• What's next for MMA?

  • Discussion of present-day CM&Q operations, as well as discussion of predecessors Montreal, Maine & Atlantic Railway (MMA) and Bangor & Aroostook Railroad (BAR).
Discussion of present-day CM&Q operations, as well as discussion of predecessors Montreal, Maine & Atlantic Railway (MMA) and Bangor & Aroostook Railroad (BAR).

Moderator: MEC407

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  by MBTA1016
 
From what I have read or heard about this railroad since the crash, I think this has be one of the few nails left that have to be put in the coffin for this railroad(no offense intended to those lost in the disaster or their families). knew nothing and never heard of MMA until this disaster and I'm just basing my $.02 cents from what I learned about MMA.


Nice job on MEC407's part to make a separate thread about what could be next for MMA.
  by mbhoward
 
fogg1703 wrote: I concur with the general consensus that bankruptcy is likely, however this is a great opportunity for CP to regain the Moosehead at a possible bargain price.
Gilbert B Norman wrote: Now there is the possibility that CP may give the MM&A properties a second look - costs of rebuilding to at least Class III notwithstanding. When the decision to bail out was made, North American crude was simply in its infancy (geologists have known it was there for at least 100 years; I knew it since taking Geo 101 during 1962. At even $60bbl it just was not economical to extract). At one time the Irving Oil refinery was receiving shipments by ocean carriers from the Middle East - now the tide has turned and they are exporting refined Canadian oil from there.
It seems to me any decision to buy the RR, (or make any investment for that matter), will depend on the return that could be generated over the out years. I've seen estimates for rebuilding RRs that work out to $1M a mile. That is for reactivating abandoned lines to Class III status. Since the MMA isnt starting from scratch costs will not be that high and the new buyer might not bother to go to Class III but there will still be some sort of investment required to upgrade the line. Authorities will not approve the sale or takeover just to maintain the status quo. So, even if the investment is half that amount, or let's say a quarter, that's still $250K a mile.

According to the MMA website, the network is 510 miles. That works out to a boatload of money. Even if you assume the RR could be bought for nothing out of the court system after a bankruptcy, and if you pare back the number of miles that will be upgraded to the main line that runs Montreal to Brownville Junction, perhaps even reduce the $ per mile further to $150K, you are still looking at an investment that could hit nine figures. Do the returns on the current business level justify that level of investment? Does the future oil hauling business opportunity really look that large?

Will Irving be willing to guarantee a certain level of business? Buying the RR for themselves is an option that's been discussed on this thread but it seems to me that would involve a strategic shift in their current business into another field. I wonder if they are really willing/anxious to do that. The few miles of track they have now does not compare to the responsibilities they will face if they buy a regional RR.

My take on the future of the line is MMA doesn't survive, and the line defaults to the government. I do not see any investor coming in and making the investment that will be required. I would love to be proved wrong but I think things are looking very bleak.
Last edited by mbhoward on Mon Jul 15, 2013 1:23 pm, edited 1 time in total.
  by JimBoylan
 
To answer previous questions about who determines routings and which railroads to use, it's any or all of the above, plus others, with footnotes!
In the United States of America, before deregulation, the Shipper could specify the routing, if left blank, the originating railroad's Agent did, and was usually required to pick the cheapest route. Anyone else,like the receiver, buyer, manufacturer, payer of the charges, middleman, possible intermediate railroad, etc., could try to influence the shipper's or agents decision. After deregulation, many railroads said that they were no longer required to chose the cheapest routing if someone else didn't give proper instructions.
But, this involved transportation in Canada. I don't know what the regulations and customs are up there.
The place and time of the change of ownership of a shipment can also be negotiated between the various parties to the transaction.

