CSX Acquisition of Pan Am Railways

Gilbert B Norman wrote:Will they ship over Class 2?

I think they would if you look at the bigger transit-time picture.

Let's say hypothetically that the shippers need a three day transit time from the Port of Saint John to wherever. If CSX upgrades the Mattawamkeag-Bangor line from Class 2 to Class 3 (40 MPH freight speed; I don't think it'll ever be upgraded to Class 4 because there's zero passenger potential there), that would shave one hour off the Mattawamkeag-Bangor transit time.

It'll cost them $60 million to do that upgrade, plus it'll increase the annual cost of maintenance on the line. In return, their transit time from Saint John to Wherever changes from 73 hours to 72 hours.

Is that worth $60 million? (I'm asking that question sincerely; I honestly don't know if the 1-hour difference is a make-or-break issue for the potential shippers you have in mind)

Even with class 1 track that was only good for 263K Pan Am had a lot more business when they were running to Keag. Class 2 track with 286K will be more than enough to satisfy any potential shipper up that way and really not even worth discussing any more at this point.

[yelling at other users deleted]

Also do you guys know CSX can run faster than 40mph right?? I know it's been a LONG time however what was old can be new again.

[false information deleted]

This corridor between Keag & Ayer is a crushing blow to the Canadians and offers a escape from the Montreal bottleneck.
As you were

Agreed. In hindsight, not so sure that CP would have bought the CMQ if they had known that CSX was going to be making its' way up to SJ. They can talk all they want about opportunities but CSX is always going to have the upper hand with it's Keag to Ayer to Selkirk and beyond route/network.

Global trade patterns are changing and now is only accelerated by covid. People are figuring out they can ship chinese goods faster through the Suez Canal and Atlantic. CP saw this and pounced on it 1st, trying to get a edge over the Americans. I'm not a huge CP fan however I will say they really are doing wonders with the ex CMQ property.

CP is also looking for a deep water port that doesn't freeze. Issues with the ice breakers on the St Lawrence and Hudson is fueling the move.
Originally Irving partnered with CP to INTENTIONALLY generate and divert the incoming traffic boom away from Pan Am. Mellon became pissed, killing two birds with one stone and sticking it to NS/ CP/Irving by offering CSXT a deal it couldn't refuse

roberttosh wrote: ↑Sat Oct 30, 2021 1:38 pm Agreed. In hindsight, not so sure that CP would have bought the CMQ if they had known that CSX was going to be making its way up to SJ. They can talk all they want about opportunities but CSX is always going to have the upper hand with its Keag to Ayer to Selkirk and beyond route/network.

My main question is where is the traffic from primarily Saint John via the ex-CMQ headed? If it is primarily headed for the Eastern United States via the ex-D&H, then I see CP's investment being threatened. If it is primarily headed for Canada and the Upper Midwestern United States in competition with CN, then CP's investment is mostly safe. The only lanes I can see the two railroads competing directly in are SJ-Detroit, SJ-Chicago, and perhaps SJ-UP/BNSF.

CP and CSX for the most part serve completely different markets and I just don't see how one would be able to wrestle away enough traffic from the other to threaten each other's investments because of this fact. Is there something that I'm missing?

A corollary to our discussion here is if Chessie (or CSX for Mr. King) does what she (they) must to make the MEC competitive, i.e. Class 2 or better, would some party in interest seek to have CSX access, including ratemaking, to Searsport granted.

Service from two competitive roads would certainly make the Port more attractive, just as it would in the case of Saint John, to the maritime companies and their shippers.

Line to Keag has always been a glorified Branch, not saying it can’t become a superhighway but it needs a lot of groundwork not to mention trackwork. On the other hand the line from WTVL to NMJ was super designed with drawn out curves, built up substructure and the likes, so that should be too hard to get rebuild once you flip out the rail and a few thousand times per mile.

