CSX Acquisition of Pan Am Railways

[Cosakita18]

Just curious what customers in the Portland area you’re referring to that have been driven away?

The most notable would be that both of the remaining customers on the former WN&P, BlueLinx and Plasmine Technology, have stopped receiving service within the past couple of years (if they are doing anything by rail it's VERY limited) There's also no more loading of refined oil products on the Turner's Island branch since the GLOBAL pier has more or less been mothballed. Rail service at the Merrill Dry Bulk terminal is also way down, and as far as I understand the Merrell terminal itself is facing an uncertain future because of changing market conditions. They haven't had a ship in months.

[roberttosh]

Just to be fair, I think that Bluelinx is still getting cars, the Turners Island situation appears to be completely out of Pan Am’s control and I don’t think that whatever is going on at Merrill’s is Pan Am’s fault either as they have always received good local service. Not that there isn’t room for improvement, there always is, but if anything I would say Pan Am has a net gain of customers over the past several years-

[QB 52.32]

But the fact of the matter is it does not really matter as the line isn't going anywhere. Nor is GWI in the running to get it.

Your two points are based upon a wrong assumption and rumor, and not fact at all.

You wrongly assumed that the point raised about GWI being an interesting candidate regarding the issue of potential consolidations was simply about eliminating PAS as a through route in favor of the B&A.

And, until the ink is dry on an agreement, reports of who is or is not in the running is rumor, even if it has some legs, when sources are outside "the room where it happens". Experience informs that even those just "outside the door" may not have all the facts and that rumors can be weaponized for the benefit of one party or another. I'm not as quick to quit in this horse race as Mr. Norman based upon rumors leaking out of N.Billerica.

Related question: has GWI increased business/traffic on any of the railroads they've acquired in the last 10-15 years? Or to phrase it differently, can anyone point to an example of a railroad whose traffic increased after being purchased by GWI?

Last publicly reported 2018 performance 6.3% year-over-year same N.American railroad carload growth. But, in a region last in railroad track-mile productivity (carloads/mile), seems like there might be some room for cost savings, too.

I can think of half a dozen customers in the Portland area alone that have been driven away within the last 5 years. A lot of that isn't necessarily PAR's fault. Small customers have been almost deliberately driven away by PSR, and that trend is nationwide. It's increasingly difficult to compete against trucks, especially with smaller customers. That's not to say that a railroad with good rates and good service couldn't win back business (Grafton & Upton is a pretty good regional example of a shortline that's managed to pull business seemingly out of thin air) but it's an uphill battle.

Not out of thin air at all....G&U is just simply working within CSX's franchise to accommodate business shifting away from Boston and competing for potential new business in a place where land is cheaper. That's the play.

[newpylong]

So when that does not happen do I get to say I told you so?

[gokeefe]

Lol ... I remain open to the idea that a private equity fund such as Fortress would be interested and very much unconvinced that a bid from GWI could be taken seriously (if it were to even materialize) based on regulatory concerns. They are just as "out of it" as CSX. While it seems clear enough that NS thinks they stand a chance with the STB (which seems like a shift from times past in regards to BM/MEC) I have a hard time discounting potential interest from CN. The early signal in my opinion remains the choice to use Bank of Montreal (literally about 300 feet from CN's HQ) as the investment banker.



Sent from my Pixel 2 XL using Tapatalk

[Cosakita18]

Gokeefe, I'm wondering what bulk transload operations in the Portland area you're referring to? PAR has done a decent job at building up a robust transload business at Rigby, and Rigby itself does have an abundance of space for added operations, but aside from the yard itself there really aren't any good facilities for large-scale transloading for either rail to ship or truck. Most of what exists is too small (in a strictly geographic sense) to be of major interest to a Class 1. The biggest downside to the Port of Portland is that all of its terminals are geographically constrained with limited room for growth on either the landward or seaward side. ( I would speculate that one of the reasons Merrill Terminal has lost break-bulk business and is now on the verge of closure is because of its severe geographic constraints )

[Gilbert B Norman]

Where am I mistaken?

If (AAR) GNWR (NYSE:GWR) gets PAR, what enhancements can the Northern New England rail shipping community expect? I think not much.

Now what if a "private-equity" gets hold, I'd expect both B&M and MEC to be chopped up to such extent that they are branch lines to serve "this or that" shipper whose business they deem profitable to interchange with someone like a "Pussycat" or a "Beaver".

