CSX Acquisition of Pan Am Railways

MRJ, you have a valid point about out-of-route miles for ships venturing up the seaway... it's about a 1,000-mile penalty in-and-out on a trip from, say, the Suez with a subsequent call at NYNJ. Ocean miles, however, are cheap relative to terrestrial transport, and the seaway ports are in closer proximity to the hinterland.

Sea is cheaper than land. However, a similar scenario has already played out on the west coast. Prince Rupert, being the closest port to China, over the last decade or so has taken a big chunk of market share from la, Long Beach, Oakland, Seattle and Vancouver

Further, Montreal is severely limited in vessel size. QC will I believe be less limited by vessel size, but i think will be CN only, if I’m right about that with QC, if you want to deal with CP on the Atlantic side with more than small ships, SJ is it

Heard "CSX Railways" over the radio recently

Like I previously mentioned at the beginning of this thread, my gut feeling is NS will eventually pull out of NYS, sell Southern Tier line, the D&H, even northeast of Cleveland. High NYS taxes, very little online business, zero coal traffic, a few trains a day and a regression for growth. This current regime is not interested in anything except the operating ratio. Shuttering Bellevue after putting almost three hundred million into it was the writing on the wall for me. They want their core routes, premium traffic and certainly not a route they would have to purchase, put a ton of money into and then deal with ongoing tunnel issues, height restrictions. Watch for this to happen over next two years

Interesting, If that happens - is there a suitor for all those lines as a unit, or are they pieced out to connecting short lines or segments abandoned?

D&h and southern tier are bridge lines so can’t see a shortline wanting it
Cp of another era bailed once on the property

Cp (again) or cn are the only candidates I see the buying out ns in the northeast if they sell

Get real folks. Neither are those lines are going anywhere. NS may be "right sizing" operations but they aren't going to bail on those lines. You should see the amount of work they're putting into them.

Going forward the NS is going to have to face the reality that the chances of developing and/or participating in any business moving East of Ayer has been significantly diminished. In essence, the new freight main will probably be redesignated from Mattawamkeag to Worcester and the old Fitchburg will handle little business moving beyond Ayer, with most of what's left moving to/from PAS points like the limestone slurry, lumber to CT, etc and not involving the NS.

Not a dust field new airport but a swamp land airport. The new Kansas city airport (MCI) terminal was built just before major consolidations for security post 911. Rebuilding for different layout was interesting. Any pile driver or jack hammer would cause water to jet up from nearby cracks..

EAL made the airport a connecting hub but it shortly went out of business. TWA made it a mini hub with also a major maintenance hanger and other facilities. Well TWA taken over by American airlines and Kansas City once again went down in importance,

Can we assume NS had the opportunity to buy Pan Am and turned it down? If so, that suggests they're willing to cede New England to CSX. PAS then becomes redundant. What will happen to it?

I still think that Mass DOT is still going to argue their case before the STB for two class I's to compere for traffic in Mass. The big question is will NS argue their anticompetitive case given the dominance that CSX will have. It's really hard to say what they will do because they are still in the slash and burn stage of PSR. They did invest a lot over the years to get their reach into NE and was upgrading the D&H just a little over a year ago. I just hope their slash and burn policy will give way to a more stabilized leadership that doesn't just walk away from the NY-NE network.

charlesriverbranch wrote:Can we assume NS had the opportunity to buy Pan Am and turned it down? If so, that suggests they're willing to cede New England to CSX. PAS then becomes redundant. What will happen to it?

I'm not so sure about that. I think that what we've seen so far (a public announcement of an agreement with CSX) may well just be the opening offer in a multi-step negotiation. NS knows that the STB will never abide CSX owning both mainlines across Mass; they can sit back and wait for the STB to require CSX to find a separate buyer for the "other half" of PAS. At that point, NS becomes the obvious buyer of that asset; but instead of getting it through a competitive bidding process, it will be via legal requirement - which may well allow NS to buy it at a cheaper price. I think the chances of NS buying out the rest of PAS in the near future are well above 50%.

Looking in the big picture, as CSX and NS fight over large intermodal contracts (Schneider, JB Hunt, etc etc), I think there's real value for NS to be able to say, "Yes, we do Boston" - even if they don't do it quite as "well" as CSX might, they can claim to check that box. That's worth something - especially now that they've put so much capital behind the claim.

It'll be something to see the successor of the Chesapeake and Ohio, whose traditional territory includes such other names as Chattahoochee and Catawba, operating along the Penobscot and Androscoggin. I am also looking forward to seeing a C40-8 (W or not) with a PAR/MEC patch, with a CSX patch over that. Confused Kittty Cat?

charlesriverbranch wrote: ↑Sun Dec 06, 2020 2:52 pm Can we assume NS had the opportunity to buy Pan Am and turned it down? If so, that suggests they're willing to cede New England to CSX. PAS then becomes redundant. What will happen to it?

You don't have to assume.
The Dark Horse had 11 years to get off the pot. And they were given the opportunity at first crack before the official announcement back in June that Mellon was putting it up for sale..

charlesriverbranch wrote: ↑Sun Dec 06, 2020 2:52 pm Can we assume NS had the opportunity to buy Pan Am and turned it down? If so, that suggests they're willing to cede New England to CSX. PAS then becomes redundant. What will happen to it?

It is not redundant and nothing happens to it - it will either continue to be a joint operation as it is now, or NS is going to buy it out. You have the Battenkill, Vermont Rail System, North Adams/Adams traffic, Conn River North/South traffic, P&W traffic and then a plethora of Fitch/Ayer traffic all on PAS. This tonnage still needs to ply those rails regardless of what CSXT does with PAR to the East.

PBMcGinnis wrote:The Dark Horse had 11 years to get off the pot. And they were given the opportunity at first crack before the official announcement back in June that Mellon was putting it up for sale..

Is it the case that NS had the right to buy out PAR's interest in PAS at any time over the 11 years? My sense is that that is unlikely to be the case. And you can be sure that Mellon would have demanded a pretty penny had NS shown interest in buying out his half.

Regarding a 'first crack' earlier this year - not knowing anything of the specifics of the PAS agreement, I would imagine that the agreement likely provides that, if either party wants to sell their interest, the other partner has the opportunity to buy it - at a price specified by the selling party - before it goes to market. (Yes, this is pretty much unbridled speculation - but would be a very sensible way to draft the agreement.) Typically the way this would work is that the Selling party sets a price; the other party says Yes or No at that price; if they say No, and the selling party finds a buyer of that interest at less than some percentage of the originally offered price (something like 90% might be normal), then they get another crack at it. Mr McGinnis, you seem to have a good amount of inside knowledge - do you know if NS refused to buy out the PAR interest in PAS at all? Or did they turn it down at a specific price? There's a world of difference between those two alternatives...

And if my speculation above is correct, it would require that CSX allocate their proposed purchase price between the PAS portion and the PAR portion. In thinking that through, it seems to me that it would be in CSX's interest to inflate the portion of the price allocated to PAS.