CP regrets selling the line, it’s 25 years behind CN. CSX in the area is good competition, Irving is about to get busy and CN is going to be in a world of hurt for manifest traffic. Reality is CSX has larger container lanes in its portfolio, so sure it can jump on the SJ wagon, and I’m sure they’ll grab some container volumes, but the opportunity is greater for CP. Steamship lines won’t want to hit CSX at another location to plug through the same network with more inland miles, they’ll want to add diversity and redundancy to their service lines and spread out amongst US and Canadian carriers. The last 18 months has taught carriers as much, have multiple network options for your routings….

Duluth built container cranes for ocean traffic but hasn't found customers yet. The biggest ship would carry 400-500 units. https://www.freightwaves.com/news/minne ... containers

Many ports hype and spend a lot, but it seems Savannah and L.A./Long Beach remain overbooked. Sure, some ships are diverting. Meanwhile, L.A. is still the default dumping ground for empties all the way from the East Coast. That's another article, same site: https://www.freightwaves.com/news/exclu ... -southeast

Yes so with present conditions shippers can sling their cars out of Maine across the CP faster to Buffalo than a ST connection to CSX/NS. Now that's for non container traffic like the mills etc. Now once the route becomes an upgraded part of CSXT the shippers will have a faster and more diversified shipping experience by kicking cars west via Rigby with CSXT. Internal talks have been saying there is more than enough potential traffic to keep the big 3 content, even an alliance if you will for NMJ etc. The CP bypass around Laq Megantic came true so I am a firm believer we'll see the other plans for NMJ and Maine come to fruition.

Shortline614 wrote: ↑Sat Oct 30, 2021 5:22 pm

roberttosh wrote: ↑Sat Oct 30, 2021 1:38 pm Agreed. In hindsight, not so sure that CP would have bought the CMQ if they had known that CSX was going to be making its way up to SJ. They can talk all they want about opportunities but CSX is always going to have the upper hand with its Keag to Ayer to Selkirk and beyond route/network.

My main question is where is the traffic from primarily Saint John via the ex-CMQ headed? If it is primarily headed for the Eastern United States via the ex-D&H, then I see CP's investment being threatened. If it is primarily headed for Canada and the Upper Midwestern United States in competition with CN, then CP's investment is mostly safe. The only lanes I can see the two railroads competing directly in are SJ-Detroit, SJ-Chicago, and perhaps SJ-UP/BNSF.

CP and CSX for the most part serve completely different markets and I just don't see how one would be able to wrestle away enough traffic from the other to threaten each other's investments because of this fact. Is there something that I'm missing?

I don't expect to ever see SJ make any inroads into the East Coast to Chicago container trade and quite frankly think that CSX has zero interest in pursuing or competing on such business. Most if not all of CP's SJ business will move to Montreal/Toronto. SJ will not only have to compete with Halifax, but also with a major new terminal at QC and a rebuilt/expanded Port of Montreal (Contrecoeur). SJ has basically no metro area compared to other East Coast US ports which are all within a few hours of major consumer markets so it will never be more than a niche player and everyone knows that. CN has been trying to grow business at Halifax for 50 years and they're now running exactly one container train a day. There just isn't that much business in those lanes and CP is a Loooooooooong ways from running anything close to a PSR sized daily container train over the Moosehead. Most days they're handling a few containers and some bare tables, hardly a high capacity intermodal corridor. On the manifest side, which I've already explained about 20 times, much of what CP handles today off of the Irving roads is heading into the Eastern half of the US, which of course CSX completely covers. CP on the other hand goes as far in as Albany, NY. Do the math, once CSX gains direct access/pricing off of the Irving roads, it will be like taking candy from a baby and there is absolutely nothing CP can do to stop it other than buy CSX.

Gilbert B Norman wrote: ↑Sat Oct 30, 2021 6:35 pm A corollary to our discussion here is if Chessie (or CSX for Mr. King) does what she (they) must to make the MEC competitive, i.e. Class 2 or better, would some party in interest seek to have CSX access, including ratemaking, to Searsport granted.

