Rockland Branch Discussion

[CN9634]

Interesting bit from the 'way back machine' (ok 2011 wasnt way back) but Dragon could potentially be a larger customer if the RRs can get it together

http://bangordailynews.com/2011/03/21/b ... and-ports/" onclick="window.open(this.href);return false;

[gokeefe]

This RFP and its outcome gives them options they otherwise wouldn't have if they had written the RFP for "more of the same".

What are these options you are referring to? There's no evidence that the former agreement would have hamstrung NNEPRA on Rockland service ambitions. Furthermore, ME's former excursion service was not exactly a stellar-performing money machine. I'm sure ME would have been perfectly happy hosting NNEPRA service for a fee.

On the freight side, consider that changing different locomotive paint schemes doesn't generate additional business.

I should have been more explicit. The change to the RFP/Operator ensures that Maine DOT won't get hit with a request for operating subsidies in the event that Dragon suspends their rail shipments. In short I think Maine DOT is prepared to shutdown the Rockland Branch if Dragon Cement disappears as a customer. By switching operators now, before a loss of business on the line, Maine DOT forces an exit to passenger service by the line operator, as opposed to in the middle of the tourist season.

I think to an extent they also preserve the option for passenger service (of some kind, likely seasonal) to Rockland, and points in between if they believe that this service is desirable and if NNEPRA and Amtrak are interested. But what they don't do is leave a well run passenger operation in place, that is locally popular and suddenly becomes a political cause if they are forced to shutdown because of Dragon Cement suddenly suspending their business.

Changing things this way prevents Maine DOT from being seen as the "bad guy" simply because of someone else's business decisions. Maine DOT wrote a realistic RFP with normal operating requirements and structured the scoring system to ensure that they would not get left with a bill for service at the end of the day. I think that's smart all around.

[Cowford]

The change to the RFP/Operator ensures that Maine DOT won't get hit with a request for operating subsidies in the event that Dragon suspends their rail shipments.

Best I can tell, there is no reference to subsidy (or its prohibition) in the 2015 RFP. What specifically changed from the last agreement to this one?

It's interesting the look at the scores in a different light: Overall, ME ranked 77% in MEDOT's point system, vs 83% for CMQ. The two most poignant differences: ME beat CMQ on passenger accommodation 90% vs 52%, but CMQ bested ME on "Cost/Revenue to ME DOT" (whatever that is, but assuming that it's tied into operator revenue expectations) 80% vs. 53%. And the latter category was 20% of the total.

Again, CMQ "predicts in its proposal that its revenue in year one will be more than $1.1 million, compared to Maine Eastern's projected freight revenue of $675,000." As the incumbent, ME certainly must have had a good handle on freight revenue expectations. And CMQ expects a 62% increase... in year one? That's eyebrow raising.

[gokeefe]

I took the scores on Cost/Revenue to MEDOT to be an indicator that MEDOT understood Maine Eastern's proposal to require a subsidy in the event that Dragon's traffic was lost and potentially for upgrades to passenger service as well.

This was based in part on the article's reporting of Maine Eastern's proposal. So that in my mind was "what has changed from one RFP to the next".

I agree that CMQ predicting an increase in revenues from one year to the next to be significant but I also think that this may have been due in part to CMQ predicting new traffic (I'm guessing propane) on the line. Whether or not this is reasonable or realistic to predict is another matter entirely.

[F-line to Dudley via Park]

I took the scores on Cost/Revenue to MEDOT to be an indicator that MEDOT understood Maine Eastern's proposal to require a subsidy in the event that Dragon's traffic was lost and potentially for upgrades to passenger service as well.

This was based in part on the article's reporting of Maine Eastern's proposal. So that in my mind was "what has changed from one RFP to the next".

I agree that CMQ predicting an increase in revenues from one year to the next to be significant but I also think that this may have been due in part to CMQ predicting new traffic (I'm guessing propane) on the line. Whether or not this is reasonable or realistic to predict is another matter entirely.

Increase in revenues or increase in profits? They're providing the same service as MERR, but their costs are a lot lower by keeping a minimalist presence and being able to remote a lot of administrative functions like dispatching out of Northern Maine. For a branch with margins as small as Rockland that's got to be worth a small, but percentage-significant, increase in their profit margins off the inherited business. Even with total revenues same as they were before.

