasn't happened. Could sadly see some of the CTC decommissioned but I hope not. Certainly would appear that way given the number of signalmen they plan on retaining.

Anyway, some ways to go still but I went from being "no f-ing way due to the PAS issue to, this has a good chance now."

I was waiting for something crazy like rights all the way to Concord, NH! I agree though rights to some place in New York is what I was expecting. The rights to WRJ makes a ton of sense and it seems smart to give two ways to East Deerfield in the chance that the Commonwealth says no to the preferred route.

Shortline614 wrote: ↑Mon Jan 03, 2022 3:20 pm Getting closer to the STB decision date. It's February 28th.

It isn't April 1st and effective May 1st as originally planned?

Amtrak and MassDOT remain the last “major” challenges… some have brought up CP but remember they didn’t actually file opposing the transaction, just voiced concerns and that it should be passed within certain conditions keeping the PAS line open.

I concur— it looks like CSX is getting it done.