G&W to acquire P&W

What is the attitude of the G&W towards passenger service? Such as Amtrak, fan excursions, or "Boston Surface Railroad" proposal for Woonsocket-Providence service and/or Worcester-Providence service? viewtopic.php?f=126&t=160242

Remember when G&W was just a 14 mile long salt RR headquartered in beautiful downtown Retsof, NY? Power was a bunch of old Alco RS-1s like the ex-C&WI unit sitting outside the shop in 1976.

Observation: Perhaps it has been captured in the discussion above but P&W's acquirer, G&W, will now own direct access to:
- P&W's largest customer, Tilcon, is > 10% of P&W revenue and, captively shipping a lot of aggregate out of CT to NYC and LI during the construction season (G&W should be expert at bulk hauling given their 100+ year history of hauling salt)
- An established auto rack unload facility (NORAD) at Davisville. As I understand P&W's current auto traffic, it's inbound Subarus from Indiana and outbound empties. As I understand NECR, their route to Willimantic is cleared for autoracks given the enlarging of the Bellows Falls Tunnel several years back
- Motiva's Ethanol facility at Providence which gets trains via CSX or NS once or twice a month.
- A small bonded international container facility at Worcester that handles a small amount of traffic from CSX which I think is the remnants of land bridge traffic from the west coast. G&W could deliver international double stacks to Worcester via CN/NECR if such a market exists (Mass Central used to handle such NECR traffic at Palmer but that dried up at least a decade ago).
- Access to Ports of Providence (coal and limestone) and New Haven (bulk) as well as Davisville.
- Gateway Terminal at New Haven (steel and bulk)
- Bulk transload facilities at Worcester
- Access to NYC/LI via NYA interchange at Fresh Pond - currently just Tilcon aggregate but I think other traffic could be interchanged as well if there were any.

Having said this, the P&W's system map indicates that P&W already enjoys trackage rights for CN interchange over NECR between Willimantic and East Alburgh and for CP interchange at Whitehall via NECR/VRS. I don't know how much traffic gets interchanged today at Willimantic but I don't think it's more than 10 or so cars per day so I wonder if there is a lot of upside post acquisition.

CPF363 wrote:Genesee & Wyoming's move to purchase P&W is both a business move and a strategic move. One has to figure that G&W has been watching to numbers on the NECR and needed to find a way to boost revenue on the entire line from New London to the Canadian Border. The only real option is the P&W as there is nothing else available and it provides new markets, mainly New York and Rhode Island for G&W at he same time. Freight going to and from the P&W could generate more over the road revenue for the NECR and provide those P&W-based customers with single line service to Canadian National's system. One has to figure CN is worked into this deal indirectly as they will be able to acquire more market share in the New England market under this deal. Will be interesting to see what traffic will ultimately use the NECR-P&W routing if the merger is approved. Interestingly, this is what Orville Harrold wanted to do 20 or so years ago when he tried to acquire the Central Vermont from CN but was outbid by Railtex, and some 100 years ago, Charles Melville Hays was attempting to build the Southern New England Railway to connect Providence with the CV.

I agree but, given that P&W's system map currently advertises that it has trackage rights over NECR to CN interchange at East Alburgh and over NECR/VRS to CP at Whitehall, I wonder how much traffic upside there really is post acquisition. Perhaps shipping rates will be reduced enabling more CN and CP traffic to move to/from Worcester/Providence/Davisville/New Haven/NYC/LI? I don't think a lot of traffic is currently exchanged (trackage rights? interchange?) between NECR and P&W at Willimantic as NECR's local south out of Palmer typically handles 10-20 cars daily (local also handles New London traffic).

http://www.pwrr.com/home/system-map/

I'm trying to parse this statement in the G&W press release announcing the P&W acquisition by comparing it to P&W's 10K for 2015 (attached photo):

G&W anticipates P&W will generate $35M of revenue and $12M of EBITDA in the first year, including $8M of immediate cost savings. In the medium term, G&W anticipates additional operational efficiencies and commercial opportunities will generate a further $5M of EBITDA over the following two to three years. G&W expects P&W to require $3M of annual capital expenditures and have depreciation and amortisation expenses of $3M

