CSX Acquisition of Pan Am Railways

From a strategy standpoint these guys seem to never miss an opportunity to miss an opportunity.

johnpbarlow wrote: ↑Sat Aug 28, 2021 6:29 am CP has filed comments re: its thoughts around the proposed CSX acquisition of Pan Am and downstream effects:
The Transaction marks a fundamental restructuring of the competitive incentives relating to the entirety of the New England rail map. The Board should proceed with great caution here, and condition the Transaction in a way that preserves the long-run incentives of the various parties to invest in and operate PAS’s Hoosac Tunnel Route as a no-less viable competitive alternative than it would have been absent the Transaction.

{/quote]
This is the whole of the merger. CSX will own New England rail operations, most especially in Maine, N.H. and to a high degree, Massachusetts. What is most surprising is the limited mention of the monopolistic aspects of the merger east of Ayer. Most are focused on PAS and the Conn River, but what about Maine? The STB is very interested in sustaining competition, so how will that be accomplished there?

MEC407 wrote: ↑Sat Aug 28, 2021 6:44 am Here's a wild and crazy idea: if CP loves Hoosac so much, maybe they should buy out CSX's soon-to-be 50% stake in PAS. Put your money where your mouth is, CP!

It is interesting that CP is just getting interested in this now. If they still owned the D&H South End and had a decent line between the D&H and Southern Ontario through Buffalo, they might have been a viable bidder for CSX's portion of PAS together with access to some of the customers on the old MEC.

Never thought New England freight railroading would get this interesting and/or dramatic.

CSX acquiring Pan Am given the current situation makes a lot of sense on paper. Why did / does Pan Am send so much traffic to CSX via Worcester, aren't they short hauling themselves vs interchanging at Rotterdam Jct. NY?

CP's position is interesting, on other forums on this site it was my understanding CP was trying to shutdown gateways to New England, particularly w/ VRS, esp. Whitehall, NY. Guess Mechanicville, NY is a slightly longer haul than Whitehall, NY?

NS seems non-committal regarding New England. They spent some money on the Pan-Am southern joint venture and acquired the D&H south end to maintain their traffic to New England. They don't seem to want to go full in either. They care enough to not let it go, but won't go full in either to buy pan am southern.

NotYou wrote: Why did / does Pan Am send so much traffic to CSX via Worcester, aren't they short hauling themselves vs interchanging at Rotterdam Jct. NY?

On paper, PAS is a different railroad than PAR, so any cars routed from Maine to Rotterdam would have a switching fee at Deerfield, whereas routing via Worcester keeps it solely on PAR.

Trains Magazine on-line says Amtrak has formally filed with the STB re: its views and suggested requirements for approving the transaction. I didn't see such a filing yet at the STB as of 8/30/21 but here are selected excerpts from the Trains Magazine article.

The CSX-Pan Am merger is the first before the Surface Transportation Board in which passenger trains account for the majority of traffic on many of the lines involved, Amtrak noted in a filing posted to the STB website today.

Pan Am has worked with Amtrak and its state partners to expand and improve service in recent years, Amtrak said, including the Downeaster linking Boston with Portland and Brunswick, Maine, and Vermonter and Valley Flyer service in western New England.

“In contrast, CSXT consistently has taken the approach of obstructing the expansion of passenger rail, and to limit access to its facilities, despite the fact that CSXT is statutorily required to provide Amtrak with access to its rail lines,” Amtrak wrote. “Indeed, as the Board is aware from the current Gulf Coast dispute, CSXT has a history of stonewalling Amtrak’s requests for additional service.”

As a result, Amtrak is asking the STB to impose seven conditions on any approval of CSX’s acquisition of Pan Am. They are:

— CSX should be required to fulfill all of its merger-related promises regarding passenger service. Specifically, Amtrak asks for a modification of the CSX-NS trackage rights deal to reflect a commitment that the trains will be scheduled to operate over CSX’s former Boston & Albany main line outside of the Lake Shore Limited’s operating windows and that the NS trains don’t interfere with the Valley Flyer and Vermonter service at the diamond in Springfield, Mass., where their routes cross.

— CSX should be required to negotiate in good faith with Amtrak and its state partners for service expansions, improvements, and additional weekend and seasonal service, particularly on its route between Albany and Worcester, Mass.

— CSX should be ordered to cooperate with Amtrak and its partners to identify what improvements would be required to raise passenger train speeds on Pan Am and CSX routes, then work in good faith to promptly make improvements.