The two Irving roads serve "massah" well enough delivering fallen timber to their mills in Saint John over FRA Class 2 (25mph) if even that. If "something spills", so what. You just pick it up, patch up the track, and "get it on". Spilled timber does not make "a Megantic".

Any thoughts of competitive rail to serve the likes of Saint John Port so it could handle high value traffic to Midwest markets, such as "Beetles, Bennies. and Bimmers", will be gone.

[gokeefe]

Now what if a "private-equity" gets hold, I'd expect both B&M and MEC to be chopped up to such extent that they are branch lines to serve "this or that" shipper whose business they deem profitable to interchange with someone like a "Pussycat" or a "Beaver".

Mr. Norman,

The recent experience, in Maine no less, with Fortress (dba CMQ) belies this thought. They fixed things up and sold to CP for about $100M more than what they paid to the bankruptcy trust.

Their investment in CMQ could easily go down as the greatest turnaround ever in the history of a Maine industry.

Sent from my Pixel 2 XL using Tapatalk

[gokeefe]

Gokeefe, I'm wondering what bulk transload operations in the Portland area you're referring to?

For some reason I had it in my head that Cushing Point could handle bulk transload but after rechecking this cannot possibly be true. Sprague on the other hand claims that they do and one can see plenty of evidence there with the salt pile. CN9634 would probably know better than most how much bulk transload capacity there really is in Portland.

Regardless I would acknowledge that accommodating ships of size is a major problem for Sprague, the IMT, Merrill's and basically all of the other terminals as well.



Sent from my Pixel 2 XL using Tapatalk

[atholrail]

Monson trans-load on the west end of Rigby, and the LPG place in the Old Port (forgot the name) were decent loses in the general Rigby area.

[gokeefe]

The LPG was Unitil(?) if I'm not mistaken.

Sent from my Pixel 2 XL using Tapatalk

[Cosakita18]

The IMT is really the only bright spot for the port of Portland right now. Aside from that, the port has really been struggling quite a bit in the past 5 years. The mothballing of the Montreal pipeline was obviously a major loss, and since then the GLOBAL terminal had also been more or less mothballed. Irving and Gulf are the only two lines bringing refined product in at this point. Although slurry imports from South America are still frequent.

As I mentioned, Merrill Terminal / Cassidy Point has also lost a substantial amount of break bulk business and unless circumstances change they almost certainly won't make it to 2030. The owners of Cassidy Point recently developed an art studio / maker space on premises...Which could almost certainly be a vision of things to come for that terminal.

That isn't to say that a revival is impossible, because there are certainty opportunities that a savvy railroad could develop... But reviving the port of Portland would take a lot of investment and willpower....and I don't think that's something a class 1 would be interested in.

[johnpbarlow]

Not trying to beat a dead horse (and I don't mean Topper) but here's an example of how non-competitive Pan Am served ports are for any prospective buyer compared to New York and Halifax:

Largest container ship to make port in any east coast or west coast Canadian port ever arrived at Halifax on 9/10/20. CMA CGM Brazil, capable of handling 15,000 containers, left Malaysia on 8/14/20, ported at Sri Lanka on 8/21/20), and transited the Suez Canal on 8/29/20. After stopping at Halifax, CMA CGM Brazil continued to New York arriving on 9/12/20 and now is en route to Norfolk expected to arrive 9/15/20.

https://www.cbc.ca/news/canada/nova-sco ... hV_-JzCFc8

[Gilbert B Norman]

Grief Mr. Barlow, that's 1201 feet of vessel; little bigger than any "Love Tub" out there.

Now with Halifax having capacity to handle a vessel that size, is that telling the other Ports in the region - Portland, Searsport, Saint John - to "stay out of the big kids swimming pool" or to "get ready to jump in"?

I would think such means good rail service. Competitive rail service? Well both Halifax and Prince Rupert have only one road, and both are "doing OK".

Maybe this "competitive rail" stuff is only in the eye of the Surfboard - a US regulatory agency with no jurisdiction in Canada.

[roberttosh]

Monson trans-load on the west end of Rigby, and the LPG place in the Old Port (forgot the name) were decent loses in the general Rigby area.

I realize there are several customers who have gone away but the poster suggested that they were driven away by Pan Am and from what I can gather I just don't see that being the case.