CSX Acquisition of Pan Am Railways

CN9634 wrote: ↑Thu Mar 25, 2021 8:04 am This should be an easy remedy, given there really is a narrow focus on the entities that have issues here. Unless more people come out of the wood work, the solutions should be easy but the process simply will take more time as a matter of formality.

I know of a few more in the pipeline that were going to file with issues, but with it moving to a Significant, I don't knowif they still will or if they will still ask to be involved.

Ridgefielder wrote: ↑Thu Mar 25, 2021 9:24 am That doesn't surprise me.

There are five rail routes that connect New England with the rest of the US: the NEC, the Maybrook Line, the B&A, the Hoosac Tunnel route (in which I'd include the VTR interchange at Hoosick Jct.) and the ex-D&H branch from Whitehall NY to Rutland VT. Every other linkage to the rest of the North American rail network goes through Canada. Only 2 of those 5 are really viable from a freight perspective-- the NEC dead-ends in Brooklyn for freight; the Maybrook is dead, period; and the route through Whitehall is totally roundabout for traffic from anywhere but northern Vermont. This deal would effectively put both of those routes-- providing rail freight access to six states with a combined population of 14 million-- under common ownership.

But what's the difference if the sale goes through or the status quo remains? Either way shipper's cars are coming to and from NS (excluding the Canadian Gateways) and CSX. The only change is now CSX will be providing terminal RR services in lieu of Pan Am on the ex-PAR system. On PAS, CSX ownership only figures into capital expenses, the operator remains a third party. Of course that's the 10,000 foot view that the applicants held, and of course now have to prove.

I think in the end only VRS and other Conn River customers that enjoy dual service from the NECR and PAS have a valid beef, but it can be rectified with rate guarantees and/or trackage rights.

Looks like the show will go on: From an on-line article in today’s Freight Waves:

“In response to STB’s decision, CSX responded, ““CSX is confident that the proposed acquisition of Pan Am Railways will enhance customer competitiveness and provide benefits to stakeholders in New England and beyond. We look forward to demonstrating this further in our next filing to the STB.”

https://www.freightwaves.com/news/stb-t ... ilways/amp

The question has been floated from time to time here as to why GW was selected as pas operator given the potential competitive issues. Seems like NS effectively had a stranglehold on how much csx could use and pass through Ayer. NS wanted double stack access to Ayer and had leverage. Csx agreed to trackage rights from VO to Ayer presumably in exchange for flexibility around Ayer for csx. Problem—p&w owns a tiny stretch of the route. I’m guessing the selection of GW as pas operator is directly connected to p&w, which of course is a GW property, granting trackage rights in Worcester.

So far today 27 new letters of support for CSX were posted on the STB website

There are about a bajillion more comments in support of the transaction shown on STB site. They're mostly copy/paste, much like the statements in the original application. People sure do seem excited by the unprecedented visibility into their supply chain that the ShipCSX platform will provide.

So the way it works is CSX solicits the letters... they send out a word doc to 1000 customers with the body of the letter, highlight areas to input company specific information and ask you to put on company letter head with signature. It's pretty standard for all transactions with the STB.

I have no doubt that's how it works, but I wonder what the actual value of those statements is, since they're basically a form letter. I'd love to see a letter opposing the transaction on the basis of PAR service being superior.

Two interesting takeaways:

1 - This was decided on March 19th, found at the very very bottom. Prior to CP/KCS announcement - not that it mattered because...

2 - The move to significant is really because the board cannot determine clearly that either one of the two conditions are met to consider it a minor transaction based on the initial filing. This does not mean the plan as-proposed needs to be modified. It just means the filers need to provide further evidence and proof to substantiate their claim (and others file against if desired) so that the STB has a more complete record to base their decision on.

F74265A wrote: ↑Thu Mar 25, 2021 12:53 pm The question has been floated from time to time here as to why GW was selected as pas operator given the potential competitive issues. Seems like NS effectively had a stranglehold on how much csx could use and pass through Ayer. NS wanted double stack access to Ayer and had leverage. Csx agreed to trackage rights from VO to Ayer presumably in exchange for flexibility around Ayer for csx. Problem—p&w owns a tiny stretch of the route. I’m guessing the selection of GW as pas operator is directly connected to p&w, which of course is a GW property, granting trackage rights in Worcester.

I don't think the Gardner branch factored too much into the equation. Whoever owns that stretch would gladly charge CSX and NS exorbitant fees on a short section of RR that only sees 2 trains/day max. That's a minor trackage rights application on top of the larger enchilada.

For some reason NS wanted GWI and CSX wanted someone else (rumored to be NYSW). NS got their way and went along with the whole thing.

There were reports that CONRAIL executives were on the OCS trips and that triggered rumors that CONRAIL was the chosen operator. Seemed like a sensible albeit surprising conclusion but obviously that never came to fruition.

It just struck me that CSX sees their main connection to the "PAR system" to be through the Worcester Main, therefore the Port of Boston and Grand Junction are minor branch lines.

Yes on Worcester main being where the action would be.

I hesitate to say too much beyond that F74265A is 100% correct that NS trackage rights over a short section of P&W at BARBERS in Worcester, MA played a major role in GWI being selected as operator of PAS. FOR NS TO GAIN TRACKAGE RIGHTS OVER THE B&A AND THE EX-B&M WORCESTER MAIN, P&W (GWI) HAD TO AGREE TO NS TRACKAGE RIGHTS OVER A SHORT SECTIION OF P&W CONNECTING TRACK AT BARBERS. The ball was definitely in the P&W 's court, and this brought GWI into the forefront VERY LATE in the sale negotiations. The whole story will, most likely, never be told publically because ALL PARTIES involved in sale negotiations are under strict CONFIDENTALITY RESTRICTIONS, and are legally prohibited from discussing them outside of official business. So, now that the STB is ordering the whole sale filings to be redone, we're back to CONFIDENTIAL NEGOTIATIONS which will likely result in little public information being made available until the next round of STB filings. Until then, we're going to have rely on the reporting (i. e. speculation) of America's Greatest Railfan and others who think they have "inside information". Personally, I'll be waiting for all the parties to the sale to complete their renegotiations and refile with the STB a few months hence. Frederick G. Bailey

This might have been treated as a minor transaction if Pan Am had considered selling the entire network to a short line. Pan Am is a terminal railroad that interchanges with the Class I railroads and the STB would probably prefer that to be maintained. It is ironic that those complaining about competitive issues are confined to the Conn River, what about the entire southern and south-central parts of Maine, southern N.H. and eastern Massachusetts? The STB approved the Pan Am Southern arrangement and treated it as a minor transaction because it enhanced competition and offered more shipping choices to customers in the region. This merger reverses that; CSX will have control over predominately all of the customers on the old MEC and eastern end of the B&M. What does it take to get this merger approved? Will be interesting to see what both Pan Am and CSX do next.