CSX Acquisition of Pan Am Railways

[lightbulb]

Why only consider the Class 1's? Genesee & Wyoming Inc offers one of the best cases when it comes to the value of PAR and PAS (half or whole) that could be derived from market and cost leverage while also pretty much maintaining Class 1 competition status quo in New England. Even along the Conn River/Hartford Line & branches given rights already in place, VRS, and CSOR's main role of acting on behalf of CSX and not independently, I would think the argument would hold.

I doubt GW would be allowed to buy up anything in the Boston area since they would then have a monopoly. Personally it looks like PAS and PAR would be best split up between two or more companies. Not sure who would want PAR besides CP. I doubt any Class 1 would want any of the locals, or branch lines on PAS or PAR. I suspect they would spin those off or embargo the businesses on them.

[roberttosh]

I think anyone, including the class ones, would want to operate the Rumford and Hinkley branches as that’s where so much of the business is.

[newpylong]

There aren't really many branches left for a potential buyer to jettison. What is left is longer but generates solid revenue or short enough where the revenue it generates is worth keeping, or else Pan Am would have ditched them a long time ago.

Re: G&W - I don't think the STB would allow for them to get the entire system. That would prevent several interchange partners from reaching more than one carrier where possible and essentially give G&W a monopoly on all traffic to and from New England outside of the B&A which has a limited reach.

[gokeefe]

So Mr. O'Keefe, it appears that rails East of Ayer are passenger only?

Not at all. What I was getting at was CP coming down from the north Northern Maine Junction - Waterville - Portland - Lowell Junction - Ayer.

As of yet CN's reasoning seems to be either interest in a Class II railroad cutoff front the rest of their system (but with several friendly interchange partners in NECR and SLR), a defensive move against CP locking down originating traffic sources (and consequent routing) or a combination of the two.

CP would then interchange either at Ayer with NS or just complete the loop and run all the way through to Mechanicville either staying in the Joint Venture with NS (seems unlikely but "who knows") or buying them out entirely.

It is well worth remembering that as newpylong says the STB seems unlikely to allow a merger which gives one carrier leverage over the Northern New England traffic. Pan Am has been a useful neutral Class II carrier that has prevented a Class I from dominating Northern New England.


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[Cosakita18]

Would the STB allow a CP acquisition of PAR at all? Taking ownership of PAR east of Ayer would give CP a near total rail monopoly in Maine. The only truly independent player would be SLR, since NBSR will likely be joined at the hip with CP via trackage rights in the near future.

[MEC407]

Right, I don't see how the STB could say no to CSX or G&W without also saying no to CP.

[Gilbert B Norman]

So Mr. O'Keefe, it appears that rails East of Ayer are passenger only?

Not at all. What I was getting at was CP coming down from the north Northern Maine Junction - Waterville - Portland - Lowell Junction - Ayer.

You have a point, Mr. O'Keefe, and with my Fairfield Navy Cadet background, I should have known that even if the Compass Rose shows a heading of NE (45dg), you are still sailing "Down East" owing to the prevailing SW winds along the New England coast.

Then possibly I should have stated that the rail lines heading Eastward towards Boston from Ayer are substantially passenger, aside from the one freight Mr. Lightbulb has noted.

I can't help but note that at the Port of Boston's website, they have no mention whatever of rail transport. That to me means a shipper, if he wants rail, must first contract with a trucking company to handle the container from the Port to Ayer, then separately contract with either (for the moment) PA or CSX to further handle the shipment. I would think that if either road were making rates from the Port, and they contracting with a motor carrier to provide transfer service, that would have been noted at the site. But since rail in Boston seems only to mean passenger, can't be too surprised.

Finally, I can recall once during my Cadet days, we once caught a "Dry Easterly" and we sailed from Buzzards Bay all the way Westward "up the Sound" to Greenwich on a Broad Reach. So much for "Downeast" on that sailing .

[newpylong]

Would the STB allow a CP acquisition of PAR at all? Taking ownership of PAR east of Ayer would give CP a near total rail monopoly in Maine. The only truly independent player would be SLR, since NBSR will likely be joined at the hip with CP via trackage rights in the near future.

I think there is slim to no chance that CP would want the entire system so coming into Maine from the south likely is irrelevant. I believe it's either going to be split up between players or someone independent like Watco will take the whole thing. There's also an off chance CN takes the whole package as well and operates it as an isolated US Subsidiary.

