What happens if Pan Am collapses?

"...might it wind up making sense for the new MEC operator to rehab the Mountain Division to St. J., for exactly the reason it existed in the first place?"

Consider Maine gateway traffic an apple pie. Ages ago, the pie was sliced seven disproportionate ways, meaning the state enjoyed seven gateways to the west. The pie grew smaller, and slices were consolidated. By 1984, the number of slices was down to four. Since that time, that pie has shriveled enormously. In fact, the entire remaining pie would barely make one ok-sized dessert slice. Yet it's divided up for four. Now, CN's gateway relies on Maritime traffic - Maine's business is incremental. However, the other three at the table - two in particular, are suffering from severe cases of malnutrition. If an MEC-successor reopened the Mountain, not only would they further "Jenny Craig" the other pie slices by as much as 25%, they'd also spiral into insolvency in no time, given it's the most expensive westerly route to operate. And oh, the MMA that you're trying to screw in the process? Guess who controls your route west of Newport to Montreal?

Cowford wrote:"...might it wind up making sense for the new MEC operator to rehab the Mountain Division to St. J., for exactly the reason it existed in the first place?"

Consider Maine gateway traffic an apple pie. Ages ago, the pie was sliced seven disproportionate ways, meaning the state enjoyed seven gateways to the west. The pie grew smaller, and slices were consolidated. By 1984, the number of slices was down to four. Since that time, that pie has shriveled enormously. In fact, the entire remaining pie would barely make one ok-sized dessert slice. Yet it's divided up for four. Now, CN's gateway relies on Maritime traffic - Maine's business is incremental. However, the other three at the table - two in particular, are suffering from severe cases of malnutrition. If an MEC-successor reopened the Mountain, not only would they further "Jenny Craig" the other pie slices by as much as 25%, they'd also spiral into insolvency in no time, given it's the most expensive westerly route to operate. And oh, the MMA that you're trying to screw in the process? Guess who controls your route west of Newport to Montreal?

Two other things to consider. First, the Mountain (like any mountain railroad) is expensive to operate. That would deter any future operator. Second, unless you're going to rebuild the St. J & L.C., the Mountain is more a gateway to the north than a gateway to the west. Routing north to St. Johnsbury on the Mountain then south on the Washington County/New England Central doesn't make a heck of a lot of sense.

Ridgefielder wrote:

Cowford wrote:"...might it wind up making sense for the new MEC operator to rehab the Mountain Division to St. J., for exactly the reason it existed in the first place?"

Consider Maine gateway traffic an apple pie. Ages ago, the pie was sliced seven disproportionate ways, meaning the state enjoyed seven gateways to the west. The pie grew smaller, and slices were consolidated. By 1984, the number of slices was down to four. Since that time, that pie has shriveled enormously. In fact, the entire remaining pie would barely make one ok-sized dessert slice. Yet it's divided up for four. Now, CN's gateway relies on Maritime traffic - Maine's business is incremental. However, the other three at the table - two in particular, are suffering from severe cases of malnutrition. If an MEC-successor reopened the Mountain, not only would they further "Jenny Craig" the other pie slices by as much as 25%, they'd also spiral into insolvency in no time, given it's the most expensive westerly route to operate. And oh, the MMA that you're trying to screw in the process? Guess who controls your route west of Newport to Montreal?

Two other things to consider. First, the Mountain (like any mountain railroad) is expensive to operate. That would deter any future operator. Second, unless you're going to rebuild the St. J & L.C., the Mountain is more a gateway to the north than a gateway to the west. Routing north to St. Johnsbury on the Mountain then south on the Washington County/New England Central doesn't make a heck of a lot of sense.

Actually, it wasn't the MMA I was trying to screw, it's the B&M, hypothesizing that after a breakup the MEC and B&M could potentially fall back to their days of mutually antagonistic ownership. Although, I didn't realize that the St. J end was no longer a direct connection to the CP, which was really the other point of the MD in the first place.