$35M in 1st year of G&W acquisition maps directly to P&W's 2015 operating revenue figure of $35.8M. 2015 EBITDA for P&W appears to be $2.6M (EBIT) + $3.7M (Depreciation) less $0.7M (amortization) = approx $5.6M v. the $12M that G&W forecasts. I'm guessing that the $8M in immediate savings must come primarily from P&W's 2015 expenses of $12.7M for Maintenance ($3.7M (moW) + $4.0M (equip) = $7.7M) and G&A ($5M)? I'm guessing transportation expenses plus track usage fees of $11.8M total won't be hit much in order to preserve the $35M of revenue expected. Net: I'm guessing that P&W track maintenance will be significantly reduced (track is currently VG shape), P&W engine and paint shop operations will be curtailed, and much of G&A will be trimmed. Yikes!

https://www.sec.gov/Archives/edgar/data ... 151231.htm

BandA wrote:What is the attitude of the G&W towards passenger service? Such as Amtrak, fan excursions, or "Boston Surface Railroad" proposal for Woonsocket-Providence service and/or Worcester-Providence service? viewtopic.php?f=126&t=160242

I don't think they're anti-Amtrak or passenger in general; they host the Vermonter between Northfield and St. Albans, after all.

You know, this is going to be the first time since G&W moved their head offices to Darien that they'll be able to see their own trains passing the front door. Corporate HQ is across the street from the Darien station.

johnpbarlow wrote:Remember when G&W was just a 14 mile long salt RR headquartered in beautiful downtown Retsof, NY? Power was a bunch of old Alco RS-1s like the ex-C&WI unit sitting outside the shop in 1976.

Observation: Perhaps it has been captured in the discussion above but P&W's acquirer, G&W, will now own direct access to:
- P&W's largest customer, Tilcon, is > 10% of P&W revenue and, captively shipping a lot of aggregate out of CT to NYC and LI during the construction season (G&W should be expert at bulk hauling given their 100+ year history of hauling salt)
- An established auto rack unload facility (NORAD) at Davisville. As I understand P&W's current auto traffic, it's inbound Subarus from Indiana and outbound empties. As I understand NECR, their route to Willimantic is cleared for autoracks given the enlarging of the Bellows Falls Tunnel several years back
- Motiva's Ethanol facility at Providence which gets trains via CSX or NS once or twice a month.
- A small bonded international container facility at Worcester that handles a small amount of traffic from CSX which I think is the remnants of land bridge traffic from the west coast. G&W could deliver international double stacks to Worcester via CN/NECR if such a market exists (Mass Central used to handle such NECR traffic at Palmer but that dried up at least a decade ago).
- Access to Ports of Providence (coal and limestone) and New Haven (bulk) as well as Davisville.
- Gateway Terminal at New Haven (steel and bulk)
- Bulk transload facilities at Worcester
- Access to NYC/LI via NYA interchange at Fresh Pond - currently just Tilcon aggregate but I think other traffic could be interchanged as well if there were any.

Having said this, the P&W's system map indicates that P&W already enjoys trackage rights for CN interchange over NECR between Willimantic and East Alburgh and for CP interchange at Whitehall via NECR/VRS. I don't know how much traffic gets interchanged today at Willimantic but I don't think it's more than 10 or so cars per day so I wonder if there is a lot of upside post acquisition.

The P&W/NECR/VRS rights situation is haulage-only, with NECR doing the hauling between Bellows Falls and Willimantic. P&W doesn't touch anything until it's picked up in Willimantic.

Fresh Pond interchange is paper-barriered by CSX to only certain goods, mainly the Tilcon aggregates. There is definitely a lot of growth there for exploiting more of what they already move, but it'll never be an unlimited interchange.

The system is entirely cleared for 19'6" autoracks and mixed- double-stack from CN to Willimantic to Worcester, Worcester to Gardner, and Worcester to Davisville. 17' from Willimantic-New London and Plainfield-Groton. Both RR's have put in requests for eventual full 20'6" and domestic double-stacks, reflected in the VT, MA, and CT state rail plans. Although reaching for the extra foot is far off and obviously has to be prompted by demonstrable traffic potential before the states go back for a second bite at the clearance apple.

