CSX Acquisition of Pan Am Railways

Thanks for posting the links to the two transcripts. I skimmed both and basically come away with the sense that the STB and others are A-OK with CSX acquiring PAR north of Littleton but there is CP and STB consternation over (1) CSX being half owner of PAS (even with B&E as operator) and (2) NS moving its time sensitive double stack/auto traffic to CSX perhaps deprecating the future value of and investment in the PAS east-west route through Hoosac Tunnel. CSX and NS protest that's not the case.

To me, it seems a bit ironic that CP publicly says it's OK with CSX offering single line service on a vastly upgraded line to Mattawamkeag to compete directly for CP's Irving/Saint John traffic but then has agita over the potential for PAS D3 to be downgraded in status/investment where CP has very minimal interchange traffic.

As I see it, what CP presented publicly to the STB as a rightful stakeholder within the existing regulatory framework for what they saw as a challenge-worthy risk of diminished rail competition moving forward into the future with CSX's proposed half ownership of PAS (and for which they have received negotiated conditions by doing so) jives with what they saw as having no worthwhile case within that public regulatory framework for CSX's proposed purchase of PAR already CSX-conditioned, importantly, with open gateways on commercially-acceptable terms. Surely, if they thought their efforts would have been worthwhile and/or necessary, they would have pursued the same public course with the STB for the PAR portion of the proposed transaction as they did with PAS.

The CP concerns are unmerited and while I am sure they will be given due attention, not likely to effect the course of the decision or conditions.

As NS (rightly so) strongly stated, CP is barely moving any tonnage over the line and had a chance to become a partner if they really wished to retain the status quo. They did not. Expecting any type of condition (especially maintaining track to a specific FRA class) when you have no current haulage/trackage is kinda ridiculous. I think NS and CSX were right to brush off the CP concerns and focus on the ones with true merit.

A settlement agreement was reached between CSX; PAS; NS and G&W on the one hand and CP on the other, submitted to the STB on 1/21/22, and will be made a condition if CSX is successful in its bid for half of PAS. So, obviously CP's concerns were judged to have some level of merit and with some scope of CP's concerns addressed by CSX et al., if even for the sensitivity as to how today's STB will judge the non-competitive nature of this part of the transaction. It'll be very interesting to see how the STB rules on the PAS part of the transaction and if it's denied, what might unfold from there.

I don't think CP had a leg to stand on in terms of any arguments about the PAR part of the acquisition, as CSX's entry into SJ will only serve to create more competition. CP is no doubt a lot more worried about CSX's entry into Maine and SJ, but could really only raise concerns about the PAS side of the deal.

For those who watched this portion of the hearing, it was amusing to see CP stumble before the board.
CP arrived without any reasoning as to how or why CSX owning 50% of PAS would be detrimental for them. Chairman asked the CP rep where is his report, charts, numbers, graphs and supporting information to support CPs opposition. Oberman dismissed CPs claims telling them come back when they have supporting evidence. Chairman Oberman also prominently made it a point to the CP rep that CP cannot take legal action against NS in regards to PAS, as NS is a non applicant participant.

Having watched the hearing initially, after reading your description of CP's presentation to and interaction with the board, I watched it again. I would recommend that you do the same because the characterization and detail you posted is off the mark. There was no "stumbling" as you've represented, nothing was "dismissed", and no one was told to "come back when they have supporting evidence".

CP's position was focused upon the anti-competitive nature of CSX gaining 50% ownership and control in PAS as the 100% owner of a parallel competing route, protecting against long-term competitive harm and preserving their position. On multiple occasions you've written that CSX and NS are "in bed together" planning to move everything off of and seriously degrade the Fitchburg, so it makes sense CP is protecting its position either by preventing that or putting themselves in the strongest negotiating position should that be pursued, no? After all, it is a long game.

As I see it, CP has been reasonable, no matter their motivation: they sought what they thought legitimate from their point of view, and germane, conditions within their rights for the STB to consider, supported CSX's purchase of PAR, did not support divestiture of PAS within the deal, and, ultimately reached a voluntary settlement with CSX, et al. that will condition the transaction that goes to, to some degree, the merit of their position.