Because railroading is an old business and a network business, in my experience oftentimes the past offers hints for the future. I think in this hypothetical situation (and in how reality has unfolded, too) that's the case. Just as MEC, as a seperate stronger player, viewed the B&M and what they would want of their route structure, so, too, would a new player assuming Pan Am's operation view what the ex-B&M offers for their own interests: connections to the Class 1's at Ayer and Worcester. IMHO, when you look at the sum of each Class 1's interests, the greater political situation, the potential of regional politics, and the probable economics and commercial interests of a Pan Am successor, it points to the same conclusions MEC reached some 40 years ago. And, that's what Pan Am has already essentially moved toward. I think any kind of a break harking back to the MEC and B&M as seperate carriers would now occur at Ayer (Worcester) and not at the historic boundary at Portland.

Back when the MEC ran traffic to the CP over the Mountain division, it was the quickest way to reach the big midwestern carriers that now make up NS & CSXT (i.e. NW, C&O, B&O, Wabash, etc) as CP connected directly with them via the Detroit gateway. Routings via the B&M at Portland needed to go through an additional carrier, either PC/Conrail or the D&H to get to those same roads, neither of which (including the B&M) I might add, had great service back in the 60's and 70's. Nowadays, with CSXT and NS right in New England, the CP route wouldn't hold that same advantage anymore and in addition, both CSXT and NS would surely want their long haul into/out of New England vs letting an overhead carrier such as the CP short haul them via Detroit.

roberttosh wrote:Back when the MEC ran traffic to the CP over the Mountain division, it was the quickest way to reach the big midwestern carriers that now make up NS & CSXT (i.e. NW, C&O, B&O, Wabash, etc) as CP connected directly with them via the Detroit gateway. Routings via the B&M at Portland needed to go through an additional carrier, either PC/Conrail or the D&H to get to those same roads, neither of which (including the B&M) I might add, had great service back in the 60's and 70's. Nowadays, with CSXT and NS right in New England, the CP route wouldn't hold that same advantage anymore and in addition, both CSXT and NS would surely want their long haul into/out of New England vs letting an overhead carrier such as the CP short haul them via Detroit.

The same traffic could and most likely did go on the Canadian National/Grand Trunk out of Portland. CN had just as many interchanges as CP did including all of the ones mentioned previously. In addition the GT out of Portland was a better railroad in every respect for freight.
Noel Weaver

Speaking of collapse - the Pan Am Southern freight main has collapsed in speed this summer with the FRA and Sperry car making the rounds. MOAY is coming through North Adams now at a brisk walking speed. almost 3 hrs from Mechanicville to here, NS must be pumped about that.

Seems like old times from....say, ten years ago doesn't it Newpy? Just as things appear to be improving from the status quo, PAR/PAS/GTI(flavor of the week) slams that imaginary door on further progress. It's just another year.....

cpf354 wrote:I think Pan Am is going to live on; the NS partnership is working, if not smoothly and not to expectations, yet, and they do a healthy business through CSX at Worcester. They may downsize in the future if their traffic base in Maine continues to shrink, but they aren't anywhere near collapse, IMHO. Sometimes it's too easy to judge the situation based on a narrow or limited perspective. For example, if you live near a branch line that Guilford abandoned years ago, you would think they were on their way out. But if you live in an area where they have a concentration of customers and new business, Ayer, for example, you'd expect they were holding their own. The freight railroad business is pretty fluid and diverse. A former line side customer could have moved and now uses transload or intermodal to ship by rail, or could still be using line side service at another location you don't know about. A good example would be the lumber co-op that used to be in West Cambridge. They moved to the old N. Billerica Shop complex and get frequent service there from locals based in Lawrence. However, if you didn't know that, you would look at the derelict buildings and weed covered sidings in W. Cambridge and think, "there goes another one".
It is still true that Pan Am has lost business and doesn’t spend lots of money on equipment and track, but they have publicly stated that minimal track maintenance and buying old power is their accepted business model. I think they shy away from low volume customers because they want to maximize their returns serving high volume customers, so using surcharges or just infrequent service, they drive away unwanted business. However there have been cases where even what appears to be a high volume customer has given up on them for poor service. I think though that’s more a reflection of their business practices than their financial health. Somewhere in the service business, there is a fine line between providing service at a loss or break even and above. Only the provider knows for sure.