In the other thread, I asked Ken Patrick to post the Waybill and Invoice that he quoted.
  by fogg1703
 
It is roughly 275 miles from BJCT to Iberville where CP owns the track. Are track conditions that bad that a total rebuild is necessary? Something tells me if Irving takes over a lot more traffic will be headed across Maine.
  by KEN PATRICK
 
i roughly calculate that mm&a division for this train was $1443/car. a total of $105k for this move. not too bad for a move with probably $20k out-of-pocket. the bakken will soon be up to 1mil barrels/day so future moves will be available.
what happened in megantic resulted from a foolish operation not infrastructure failure however the litigation will bankrupt mm&a. i'm sure their preparing their filing now. the emerging entity should be clean and viable. i believe cp will fashion a joint operation with irving to operate this resource in a proper fashion. ken patrick
  by BandA
 
Is the Canadian portion a seperate legal entity? Then only that portion will need to file bankruptcy. But depending who buys the Canadian portion in backruptcy, the US section may get squeezed.
  by mbhoward
 
fogg1703 wrote:It is roughly 275 miles from BJCT to Iberville where CP owns the track. Are track conditions that bad that a total rebuild is necessary? Something tells me if Irving takes over a lot more traffic will be headed across Maine.
OK, 275 miles or so makes the investment more manageable, but even if you lower the cost per mile down to $100 K, that's still a sizable investment. I don't think a total rebuild is in order but I do understand its much more expensive to upgrade a line's capability to a higher class than it is to perform scheduled maint to keep a line at a current level. Considering how long it's been since the line was maintained by CP, who presumably maintained to at least Class II or III standards, I can't help but suspect a heck of a lot of work needs to be done.
KEN PATRICK wrote:i roughly calculate that mm&a division for this train was $1443/car. a total of $105k for this move. not too bad for a move with probably $20k out-of-pocket. the bakken will soon be up to 1mil barrels/day so future moves will be available.
So that's approximately $85K for the move? I read somewhere else online ( perhaps in this forum, I can't remember) MMA makes two moves a week. So figure around $170K a week they earn on the oil move alone? In May, MMA reported to the ME DOT they moved 347k barrels of oil through the state. I assume the bulk of that was west to east, to the Irving facility. Does anyone know or has anyone heard what the capacity of the Irving facility is or if there are any plans to upgrade to handle a greater volume of oil?

It seems to me the ROI would be waaayyyy out to the right. Any investor would need deep pockets or be very patient.
  by CN9634
 
Massive layoffs at both the US and Canada operations...
  by MEC407
 
Letter to the editor in today's Vancouver Sun, regarding one-man crews:

http://www.vancouversun.com/crews+would ... story.html" onclick="window.open(this.href);return false;
  by gokeefe
 
CN9634 wrote:Massive layoffs at both the US and Canada operations...
Sorry for asking the obvious. Is this a prediction or a report of activity?
  by CN9634
 
Sorry to clarify it is a fact George.
  by gokeefe
 
CN9634 wrote:Sorry to clarify it is a fact George.
Too bad. Just when things were starting to really turn around.
  by Roscoe P. Coaltrain
 
Over on the Trainorders website, Ross Rowland has been pretty active, in numerous threads, at defending Ed Burkhardt. In one thread, he also criticized the Canadian way of life as "socialistic"

Personally, I wonder if Ross has a substantial investment in RailWorld, and thus is speaking from a reactionary point of view.

As background, here is a 1983 newspaper article on Ross, a feel good story about him taking his private railcar to see his dad in Hendersonville NC. It talks about him making his money early in life from speculating in the commdities markets, which has allowed him to "play with real trains" later on in life. Remember, 1983 was after the Freedom Train gig but before the whole ACE-3000 epsiode. Since then, Ross has had more than his share of other stillborn projects, lots of talk that never really went anywhere. The article says Ross was age 42 in 1983, so you can do the math on that.

http://news.google.com/newspapers?nid=1 ... 90,4811144" onclick="window.open(this.href);return false;
  by KEN PATRICK
 
jim boylan- i was theorizing not quoting from the waybill covering this move. i'm sure the actual waybill is now part of the legal effort. other posts support my post re: lading title and routing. ken patrick
  by JimBoylan
 
Actually, the Bill of Lading from which the Waybill was prepared is more authoritative and closer to the source. Even it might not reflect any sale or change of ownership of the oil that happened after the shipment was given to the originating railroad.
Was the Bill of Lading negotiable, that is "To the Order" of someone? Then, the oil would be owned by whoever has the Bill of Lading Bill of Lading, properly endorsed.
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