Who ya got? (NS vs. CSX)

Interesting times for New England railfans. Two Class 1's each spending hundreds of millions of dollars, for ultimate control of the New England freight/commodity market? Why is this happening in such a tiny region of the country? Can both survive spending at this rate? Highly unlikely. Both NS & CSX have already spent a combined quarter of a billion dollars, obviously serious investments for both railroads.

IMO both can't possibly keep spending @ this pace for control of New England. In the grand scheme of things I don't believe New England will over the long term (not 5 or 10 years but 20 plus) require daily intermodal/freight/commodity trains from two Class 1's. The demand won't be there. Most states in New England have tiny populations and one is consistently losing signifigant percentages of its populace. Most industry that requires large scale car loadings/unloadings for mixed freight is long gone, likely never to return.

I am aware of the height limitations of the Hoosac Tunnel for intermodal & also that the Boston & Albany is generally considered to be the premier entrance to the region. Both routes clearly have their advantages/disadvantages, that has been beaten into the ground on Railroad.net and is boring.

So....back to my question, 20 plus years from now who will be the winner? Plus one caveat, don't indicate both because the amounts of money being spent is clearly to eliminate all competition.

Both I doubt the ICC would allow only one railroad to have control of New England.

BigLou80 wrote:Both I doubt the ICC would allow only one railroad to have control of New England.

ICC was abolished in 1995. STB (Surface Transportation Board) has authority over rail mergers, abandonments, etc..

The opening of the wider, deeper Panama Canal will allow the mega container ships to bypass Long Beach, Seattle, etc. and come direct to the East Coast. Railroad improvements are in step with port authorities who are also chasing Federal money to dredge and widen. Ports will need railroad infrastructure to forward shipments.

It's not so much *more* freight to the Northeast, it will be a reduction in shipments from the Western U.S. to more direct from the East Coast.

What you're seeing is the beginning of a 10 to 20 year game plan.

Though it would be interesting to watch, I don't think either Class 1 believes it would be in their best interest, or practical for that matter, to fight to the finish in New England. The fight would take too long, involve too much investment which couldn't be justified while limited by the politics of public funding, run counter to pro-competitive political pressure and the STB as BigLou mentioned, and, probably end up not so good for the stockholders either, at least in the short/mid-term.

Both NS' and CSX's investments, I think, should be considered in the context of longer term plans playing out and a growing competitive advantage and demand for rail vs. highway. New England's importance as a rail marketplace to both carriers, because of its population and length-of-haul from other regions of our country, underscores why both are making investments. CSX is finally implementing a 20-year old plan put in place by Conrail to bring domestic doublestack efficiency to its entire network with a consolidated eastern MA intermodal terminal. NS is investing in an historic network that had faded in leaner times, developing new network access from the South, and playing catch-up just to stay in this market because of the lack of investment over a couple of decades

With the marketplace floating everyone's boats higher, 20 years out I suspect both Class 1's will be winners, each handing more New England traffic than they do today.

All true. However, at this time there are only three sites on the Atlantic Coast that are gearing up to handle the mega-ships that will be using the widened Panama Canal, and none of them are anywhere near New England. This suggests a reduction in cross-country transportation and an increase in north-south coastal traffic. I must admit that I don't understand why NS and CSX are fighting over a relatively paltry level of business in a geographic area that is seeing a population decline, but hey - it's their money. Yeah, I know, it's some of ours, too.

PBM

NS' and CSX's investment in NE has little to do directly with the Panama Canal and Asian international traffic because these two initiatives are primarily about domestic traffic and rail's improving competitive position against highway to handle this domestic traffic. For both NS and CSX it's about improving upon what they now have and opening up new domestic markets for New England. If it weren't worth it, neither one would be doing it.

The premise of failure due to population decline is false, just for the fact that EVERY New England state experienced population growth over the last 10 years. And while not a TX or CA, New England is not "tiny" - the Boston MSA is in the country's top 10. Most manufacturing is already gone and it's generally a consumption area... not a huge railroad growth potential perhaps, but the assumption that recent/present capital spending will continue unabated is false, as well. The NS is spending money on closing a deferred maintenance gap, and CSX is focusing on consolidating intermodal terminals.

