Why hasn't there been more consolidation among shortlines?

A general discussion about shortlines, industrials, and military railroads

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Why hasn't there been more consolidation among shortlines?

Postby SouthernRailway » Sun Mar 16, 2014 11:59 am

I'm aware of Genesee & Wyoming, Iowa Pacific and others that have accumulated "chains" of shortline railroads over the years, but there are slews of other shortlines out there, most of which I assume are independent or form parts of a company that owns just a few railroads.

Question: why haven't these independent/small chains of shortlines been acquired by larger buyers? I'd think that there would be significant efficiencies to be found if those shortlines banded together and were owned by one owner.

Are most of those shortlines just not profitable enough or is their equipment too mismatched to be of interest to a large-scale acquiror?

Thanks.
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Re: Why hasn't there been more consolidation among shortline

Postby scottychaos » Sun Mar 16, 2014 12:02 pm

I would imagine a lot of them dont *want* to be taken over..
If you have a small but successful business, "selling out" to another company can often be worse
for you and your employees..

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Re: Why hasn't there been more consolidation among shortline

Postby Deval » Sun Mar 23, 2014 1:05 am

It's really a matter of time. I remember when RailTex started in 1986 with the Austin & Northwestern Railroad. Railtex was bought out by Rail America which was recently bought out by Genesee & Wyoming. Now you can't go anywhere without seeing G&W - and it seems that every short line that was once independent is now part of some big conglomerate.

G&W is not alone - the Wisconsin and Southern was picked up by Watco - and in the places that G&W does not operate, Watco does. And then there is Pioneer Rail Corp, which I'm sure will be picked up by somebody soon

So, just be patient. All of these small shortlines you speak of will soon be gobbled up by some big conglomerate and will be worked into oblivion.
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Re: Why hasn't there been more consolidation among shortline

Postby Desertdweller » Sun Mar 23, 2014 2:47 pm

The marginal ones will be worked into oblivion. They will be cash cows to be milked by their holding companies, then sold to next-lower-level operators or abandoned.

The successful ones will be bought by next-higher-level operators, or by Class Ones.

If a short line or regional becomes very successful, it is likely to wind up in the hands of a Class One, either the original owner or one of its former owners competitors.

Les
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