[roberttosh]

No shipping company is going to use the port Boston for inland rail distribution when there's a 50 mile dray involved to either Worcester or Ayer, especially when you consider there's around a dozen on rail facilities up and down the Atlantic seaboard.

[Cosakita18]

I think there is slim to no chance that CP would want the entire system so coming into Maine from the south likely is irrelevant. I believe it's either going to be split up between players or someone independent like Watco will take the whole thing. There's also an off chance CN takes the whole package as well and operates it as an isolated US Subsidiary.

So the question is: Where would the line be split? Ayer seems the most obvious, but Rigby, Danville or Waterville could also make sense in some circumstances.

[CN9634]

Some interesting news today, WATCO announced a $310M acquisition of some DOW chemical rail assets (Without looking into much so far I assume their chemical plant rail switching operations). From a pocketbook standpoint, that doesn’t exclude WATCO from a Pan Am purchase, but certainly puts a strain on their ability to muster finances.

Also MaineBiz featured an article today on the PAR being for sale with MaineDOT officials confirming it in speaking with Pan Am (yet PAR officially has released no comment)

[J.D. Lang]

I’ve been following this whole thread with great interest so I thought that I’d thrown in my own amateur's thoughts.

Northern Maine has some great resources in its forested land that is quite suitable for rail transport in the form of lumber and paper making products. From what I’ve read here it seems like the mills in Rumford, Jay, and the Sappi Mill are stabilized or even expanding. Old Town is or has come back online in some form. Couple that with the Irving lumber mills to the north and it results in a lot of outbound loads that rail handles. Inbound loads of LPG are on the rise because a lot of households are now heating with it plus the chemicals used in the paper making process.

Personally I would like to see a Class II or III company buy the whole thing from Ayer north (if Ayer becomes the dividing point). It’s anyone’s guess whether NS would buy out the PAS share of the patriot corridor. Between being in the throes of PSR and the Hoosac tunnel issue that is far from a given. But getting back north I think it would be great if NBSR bought the line from Ayer to Keag. I know that getting the infrastructure to some sort of state of good repair will cost a fortune and I don’t know if the Irving’s would want take that large a leap into railroading but if they did they could link up there MER and NMR and have interchanges with CP, SL&A, NS, and CSX just for the carload traffic in and out of Maine plus lanes for intermodal.

Anyway I don’t see the STB wanting either CP or CN corralling all of the northern NE traffic.

Just my thoughts.

[Gilbert B Norman]

Volks, I think any of us around here who follow railroad industry affairs, as distinct from those who are foaming for the next shot, have concluded that for fair competition, the only Class I available to acquire Pan Am is NS.

I'm sure the Surfboard, with or without reading our discussion here (sure would be nice if they did) knows full well that if Chessie or either Canadian got PA, there would no longer be competitive rail service in Maine and much of New Hampshire. It's been pointed out here immediately by Mr. Lang that there are Products of Forests that shippers gladly give to rail - and surely would give even more if they had satisfaction of at least Class III track (40mph) and that promised third morning in, say, Chicago, meant that. No question, Chessie has the superior E-W route to command high value Container traffic from the region. To give "Topper" single road access is simply leveling the playing field.

OK, we consider a Short Line operator. The big question there is if PA can't or no longer make it pay, then why should we jump in?

While I doubt if this will play out on the Financial Press' page 1 as did the "who gets Conrail" saga, it will prove interesting to us who follow industry affairs and have only rail publications and discussion sites such as right here.

[MEC407]

From Mainebiz:

Pan Am Systems Inc., led by banking heir Timothy Mellon, has put the Billerica, Mass.-based freight rail company up for sale, according to industry reports and confirmed Monday morning by Nate Moulton, director of freight rail for the Maine Department of Transportation.

Based on recent communication he’s had with Pan Am, Moulton told Mainebiz the New Hampshire parent company “is soliciting buyers and looking to sell the railroad.”
. . .
Moulton said the DOT isn’t picking favorites, nor is it looking for the railroad to be sold. “Our hope is simply for a good, well-funded railroad that can continue to invest in the infrastructure,” he said.

That’s similar to the reaction from George Campbell, chairman of Yarmouth-based Treadwell Franklin Infrastructure, part of a consortium behind the proposed Maine International Cold Storage Facility.

Read more at: https://www.mainebiz.biz/article/maines ... re-unclear

[S1f3432]

The Port of Boston has been mentioned a number of times. Aside from fuel going to and from bulk
terminals, how much cargo is shipped into or out of the Port of Boston these days? I have been under
the impression such traffic has been negligible for years.