— CSX should be ordered to not make operational changes that would result in a deterioration of on-time performance of Amtrak trains.

— CSX should be required to perform non-emergency trackwork during non-peak passenger periods.

— CSX should be ordered to provide for the operation of up to four weekend Berkshire Flyer trips in the summer between Albany, N.Y., and Pittsfield, Mass., within 90 days written notice from Amtrak – and without any Amtrak-funded capacity improvements.

— Amtrak also asked the board to maintain jurisdiction over the CSX-Pan Am merger to ensure compliance with any conditions imposed.

For those of you with a Trains Magazine subscription: https://www.trains.com/trn/news-reviews ... am-merger/

Oh, and while we are at it, Amtrak, how about paying the full opportunity cost of the train laden with high value traffic that cannot be operated over the B&A owing to your self centered demands.

When are you and your advocates going to learn the the Class I rail system done not exist for your convenience; it is here to handle freight traffic and provide a financial return to its investors?

I don't think the issue here is Amtrak's willingness to pay - if you read through the entire filing (it's dated 8/27), Amtrak is talking about CSX's history of hypocrisy when it comes to their public statements about affects of their actions on passenger rail and what they actually do (see the Buckingham Branch lease, among others). What they're saying is essentially, "OK CSX, put your money where your mouth is, and commit (in writing, and in a binding way) to what you're saying, without using any weasel words."

Amtrak has stated they're willingness to pay for reasonable costs, which include things like paying for the PTC that CSX said they would put in on the Downeaster route, but not things like adding an additional main line track for a single train one way two days a week...

Well Mr. Moldover, if such represents the first time that Amtrak accepts that operating trains over the Class I system represents far more of an economic loss to the roads than the apparent "bargain basement incremental cost" remuneration covers, GREAT!!!!

Perhaps then, along with the cost to reequip the LD trains if they are to continue indefinitely, someone will decide that the cost-benefit of a few more Congressional funding votes from flyover country or transportation of last resort to the can't drive wont fly constituency is simply not there and the process of an orderly discontinuance of these trains will begin.

Passenger rail people seem to think they should have unlimited access to the freight rail network without having to give the companies compensation. While freight rail people think that they should have near total control of passenger trains over their network while not having to pay for any of it. New England exemplifies this never ending conflict.

Short memories at Amtrak about Pan Am, that is for certain.

Perhaps, although it's also notable that Pan Am eventually came around and has for the most part been a better-than-average partner. They went from fighting it tooth-and-nail, to grudgingly accepting it under duress, to outright embracing it. And it's a good thing they did, because thanks to Maine taxpayers Mellon is going to get a lot more money for this railroad than he would have if it was still in pre-Downeaster condition.

Shortline614 wrote: ↑Tue Aug 31, 2021 8:37 am Passenger rail people seem to think they should have unlimited access to the freight rail network without having to give the companies compensation.

That's painting with a broad brush, don't you think? The "passenger rail people" I know all agree that the freight railroads should be compensated fairly. As far as Pan Am is concerned, they have made out very well with the Downeaster.

MEC407 wrote: ↑Tue Aug 31, 2021 1:07 pm Perhaps, although it's also notable that Pan Am eventually came around and has for the most part been a better-than-average partner. They went from fighting it tooth-and-nail, to grudgingly accepting it under duress, to outright embracing it. And it's a good thing they did, because thanks to Maine taxpayers Mellon is going to get a lot more money for this railroad than he would have if it was still in pre-Downeaster condition.

Fink Sr. and Culliford were very risk averse. The original anti-passenger move was the banishment of the railfan trips in the mid 80s. Then someone smartened up and realized they could get a new railroad and MOW salaries paid for by someone else. The trend has continued. Why not when you're only running 4 trains a day yourself?

CSX has no reason to be any different, they won't be running more than that... unlike Pan Am they'll have at least a Class 2 railroad beyond passenger territory and will be running 50 MPH if it makes sense in passenger territory. Much easier to intermingle passenger and freight with more dependable operations and velocity.

If there was a way to give you a thumbs up I would. Well said Mr. newpylong.

To all sad stock holders and others about all the objections from government and passenger rail filing against CSX. Don't forget to make a quick buck for you stock holders the freight railroads sold quite a bit of their property to the government and have fed from the trough of government money for such things as double stack clearances, rail improvements and yard improvements.
With that being said I'd say passenger rail and the government can have a lot to say about the sale. After all they are protecting their investments too thinking long term as opposed to a quick buck.

And yes I am an activist stock owner in CSXT.