If it's revenues I'd be interested in why they say that. There's tons of propane dealers with sidings, but they're relatively elusive dormant customers to convince to switch back to rail because of how longstanding-stable and advantageous the trucking rates have been for the smallish-capacity wholesalers. So for them to make an anticipated revenue increase claim must mean they think they're going to close on something soon rather than simply possessing a few dormant or speculative customers. Dormant customers with future considerations aren't rare. Dormant customers making a new, pronounced lean to reactivate are pretty rare...propane a particularly stubborn one for that.

[Cowford]

...but [CMQ] costs are a lot lower by keeping a minimalist presence and being able to remote a lot of administrative functions like dispatching out of Northern Maine

No-one seems to remember that the ME was owned by a short line, albeit a moderate sized one that probably offered similar synergies re billing, etc. And I'm figuring the Rockland dispatching center roster hasn't changed.

There's tons of propane dealers with sidings

More accurately, there's one... with only the faintest remnant of a siding... and no rail unloading infrastructure.

[gokeefe]

I agree with Cowford that the projected increases in income (net or gross) are generally mystifying.

Apparently they were credible to the people evaluating the bids.

[Dick H]

It's only about 60 miles or one and half hours by road between Rockland and Northern ME Jct.
Maybe the CMQ will work some or all of the Rockland crew at NMJ on some days,

[BandA]

Are the CMQ & MERR proposals posted? Is the MeDOT analysis posted somewhere? Did Dragon cement express a preference for operator? Are CMQ's freight rates lower? I've read nothing in this forum that explains why the CMQ proposal was chosen.

[gokeefe]

Are the CMQ & MERR proposals posted? Is the MeDOT analysis posted somewhere? Did Dragon cement express a preference for operator? Are CMQ's freight rates lower? I've read nothing in this forum that explains why the CMQ proposal was chosen.

The article from Village Soup makes it all quite clear and that was written based on their examination of the bid documents. You can read the article for $0.99.

CMQ's freight revenues are higher and they got significant credit for their bid which apparently indicated good business prospects versus Maine Eastern's bid which hinted at a potential need for operating subsidies.

[BandA]

Ah. Managed to find a copy of the article. I read it that they slanted the contract to the vendor they wanted to win. Or MeDOT is incompetent.

The Courier-Gazette made a Freedom of Access request for the proposal documents from the Maine Department of
Transportation and the state has released the documents along with the scores for the two companies. See attached table.

Document are still not published anywhere I can find them. Seems like an opaque process designed to keep the public out. Since I don't live in Maine I don't care enough to file FOIA requests there.

Chuck Jensen, vice president and chief operating officer of Maine Eastern's parent company, Morristown & Erie Railway,
said he does not understand how the state awarded Central Maine & Quebec any points for passenger service. He also
pointed out that those points made the difference between Maine Eastern's winning and losing the 10-year contract.

I don't understand either, and I read the bureaucrat's explanation.

[gokeefe]

Ah. Managed to find a copy of the article. I read it that they slanted the contract to the vendor they wanted to win. Or MeDOT is incompetent.

Since I know and have met Nate Moulton and other leaders from Maine DOT in a professional capacity I feel comfortable assuring you that incompetence should be the last of your worries. I'm somewhat disappointed that it was even mentioned.

I think the RFP made it clear what their expectations were and that there had in fact been changes to operating conditions. Specifically that Maine DOT expected equipment that met modern accessibility and safety standards, and also that Maine DOT was not going to accept a situation where they could potentially be "on the hook" for an operating subsidy in the event that Dragon cement's traffic collapsed.

The Courier-Gazette made a Freedom of Access request for the proposal documents from the Maine Department of
Transportation and the state has released the documents along with the scores for the two companies. See attached table.

Document are still not published anywhere I can find them. Seems like an opaque process designed to keep the public out. Since I don't live in Maine I don't care enough to file FOIA requests there.

