CMQ Profitability

[backroadrails]

If I recall a company is still taking logs at Searsport.

[CN9634]

They sure don’t have much on-line business left in a Maine besides some propane and some tank car traffic down in Searsport. Hard to imagine they’re very profitable these days.

Some propane? They've got a ton of LPG going in, they ran an extra job on Sunday with 3 SDs and mostly LPG down to NMJ. Granted, it's seasonal traffic, but many of their LPG customers expanded between last year and this. As for online traffic, they have a good bit of traffic off the MNR wrapped up since the NBSR operates its properties like a terminal RR (IE connecting railroads come in and quote customers directly) and the bridge to Saint John of course will be the most important connection.

The cross lamination lumber plant for Millinocket was never on the radar for rail service. The LMS loss is a blow for sure, perhaps a new warehousing solution will present itself. Otherwise, things are growing steadily (new business online in Canada too). Let's see what happens in 19'Q1 if they start seeking interested parties in a sale and if so, hopefully its not someone like GWI that comes in.

[MEC407]

...hopefully its not someone like GWI that comes in.

Why hopefully not GWI?

[CN9634]

Resources become rationalized between all the Northeast RRs as that is an operation region (See growth of SLR before vs after GWI ownership)... and everything turns Orange.

[KSmitty]

...The LMS loss is a blow for sure, perhaps a new warehousing solution will present itself...

What LMS loss?

[rr503]

Resources become rationalized between all the Northeast RRs as that is an operation region (See growth of SLR before vs after GWI ownership)... and everything turns Orange.

Was SLR growing much before GWI? Seems that they have economic/structural winds against them, no?

[backroadrails]

What LMS loss?

https://bangordailynews.com/2018/12/20/ ... -facility/
That should explain it.

[backroadrails]

It should be noted that LMS ownership never transferred to CMQ, but is still owned by Ed Burkhardt.

[KSmitty]

Well that sucks, but could be good news for Pottle's and Pan Am on the other side of the junction...

[CN9634]

Resources become rationalized between all the Northeast RRs as that is an operation region (See growth of SLR before vs after GWI ownership)... and everything turns Orange.

Was SLR growing much before GWI? Seems that they have economic/structural winds against them, no?

Yes. After GWI ownership a lot of folks jumped ship or were given 'better' positions elsewhere on GWI properties. The A Team essentially got split up... also Matt Jacobson's departure in 2001 wasn't very helpful either considering what he brought to the table.

[backroadrails]

Well that sucks, but could be good news for Pottle's and Pan Am on the other side of the junction...

From what I have been told the warehouse was used to move and store paper from Twin River Paper, and OSB from Huber, where it would be trucked out as needed. From what I have heard, the product will most likely just move by truck now from the mill(s). The new company will most likely not use rail since their wood for window frames comes via container, and would require a IM terminal. And even then I read that they only get like 8 containers a year making it not cost effective.

[roberttosh]

They sure don’t have much on-line business left in a Maine besides some propane and some tank car traffic down in Searsport. Hard to imagine they’re very profitable these days.

Some propane? They've got a ton of LPG going in, they ran an extra job on Sunday with 3 SDs and mostly LPG down to NMJ. Granted, it's seasonal traffic, but many of their LPG customers expanded between last year and this. As for online traffic, they have a good bit of traffic off the MNR wrapped up since the NBSR operates its properties like a terminal RR (IE connecting railroads come in and quote customers directly) and the bridge to Saint John of course will be the most important connection.

The cross lamination lumber plant for Millinocket was never on the radar for rail service. The LMS loss is a blow for sure, perhaps a new warehousing solution will present itself. Otherwise, things are growing steadily (new business online in Canada too). Let's see what happens in 19'Q1 if they start seeking interested parties in a sale and if so, hopefully its not someone like GWI that comes in.

LPG business may be strong (what, 10-15 cars per day?) but it’s only that way for 4-5 months per year and isn’t gonna pay the bills come July. In addition, all traffic off the Irving roads is highly competitive open access business with Pan Am and CN both in the picture so profit margins are nowhere near what you see with on-line customers, like they used to have when the mills at Millinocket were still operating. Not as familiar with the Canadian side but just don’t see a real bright future for their Maine Ops with all those operating miles and so few significant on-line customers.

[CN9634]

The past year of traffic and revenue is available at FTAI.com so you can familiarize yourself if you so wish. In terms of not paying the bills, they have been doing so for at least two years now as they again are a profitable enterprise.

Not sure why you don't see a bright future in Maine, GAC just added a new unloading track, all the LPG guys expanded and they pulled off some new business such as Cement going to Lane. Not to mention, they locked up paper traffic out of Twin Rivers going west as well as some grain/ag traffic going into Detroit on PAR. The Canadian side is no doubt the largest profit center, but the Maine side can hold its own.

To re-emphasize-- they are a profitable and growing enterprise (18'Q3 nearly 6500 carloads a new record, slightly less than 10% of that was LPG out of season) so if we are talking about a potential sale then I'm sure there are some interested fish out there.

[roberttosh]

I don't doubt that they are profitable/growing and some onesie-twosie cement and feed moves are no doubt feel good marketing stories, but they don't compare to customers like Sappi, Verso and ND Paper that handle 30-40 high revenue loads a day, 7 days a week, 52 weeks a year. The Twin Rivers traffic sounds good on paper but my guess is that it's not much of a money maker since they had to outbid CN and Pan Am to win such overhead traffic. I guess we'll have to agree to disagree on whether 6500 cars per quarter, which comes out to roughly 71 cars per day (much of it lower profit overhead traffic) over what's nearly a 500 mile system is going to attract a lot of interest...

[backroadrails]

It should be noted that both Pleasent River Lumber and Moose River Lumber are expanding their production, and are expecting to move more by rail. Moose River added another log unloading area last winter in Jackman to accommodate more log cars. Once the expansion at Jackman is complete I believe they will be taking a combined total 20 log cars and center beams. As to Pleasant River their mill doesn’t have direct rail access so I am not sure what the totals for that mi would be.