QB 52.32 wrote:
gokeefe wrote:That would go against the idea that they are trying to improve their operating ratio. No price cuts coming from those guys anytime soon.
Depending upon how you define "anytime soon", CSX's 3-year plan runs through 2020 and includes merchandise/intermodal traffic growth ramped up in the out years. Adding new traffic with precision price cuts coincident with a lower cost operation, leveraged to network strengths and taking advantage of rail economics that give the biggest bang for the buck is surely an option to lower the operating ratio. To the extent their plan is successfully executed and directly or indirectly affects PAS, the time frame surely beats NS' ability to improve their New England intermodal competitive position.
CN9634 wrote:Well if any of what you suggest is true then NS wouldn't have any intermodal franchise (that grew 20% in revenue, 8% in volume at H1), and certainly not one that has the preferred routing of the #1, and #3 domestic IMCs by volume. Also, they wouldn't be considering raising the clearances in the tunnel ( which they are after doing a soft raise a decade plus ago). So unfortunately I have to disagree with what your opinion, mostly because what is actually happening is the exact opposite...
It's just simply fact that NS doesn't hold the service advantage over CSX in the Northeast, that they're a couple of days slower and more unrealiable in the Chicago-New England lane and that the UMAX Chicago interchange re-structuring is really a lot of nothing that doesn't change the situation. This does not suggest NS "wouldn't have any intermodal franchise", but one qualitatively competing more on price and less on service. And, while NS posted very good 1H18 intermodal numbers, particularly with unit revenue growth, they're at least a couple of years farther along than CSX in their plans, though already bested by a bigger than expected CSX OR leap; hauling traffic for IMC's is but one of five intermodal lines-of-business and it's interesting how very much traffic the #1 IMC gives non-preferred CSX but how the #2 IMC gives non-preferred NS none; and, when it comes to PAS, you have to ask how much of the plan to raise the tunnel clearance is really just a hope at this point given NS' inability to financially justify the cost.
Well they don't have doublestack and they deal with Pan Am, so in New England they don't hold any service advantage with their severely over capacity and inefficient Ayer ramp, no doublestack and yet another emphasis on dealing with Pan Am. CSX owns the line and has two ramps, as well as a foothold in Intransit right off their property in Worcester.... so that much is obvious for New England.
Now the Northeast... Mechanicville & Taylor cover better footprint in conjunction with Croxton & E-Rail. Then you add in Allentown, Harrisburg (Rutherford too), & Greencastle and the Northeast is locked pretty tight compared to CSX's Kearny, Philly, 'Cuse and C-Burg. Hunt has over 85,000 containers and Hub is second at about 40,000... so not only is Hunt #1 but they are #1 by more than double the next guy. So losing some volume of Hunt's in New England is just due to the low capacity at Ayer. The bad news is actually for HUB, which is choked out even worse and just sold off their MODE broker, so their New England portfolio will likely suffer... unless they buy another IMC (in the works) and hedge volumes. My point all in all is a real Ayer expansion is needed for growth in New England for NS, but in totality of their 'Northeast' business they certainly have a large share. And lets be honest.... CSX old regime's thinking was a bit off in many cases.... Valleyfield? Really?