Near as I can tell, New Englanders will, in 20 years, be more numerous and still be eating and drinking, spending money on "stuff", buying new cars, scrapping old cars, and generating garbage.


"...at this time there are only three sites on the Atlantic Coast that are gearing up to handle the mega-ships that will be using the widened Panama Canal, and none of them are anywhere near New England."

The port of NY/NJ is pretty darned close. And it's more than three: NY/NJ, Norfolk, Charleston, Savannah, and Miami.

Massachusettes declines in population every year. That's a fact. It has lost so much population its Congressional districts are being combined and it is losing a House seat. You're wrong.

How do you know that NS or CSX spending will cease? More of your "facts"?

dcm74 wrote:

BigLou80 wrote:Both I doubt the ICC would allow only one railroad to have control of New England.

ICC was abolished in 1995. STB (Surface Transportation Board) has authority over rail mergers, abandonments, etc..

I was in a hurry, my point still stands however. Preventing or at least attempting to prevent monopolies is one of the few useful things Gov't does

While the Cape and Western Massachusetts did lose population, the population
of the state as a whole was up 3.1%. Breakdown here.

http://www.projo.com/news/census2010/ma ... wns800.htm

While Massachusetts will lose a Congressional seat, that is because several
states, mostly in the south and west, grew at a faster rate.

Thanks for the back-up, Dick.

Here's the US Census Bureau link... according to them, MA population saw 3.9% growth 2000-2009.

http://quickfacts.census.gov/qfd/states/25000.html

It's becoming evident that you're a sheep in WOLF's clothing...

WOLF wrote:So....back to my question, 20 plus years from now who will be the winner? Plus one caveat, don't indicate both because the amounts of money being spent is clearly to eliminate all competition.

First, corporations in the 21st Century don't work "to eliminate all competition."* There are far too many lawyers and accountants involved, not to mention federal regulators and the Department of Justice, for things to be run the way they were in the days of Stanford, Gould and Vanderbilt.

Having said that, if I had to divine an outcome, I would say that CSX would "win" based on the Hoosac Tunnel limitations, and that NS would sell its share of PAS back to PanAm or P&W.


EDIT to add the footnote I had intended:

* - Possibly excepting Microsoft.

>>The port of NY/NJ is pretty darned close. And it's more than three: NY/NJ, Norfolk, Charleston, Savannah, and Miami.

The key phrase is "gearing up." If you're reading the same industry rags that I am, only Norfolk, Charleston, and Savannah are actively working to dredge harbors and expand rail connections. The other two appear to be in the early planning stages.

>>NS' and CSX's investment in NE has little to do directly with the Panama Canal and Asian international traffic because these two initiatives are primarily about domestic traffic and rail's improving competitive position against highway to handle this domestic traffic.

Could be, but that is contrary to everything I've been reading. Does anybody know whether CSX or NS have published anything about their New England activity?

PBM

Not to stray too far off-topic, but Norfolk is already good to go. Dredging is not being done, but is in the planning stages at all the other ports. (Both Charleston and Savannah already receive post-Panamax vessels, though there are load/sailing time limitations.)

Also, I agree with QB about New England investment being a domestic play. The West Coast vs East Coast battle has largely already been fought... about 30 percent of Asian imports already come over East Coast ports... there won't be any seismic shift of market share in 2015. And who the heck knows how the new 18,000 TEU uber-ships (which are too large for the "new" canal) will affect container flows... Asian traffic through the Suez to EC ports for reverse mini-landbridge??

Anyway, back to the topic at-hand. In thinking a little more about one of WOLF's errrrrr... provocative comments, namely:

"...I don't believe New England will over the long term (not 5 or 10 years but 20 plus) require daily intermodal/freight/commodity trains from two Class 1's."

I stand by my earlier posts, but have to revisit this sentence, as it is a bit ambiguous. If the supposition is that at least one of the Class 1s will extract themselves from direct service into New England in the next 20 years, e.g. CSX retrenching to Selkirk by selling off lines east to a regional carrier... I'd say that's unlikely, but a possibility. If it's to say that traffic levels will decline markedly over the next 20 years, there's no basis in fact to indicate this a possibility.