Yet those conditions are not part of the public record (yet). So we do not know if what was settled differs from the ask (which some here and NS argued as BS).

End of the day is, no other Class I has come forward to pickup the other 50% of PAS (yet). NS had opportunity (and still does under the buyout clause), and CP was asked too.... STB has no real alternative at this point... if the deal goes away the benefits to shippers does too. No surprise no shippers have opposed this deal either.

Reviewing the three immediate posts, I must question what use the "West End" of the PAS E-W, "Route of the Flying Yankee" is to any of the "players"?

It seems destined to become a Class 2 "secondary line" to whoever ends up operating it (the Short Line Genesee is prepared to form or others) with a long tunnel that has clearance restrictions and could have a "cave in" whenever it chooses.

Yes, it could represent a competitive routing for Topper to the Boston area, but the discussion here has established the acquisition is all about serving Maine and Saint John. So far as being a player, Topper has bolted to the paddock.

CP has plenty of opportunity to serve Saint John with its "reacquisition" of the CP-M. With its soon to be expanded System, it can handle on its own lines traffic, of course, to anywhere in Canada, but also to the US Midwest and with a more favorable, divisions wise, interchange with Uncle Pete or Warren. at Kansas City.

CP is, however, at a disadvantage to handle traffic to the Southeast, as while it could circuitously handle such through Montreal and the D&H to Albany, it would have to give it up there to Chessie or Topper - uh "not exactly" a friendly connection.

Hey, but as Mick says.....

Other than a very big Butane lane to a BNSF point in TX, most of what is shipped on or off of the Irving roads is East of the Mississippi business, so CP's acquisition of the KCS will not help much in terms increasing their marketshare.

newpylong wrote: ↑Mon Mar 21, 2022 12:08 pm Yet those conditions are not part of the public record (yet). So we do not know if what was settled differs from the ask (which some here and NS argued as BS).

The settlement agreement has been made part of the public record (except for one likely important redacted part) filed on 1/21/22 with the STB, docket # FD_36472, Filing ID # 303576 and is available on the STB website.

Gilbert B Norman wrote: ↑Mon Mar 21, 2022 3:32 pm Reviewing the three immediate posts, I must question what use the "West End" of the PAS E-W, "Route of the Flying Yankee" is to any of the "players"?

It seems destined to become a Class 2 "secondary line" to whoever ends up operating it (the Short Line Genesee is prepared to form or others) with a long tunnel that has clearance restrictions and could have a "cave in" whenever it chooses.

Yes, it could represent a competitive routing for Topper to the Boston area, but the discussion here has established the acquisition is all about serving Maine and Saint John. So far as being a player, Topper has bolted to the paddock.

It isn't destined to become a Class 2 "Secondary Line", that is exactly what it is today for all intents and purposes. Yet it will be the B&E mainline, so take from that what you may.

QB 52.32 wrote: ↑Tue Mar 22, 2022 8:19 am The settlement agreement has been made part of the public record (except for one likely important redacted part) filed on 1/21/22 with the STB, docket # FD_36472, Filing ID # 303576 and is available on the STB website.

Thank you, not sure how I missed that in my prior search.

It looks like not everything that they requested in their Powerpoint at the hearing made the cut (as expected).

This may be apropos of nothing but I observed CSX Q427 pass the Palmer MA live cam at 2000 Thursday 3/24/22 with a block of 40 CP covered hoppers in the its consist. I'm guessing these were grain empties heading west from Ardent Mills at Ayer - in my observation the grain traffic to the Millings generally arrives as a BNSF or UP unit train. Perhaps CP is now actively trying to increase its generally low level of interchange traffic into southern New England? Assuming this was CP originated grain, it's interesting that it was interchanged to run via "the Southern Route" rather than the PAS route that CP is lobbying to keep open and relevant post acquisition.