Interesting response, cpf354.

Having worked for a private company for over a decade, I saw a lot of behind the scenes and wondered all the time if the company was going to survive. After a decade, when a supplier decided the small company wasn't worthe their business, we shut down. Anyway... PAR really doesn't have much track to maintain in Massachusetts up to Portland because they have other companies doing it for them. The MBTA takes care of the commuter lines, Amtrak (NNARP) takes care of the tracks to Portland, and NS doled out some money for the west end. Most of the branchlines have been hosed, and many online businesses scattered here and there have left. So what's left? The remaining operational freight track in Maine, and a few branches in New Hampshire. This isn't much to maintain, and they don't do a lot with that.

If PAR were to go tits up, as the British say, I would think that NS and CSX would pick-up the west-end traffic, and either Irving or some other shortline would pick-up Maine trackage, or even CPR or CN because I'm sure they'd want to get to a warm water eastern port such as Portsmouth or Boston. What's left in eastern New England would either be carved between both NS and CSX again, or perhaps P&W would take that into their fold. P&W is a company that goes after smaller branches and builds up from there, thinking about the tracks around Putnam, CT. and Providence.

It's an interesting subject to think about, both perhaps in jest and in all seriousness.

John

The only thing that could cripple Pan Am is if the mills in ME shut their doors. When I hired out they said if the mills ever shut down, half the field work force is gone.

Considering the way traffic moves now, the closing of the paper mills will only cripple PAR. PAS hauls a majority of intermodal and local traffic so the B&M would continue to be viable. As for the MEC... I think you would kiss it good bye.

Do you folks out there in Pan Am Forum-land really, actually think Pan Am is going to collapse ? Think about the ownership, the actual ownership.. It seems that Pan Am has made an investment in 'new' equipment, and making the most out of the GP40 fleet. They seem to be working to improve stuff they own in NH outside of the main line. And let us not forget the paint job that had every railfan, should I be mild and say, 'gush', over the great job making a swan out of the 77 from a old tired ugly duckling.. That is not the sign of a railroad about to pull the plug... Is it ??

BowdoinStation wrote:Do you folks out there in Pan Am Forum-land really, actually think Pan Am is going to collapse ? Think about the ownership, the actual ownership.. It seems that Pan Am has made an investment in 'new' equipment, and making the most out of the GP40 fleet. They seem to be working to improve stuff they own in NH outside of the main line. And let us not forget the paint job that had every railfan, should I be mild and say, 'gush', over the great job making a swan out of the 77 from a old tired ugly duckling.. That is not the sign of a railroad about to pull the plug... Is it ??

First, I hope we all appreciate the irony of being asked about "pulling the plug" by a poster who named himself Bowdoin Station :D (Please don't take offense, I just thought that was funny.)

Second, I think / hope that this entire thread has become a big "thought experiment." I, for one, do not think PAR is going anywhere in the near or medium term. I'd certainly like to see more stability in the state's paper and lumber industries (Save Maine's Economy: Write Stuff Down!), but I really don't think there's an imminent collapse of either those industries or the railroad.

I think the MEC will have a very hard time being viable as a whole if the paper industry collapses. Only have to look at the BAR/MMA for a good example of what might happen... can't pay the bills if all those paper and slurrpy cars dissapear.

[First, I hope we all appreciate the irony of being asked about "pulling the plug" by a poster who named himself Bowdoin Station :D (Please don't take offense, I just thought that was funny.)]
That is funny..

Is the case o comparing MMA's troubles to the MEC.. Doesn't MEC have a lot more revenue and resources than the MMA, plus the huge amount of remote trackage that the MMA originally had, and the upkeep of it all against the number of carloads and opportunities led to their problems ? MEC would appear to cover a lot more industry and smaller geography than MMA..