Once ongoing NECR grant-funded upgrades in CT and self-funded upgrades in MA are done, 286K loading weights will exist from CN to New London, Worcester to Willimantic, Worcester to Davisville, Worcester to New Haven, and New Haven to the Tilcon quarry in Durham, CT (with P&W incremental upgrades slowly trudging north towards Middletown). Metro North has even paper-uprated the New Haven line for 286K loads via recent action, but that may only be for the overnight runs to Fresh Pond when no other trains are out simultaneously crossing any bridges. Not sure about Worcester-Gardner...I know it's 286 to Barbers Jct., but having trouble referencing definitive status out to Gardner (the P&W CEO updated shareholders on systemwide weight initiatives, but his letter disappeared when they revamped their website couple months ago).

P&W's also got a large chunk of port real estate at South Quay in East Providence that it's seeking shipping tenants for. Features direct access to I-195 via RIDOT's new Waterfront Drive access road. Right now they're marketing it as truck-centric with no direct rail unless a tenant specifically request it and commits to rail shipments. As a direct condition of the land swap for building Waterfront Dr., RIDOT is required to re-lay the 2 miles rail it ripped out to South Quay on a new side reservation it set aside next to Waterfront Drive. Would be 19'6", 286K capable via the E. Providence Branch out of Central Falls.

johnpbarlow wrote:

CPF363 wrote:Genesee & Wyoming's move to purchase P&W is both a business move and a strategic move. One has to figure that G&W has been watching to numbers on the NECR and needed to find a way to boost revenue on the entire line from New London to the Canadian Border. The only real option is the P&W as there is nothing else available and it provides new markets, mainly New York and Rhode Island for G&W at he same time. Freight going to and from the P&W could generate more over the road revenue for the NECR and provide those P&W-based customers with single line service to Canadian National's system. One has to figure CN is worked into this deal indirectly as they will be able to acquire more market share in the New England market under this deal. Will be interesting to see what traffic will ultimately use the NECR-P&W routing if the merger is approved. Interestingly, this is what Orville Harrold wanted to do 20 or so years ago when he tried to acquire the Central Vermont from CN but was outbid by Railtex, and some 100 years ago, Charles Melville Hays was attempting to build the Southern New England Railway to connect Providence with the CV.

I agree but, given that P&W's system map currently advertises that it has trackage rights over NECR to CN interchange at East Alburgh and over NECR/VRS to CP at Whitehall, I wonder how much traffic upside there really is post acquisition. Perhaps shipping rates will be reduced enabling more CN and CP traffic to move to/from Worcester/Providence/Davisville/New Haven/NYC/LI? I don't think a lot of traffic is currently exchanged (trackage rights? interchange?) between NECR and P&W at Willimantic as NECR's local south out of Palmer typically handles 10-20 cars daily (local also handles New London traffic).

http://www.pwrr.com/home/system-map/

As mentioned in the other thread, that's haulage-only. NECR handles all moves between Bellows Falls and Willimantic. This finally enables real run-thru from Worcester through all the VT interchanges. Probably means the CSX interchange moves entirely from Palmer to Worcester since they're looking for any excuse to consolidate staff and equipment in MA to a minimum outside of the biggest yards. They'll still keep Palmer Yard live for the MCER interchange, locals launched out of there, stopovers, and other miscellany...but the activity's likely to drop off considerably if the merged RR rolls up all CSX handoffs in Worcester.

re: fresh pond/ LI aggregates - there's some room for growth but it's limited. Most aggregates coming into LI these days are via train or barge, depending on the customer's location. There are probably a few plants trackside that don't get cars (ferrera in maspeth comes to mind), but I don't think there will be huge growth here.

There's also competition from up north via CP. Brookhaven rail terminal recently started getting aggregates via this route. (CP for a short while competed well with P&W for aggregates when they were still running down to LI - moving 35-40 cars a week). Speaking of, there was some push to get CP's rights into NYC transferred to NS when they bought the old D&H main... NS doesn't seem interested, but if they were, they could compete in this space. The politicians that got CP the trackage rights to break the CR/CSX monopoly might still be keen on pushing it. CP's haulage swap with CSX (that ended their service into NYC) ended up costing them the aggregate business.

2/3rds of the other freight cars moving on and out of LI are trash cars heading to landfills south and west. Even if there were no paper barrier, it would be hard to find customers interested in such a routing.

