NS and D&H agreement

Suppose that most all have heard it already- but if you haven't:

http://biz.yahoo.com/prnews/040630/dcw007_2.html

Press Release Source: Norfolk Southern Railway


CPR and NSR Move to Improve Performance of Northeastern Rail Network
Wednesday June 30, 8:42 am ET


CALGARY, Alberta, June 30 /PRNewswire-FirstCall/ -- Canadian Pacific Railway (CPR) and Norfolk Southern Railway (NSR) today signed a memorandum of understanding for an exchange of trackage rights, freight haulage and yard services that will increase operational efficiency and enhance rail service to customers.
CPR (NYSE: CP; Toronto) announced in June 2003 it was restructuring its northeastern U.S. operations and was seeking proposals for ways to increase freight volumes, reduce operating costs and improve earnings. CPR's northeastern U.S. network is operated as the Delaware and Hudson Railway.

"This agreement with NSR opens up new opportunity to move our northeastern U.S. franchise into a position of profitability," Rob Ritchie, President and Chief Executive Officer of CPR, said. "We expect the changes will generate higher traffic volumes and revenues, greater productivity and lower operating costs."

David R. Goode, Norfolk Southern Chairman, President and Chief Executive Officer, said, "This is an excellent example of railroads cooperating to better serve our customers. We will be able to jointly provide transportation solutions that will improve efficiency and quality of service for both carriers in the northeast U.S."

Under the agreement, CPR and NSR will consolidate freight marshalling at yards in Buffalo and Binghamton, N.Y.:

* CPR will cease yard operations in Buffalo, shifting all freight
marshalling to the NSR yard there.

* Similarly, NSR will shift its yard operations in Binghamton to CPR's
East Binghamton yard.


There are three major components to the new trackage rights and freight haulage arrangements between CPR and NSR:

* CPR will be able to move NSR freight traffic between Rouses Point and
Saratoga Springs, N.Y., under a haulage arrangement. NSR will operate
its own trains over CPR's line between Saratoga Springs and
Binghamton, N.Y., under a trackage rights arrangement. The
arrangements will generate higher revenue for CPR and provide NSR with
a substantially shorter route to Quebec and the Maritime provinces.

* CPR's freight traffic between Binghamton and Buffalo, N.Y., will move
in NSR trains under a haulage arrangement, replacing a trackage rights
agreement under which CPR operated its own trains between the two
cities. The arrangement will reduce CPR's operating costs and
generate additional revenue for NSR.

* CPR will operate over a new NSR route using existing rail lines
between Detroit and Chicago under a trackage rights agreement. It
will be the shortest rail route between the two cities and will
provide CPR with a faster, lower-cost lane.


"CPR's challenge remains to take this part of our network to a level of profitability that will make it self-sustaining," Mr. Ritchie said. "We are prepared to examine additional measures that, in concert with our NSR agreement, will further optimize our assets and drive up profitability."

New trackage rights arrangements and the discontinuance of trackage rights require approval of the U.S. Surface Transportation Board.

Mr. Ritchie will hold a conference call with analysts and reporters today at 3:30 p.m. Eastern time to discuss details of the agreement with NSR. The telephone numbers for the call are 1-800-814-4857 or 416-640-1907. Callers should dial in 10 minutes prior to the call. A telephone replay of the call will be available through July 7 at 1-877-289-8525 or 416-640-1917, pass code 21056014 followed by the pound key. The call will also be webcast live on CPR's website, http://www.cpr.ca. To access the webcast, click on Investor Information and choose Investor Presentations. The webcast will be archived through July 30.

Canadian Pacific Railway is a transcontinental carrier operating in Canada and the U.S. Its 14,000-mile rail network serves the principal centres of Canada, from Montreal to Vancouver, and the U.S. Northeast and Midwest regions. CPR feeds directly into America's heartland from the East and West coasts. Alliances with other carriers extend its market reach throughout the U.S. and into Mexico. Canadian Pacific Logistics Solutions provides logistics and supply chain expertise worldwide. For more information, visit CPR's website at http://www.cpr.ca.

Norfolk Southern Railway operates 21,500 routes miles in 22 states, the District of Columbia and Ontario, serving every major container port in the eastern United States and providing superior connections to western rail carriers. NSR operates the most extensive intermodal network in the East and is the nation's largest rail carrier of automotive parts and finished vehicles. For more information, visit NSR's website at http://www.nscorp.com.

I would assume this would remove some trians from the Tier and Make the existing ones much longer? How ill it affect the Yard setup in Buffalo?

Brooks

So I guess this means no more CP /D&H down on Bailey Street?

-otto-

Would take it no more orange/pink SD40's on the Tier....

Tom H>

CSX is also a loser in this since CP traffic will be routed off its line between Chicago and Detroit via Grand Rapids.

It raises a question about impact on Guilford operations. Will NS assume full responsibility for handling coal train to Bow and Mt. Tom, save for operation east of Mechanicsville. Will interchance between NS amd GRS increase? Will they use Mechanicville or another location.

An article in Albany paper Thursday said CP would close Buffalo yard and move to NS's. NS will leave its Bingo yard for CP's East Binghamton facility.

I wonder how interchage with the O&H especially will be affected with CP terminating trackage rights. I would guess that D22 will become H## in the not so distant future.

The WCRR (Wellsboro Corning) also supposedly can interchange with the D&H at Gang Mills. Looks like more work for the NS locals.

Tom H>

I guess that would depend on any power pooling agreements between CP and NS.

thannon wrote: Would take it no more orange/pink SD40's on the Tier....

Tom H>

I would think NS would keep it black.

Likewise the orange and black CN units will disappear too.... looks like the Tier will be monotone.

Tom H>

Since there will be only one yard in Binghamton, I wonder if NS might consider building a connection from the former Erie to the forler DL&W east of the yard?

When the original study was done prior to the DL&W/Erie merge, one of the $$saving moves was to build a bridge between the two lines at Great Bend, PA so the Delaware division trains went right onto the Scranton division and onto E. Bingo yard. The cost of the bridge over the Susquehanna river stopped it.

I think a proposal to connect ex-Erie to ex-DL&W at Great Bend, PA is an excellent idea. The two lines are only ~ 1/4 mile apart with no obvious obstruction other than the Susquehanna River. This could also permit a simplification of the interlockings at BD as the ex-Erie main would be superfluous there - maybe NS/CP could eliminate the current situation where the route from Conklin to the ex-D&H crosses the route from Conklin to QD via the ex-Erie.

Couple other questions: what will become of the majestic NS Binghamton yard? Will NYS&W pick up the 3 or 4 tracks? I assume Tier route NS crew changes will still be done at QD?

You won't see a bridge built at Great Bend as long as the traffic on the Delaware remains so piddly. There just isn't any justification to spend that kind of money for SU99/100 and a handful of H locals.

As to simplifying BD, that would be nice, but they don't even have the money to build an Erie-DLW westbound crossover that would eliminate a backup move through the eastbound Erie-DLW crossover in order to give NYSW trains off the Delaware a straight shot north.

If a crossover on solid land right at BD is economically unfeasible, any other solution requiring bridge construction would be even further down the wishful thinking list.