Service from two competitive roads would certainly make the Port more attractive, just as it would in the case of Saint John, to the maritime companies and their shippers.

I’m confused as to why cp would ever be required to grant concessions to a competitor in the context of a transaction to which they are not a party. Perhaps cp would sell some access to searsport given that so far there is zero public indication that I’m aware of of shippers looking for expanded rail service there

If I'm getting this right...

CP's intermodal traffic is safe since it is heading for places where CSX has little to no presence. CP's carload traffic would be under threat since most of that is headed for CSX and NS via Albany and Buffalo. The NS traffic would be safe but CSX traffic would be taken away from them since CSX would have single-line service.

Since this is the case, I do not see CP striking a deal with CSX to route traffic via Northern Maine Junction since CP would simply be giving over traffic to a competitor (at least in the Saint John-Albany/Buffalo lane) at that point. CSX would have no choice but to upgrade the Keag line to have a direct connection with the Irving roads and thus Saint John.

Yes, the FML line to Keag will be rebuilt regardless.

As for Searsport, the only relevancy to the transaction is CP post sale will have a direct interchange with CSX at NMJ which could give their customers better routing options. This could result in more interchange there. CSX does not want direct access to Searsport.

For sure it will, just not in a rush. Puts Pleasant River in an awkward situation with their new facility at Enfield, wonder how much appetite CSX will have to run up there for 4 cars but I'm sure they'll play ball or come up with a creative solution. Honestly I could see Irving taking over the line down to Old Town or even NMJ someday, handling local traffic and handing it off to CSX or CP.

The comment on majority of Irving traffic going to NY is a huge mis-categorization. First off, they produce a variety of products from Lumber, to pulp, paper, tissue, ect. Each market is different. Lumber sticks around mostly locally although it can go to Toronto and the Midwest, every now and again some loads make it far west. Paper and pulp goes all over the place, their pulp is the northern blends of NBHK and NBSK, which they have either contract or spot market sales. Some goes to their plant in Georgia, while the rest can go anywhere and everywhere. Paper will go to Toronto, Pennsylvania, Kentucky, Chicago, Minnesota/Wisconsin in particular, Texas, California, Mexico to name a few major points. You can see Irving cars all over the continent especially now that they've beefed up their 50'HC fleet.

Everyone also seems to forget that when 142 hits Maine, it's already made setoffs at Farnham and Sherbrooke. Tafisa is growing so is Logibel at Megantic (ironic). Tafisa has switched almost fully to 60' cars now that CP is in town and has stock, dumping the old junky 50' MMA/IANR cars. Logibel does a lot of lumber transload from the area, but also some steel and others. Sherbrooke is the SLR interchange, EKA, and other local traffic. Farnham has LPG, VTR, and other local traffic.

Other developments NOT covered thus far here is the inbound pulp traffic from Domtar and other upper Superior producers into the market via CP (look for the 50' CP vented cars). They come into Irving as well as Pixelle in Jay. CP ripped up half the farm, rumor is they are looking to plant a major LPG terminal there. Lanes built out 16 car spots for Asphalt (no moves have occurred yet) and they take Cement. GAC is actually taking loads of Slurry inbound from places as far as Arkansas, to be remixed and reshipped (not sure if they ship or rail). CP asked MaineDOT to design (not build but design) a loop at Searsport for unit train operations. That's a back burner project for sure but the St Lawrence seaway does freeze up each winter and Thunder Bay closes to shipping.

I don't think CP has any regret in purchasing this line, their last call they said they've already doubled the revenue on CMQ, which was basically stabilized around $40M per year.

Oh and lastly, for those interested in the 'little' intermodal facility at Saint John as below. I can tell you having worked at a few Class I facilities, a Greenfield site offers way more efficiencies than tearing up a few yard tracks in the middle of an existing terminal and calling that an intermodal facility.

https://pub-saintjohn.escribemeetings.c ... entId=8150