Nothing opaque about it. If you want to see the documents just file your own Freedom of Access Act (state version of federal Freedom of Information Act) request and you'll get to see the same information that the newspaper did. I'm disappointed that you would indicate that a process this transparent is "designed to keep the public out". Maine's laws on these matters are quite strong and as someone that has been a records custodian for documents subject to the FOAA I can assure you that the law is quite clear about how information like this must be handled. The documents are accessible and subject only to the barest request requirements from the FOAA.

Chuck Jensen, vice president and chief operating officer of Maine Eastern's parent company, Morristown & Erie Railway,
said he does not understand how the state awarded Central Maine & Quebec any points for passenger service. He also
pointed out that those points made the difference between Maine Eastern's winning and losing the 10-year contract.

I don't understand either, and I read the bureaucrat's explanation.

I think it was quite simple. CMQ said they could accommodate a third party and that they had previous operating history doing exactly this. Maine Eastern's freight portion was weaker and that is why they lost. CMQ apparently made credible claims that they could improve the business. Had I been evaluating the application I would have been skeptical just as I'm sure others were as well. Maine Eastern also indicated a substantial need for additional funding for their grandfathered passenger equipment and made no claims about the potential for additional business.

In my eyes I think the key here is that the application evaluators felt CMQ made a credible claim in regards to obtaining additional business. The RFP was structured to ensure that Maine DOT did not end up in a position where they would be "on the hook" for an operating subsidy which they couldn't pay. I think I would have structured my RFP in exactly the same manner had I been up against a similar problem (potential loss of Dragon's traffic).

[fogg1703]

Did MERR carry more cement to interchange its final year or was it just me?

While CMQ's numbers on freight revenue may seem a little bit large compared to MERR, think about the fact that Dragon has habitually stated if a more reliable service could be provided they would not only supply their Windsor Qc terminal by rail (upwards of 10 cars/week) but could find more outlets for cement via rail in New England to ease barge capacity. It already began with loads to Tresca in Millis Ma last season, JP Noonan's purchase of FG Adams Trucking a major operator out of Coastal's Silo in S Boston could shift some carloads to Noonan's transload in Mansfield MA. What was once a common practice of supplying its own Dragon Products yards around Maine via rail shipment could return especially to northern Maine outlets. Lets not forget the fuel for the Kiln, Petcoke, which arrives via ship in Searsport could be an all rail delivery again. Add in plate steel loads for Hardings which is extremely variable with contracts won by BIW, as well as steady as she goes, Dicaperl, adding to carloads. My point being, with an extremely low overhead, increased freight rates and some cooperation with PAR (one can only hope) it may be possible to erode some of the trucking dominance in the area and increase carloadings compared to MERR. Wether this translates into the numbers that CMQ stated to win the contract or not, I look forward to see if they can try.

[Cowford]

Let's look at what are actually separate discussions on subsidy:

1. Passenger service. CMQ would not require subsidy. But that's because they would not provide such service. ME was saying that they would require subsidy if MEDOT forced them out of excursion service into an operator category that required ADA compliance, FRA glazing, etc. So either way, if ME DOT wants passenger service, it's gonna be subsidized.

2. Freight service. The article referenced predicted subsidies for freight in the future, but was that really what ME was saying? Rather, ME appeared to be saying that the line is a one-trick pony, and that pony has old old shoes, i.e., an aging railcar fleet. And replacement of this fleet is a costly, unresolved issue. Changing operators ain't gonna make that problem go away.

Additionally, ME was stating that the line is required to be over-maintained for existing freight service and that, in order to keep the track in good nick, a big tie job is looming (~60% of the line's ties are pre-2002 rehab according to track chart). Again, CMQ taking over ain't gonna make that issue go away... or maybe they will, as it brings up an interesting point. The RFP is contradictory on the issue of track maintenance: It states that the line must be maintained "so that the Rockland Branch remains in the same condition it is currently in", i.e., current conditions/FRA Class standards. But in the following sentence it says that "maintenance activities... will be appropriate to the level of freight and passenger service operated over the Rockland Branch..." Man, that last sentence leaves A LOT to interpretation. One could allow the entire line's condition to decline to Excepted status and argue it's appropriate to the level of service required. Then, if passenger service ever comes to be, the state passes a bond (or files for another Tiger Grant) to rebuild the line.

[MEC407]

Great points, Cowford. Apparently you've been reading my mind, as I was thinking the exact same things.