CSX Acquisition of Pan Am Railways

Bill Stephens’ take:

http://cs.trains.com/trn/b/observation- ... lways.aspx

Mr. Stephens seems just as confused as we are about this, even with all his insider knowledge that we don't have. It seems to me that CSX is looking to buy Pan Am, just for the sake of buying Pan Am. If CSX does emerge as the winning bidder, it wouldn't be the first time this happened.

The Gang from Wall Street that backed Hunter Harrison cashed out over a year ago. They stripped CSX to the bone with PSR, ruined 100s of employee lives and stuffed their pockets with the savings. So now the investors left have a railroad that has no growth potential if it continues as EHH left it. So the only way to grow now is spend and expand. They have obviously found the traffic in Maine and New Brunswick worth investing in. They already handle a good chunk more of the traffic than NS does. One just count cars on Q427/POSE versus 11R.

Yep - CSX is finding themselves in the same post-EHH world that CP did a few years back. That is, a railroad that was "right sized" (ie shrunk to operate qs cheaply as possible, not provide good service) and now is growth capped without taking on new opportunities.

Two takeaways from TRAINS Mr. Stephens' material. Either he overlooked the maritime traffic potential we have invested many bytes discussing, or he thinks such is not of consequence. If the latter, we are "Murphy"; a Goldendoodle I often care for who sees a squirrel making tracks for a tree, but he still must bark at it.

After reading Mr. Stephen's report, I think he could have easily written it just from reading this thread. There is no real insight or new information there.

I do however want to note these paragraphs:

The problem is that much of Pan Am’s growth depends entirely on having a local commercial team that can connect the dots and meet with customers regularly to see projects come to fruition. And some of Pan Am’s traffic moves in relatively short hauls, either entirely on its own rails or in conjunction with connecting short lines.

All this is the bread and butter of regional railroads. It is not what Class I railroads do, and if CSX were to acquire Pan Am it is likely that virtually everyone at Pan Am headquarters in Billerica, Mass., would be sent packing.

This is exactly why I suggested the creation of a joint venture New England version of CONRAIL for Pan Am a while ago. This is what is needed. A semi-autonomous subsidiary that functions as a funnel for traffic to and from both CSX and NS at Ayer, but also is capable of expanding existing customers and finding new business along the system throughout New England.

This would be optimal and it would be the biggest news and best opportunity in New England railroading since the PAS Patriot Corridor in 2008. I so hope this is what comes to fruition after the dust settles.

Bingo.

CP said it perfectly with the CMQ acquisition... unless you count the A2A Railroad, no new major rail lines will ever be built.... you want to expand the network and footprint, you do it by buying. And the Pan Am's of the industry don't come for sale but (also a well put CP phrase) 'generationally'. You don't buy the RR for what it is now, but for what it will be in the future...and you buy because if you don't, you'll never have the chance again.

There is a substantial amount of freight traffic moving in and out of Maine and the Maritimes that moves adverse to Pan Am that CSX should be able to get it’s hands on with this new routing option. Seems like CP may have the most to lose if this ends up happening.

I can't believe we are talking about CSX successfully acquiring Pan Am. This is an improbability of improbabilities. I do accept the theory that this purchase is oriented around future growth. That makes more sense than almost any other theory we have entertained to date. It is certainly beneficial to Maine to have improved connections to New York.

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although, if true, presumably not so good for those Maine folks employed at the Waterville shops. If csx were to buy, I can't see them keeping that given the downsizing and closings at their existing shops in recent years (Erwin, Cumberland, etc).

No way to know for sure. They have to keep something to support New England and Waterville is as good as anything out there.

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No it's not. They only need Selkirk for heavy repairs if the RR is 40 MPH. The Waterville back shop would likely go away. They'll still need a place to fuel, sand and inspect, light repairs etc.

Waterville would probably be downsized to a certain extent. The areas of the facility dedicated to heavy rebuilds and car/locomotive painting would be redundant and no longer needed, but they'd still need a place in Maine for refueling, minor wheel/truck repairs, and routine maintenance.

For what it's worth, the average age of CSX's locomotive fleet is 20 years, compared to 34 years for PAR's fleet. If PAR hadn't bought the GEs, the average age of their fleet would be 50 years.

Maybe NS was aboard this latest OCS run? LOL

newpylong wrote: ↑Tue Nov 17, 2020 7:13 am No it's not. They only need Selkirk for heavy repairs if the RR is 40 MPH. The Waterville back shop would likely go away. They'll still need a place to fuel, sand and inspect, light repairs etc.

Right the Waterville backshop and work equipment shop will be shut down right away. They probably could use a running repair/fueling shop in Maine, but the Waterville engine house is going to be too out of the way and old. There will only be a couple of other units outside of Portland and the PORU/RUPO service after the service is streamlined, branches pruned and the remaining mill switchers contracted out (Rileys loco/crews, SAPPI loco only). Look for the main part of Rigby to be cut back to about 10 tracks too. If they are smart they will pull every other track to make it easier to plow in the winter.