Seems like a news release in its language: Railway Gazette

Don't think I've seen this linked yet. Brief, fair-use:

Genesee & Wyoming to buy Providence & Worcester Railroad

USA: Genesee & Wyoming Inc entered into a definitive agreement for the acquisition of Providence & Worcester Railroad Co on August 12. Subject to customary closing conditions, Surface Transportation Board regulatory approval and the backing of P&W shareholders, the $126m deal is expected to be concluded in the fourth quarter of 2016.

Headquartered in Worcester, Massachusetts and operating in Rhode Island, Massachusetts, Connecticut and New York, P&W is contiguous with G&W’s New England Central Railroad and Connecticut Southern Railroad. It has around 140 employees, 32 locomotives, 260 km of owned track and 560 km of track access agreements, including exclusive freight access over Amtrak’s Northeast Corridor between New Haven, Connecticut and Providence, Rhode Island, and trackage rights over MTA Metro-North, Amtrak and CSX Corp infrastructure between New Haven, Connecticut, and Queens, New York.

P&W also connects with CSX, Norfolk Southern, Pan Am Railways, Pan Am Southern, the Housatonic Railroad and the New York & Atlantic Railroad, and connects to Canadian National and Canadian Pacific via the NECR.

It serves a mix of aggregates, automotive, chemicals, metals and lumber customers in southeastern New England, handling approximately 43 000 carloads and intermodal units annually. It serves the ports of Providence, Davisville and New Haven, and a USA Customs bonded intermodal terminal in Worcester, Massachusetts. P&W also owns 45 acres of undeveloped waterfront land in East Providence which G&W expects to sell.

From the above link:

F-line to Dudley via Park wrote:
The P&W/NECR/VRS rights situation is haulage-only, with NECR doing the hauling between Bellows Falls and Willimantic. P&W doesn't touch anything until it's picked up in Willimantic.

I need to read more carefully the content at the URLs I post!

But the point still remains that P&W today can collect revenue on any CN interchange traffic south of East Alburgh as well as the revenue from any CP interchange east of Whitehall for traffic to RI/Worcester/NH. There just isn't that much volume flowing between P&W and the 2 Canadian carries today and I'm not sure there should be much growth in that business after the G&W acquisition. But I could be wrong.

Paper barrier permitting, couldn't P&W try to capture some of the lumber market in and out of LI? A lot of it comes from canada, and it's a market with room to grow.

F-line to Dudley via Park wrote:

BandA wrote:Aren't NECR & Pan-Am in a hostile relationship over trackage fees? Will this spillover into the P&W?

Doubtful. The STB is adjudicating that case, so there will be some final resolution to the Conn River VT rate dispute long before this merger even goes in front of the STB.

NS is far more concerned about CN establishing a competitive lane into New England and what it needs to do to shore up the Patriot Corridor to Ayer before CN starts making tangible inroads. Any petty disputes about who pays what to run to Bellows Falls will be forgotten in a nanosecond upon resolution of the case. It's all about Class I vs. Class I for them, which means nothing steals focus from their corridor to Ayer.

As does CSX. Remember, CSX just built an intermodal terminal right smack dab in CN's territory, only about 50 miles south of their corporate HQ in Montreal. Previous to this, CSX and CN had a good relationship interchanging cross border traffic, including deals to rate lanes into Worcester. Now, I'm fairly confident CN is going to strike back.... Also remember CN has deals with JB Hunt, Hub and Schneider (unlike NS and CSX who has exclusive deals with some) and other intermodal carriers. Also, CN has the most direct/cost competitive route to Mexico via CN-KCS and intermodal is the new favorite way to get in and out of Mexico. I'd be surprised if you didn't see CN steal away some intermodal traffic from both CSX and NS, especially if they plant their flag at Intransit in Worcester.

Granted, this will somewhat change the competitive landscape and cause some traffic shifts... but some of this speculation is over the top. A lot of traffic is simply not very "route flexible", competing roads (and suppliers, in the case where you're talking source substitution) would likely have effective response options, and the northern route ain't exactly the BNSF Chicago-LA racetrack. Mr Barlow's comments are much more on-point, IMHO.

Wonder if this could lead to one of the two routes along the Thames between Norwich and New London being abandoned. Way back in the day there was an interchange track between the New Haven and Central Vermont in downtown Norwich, but I think that was wiped out in the floods of '55, if not before.