Potential PAR/PAS Traffic Growth

I’m looking around online today about NS moving the stacks to B&A I was reminded that NY gave NS a 5 million grant to rebuild the Albany main. So even less capital outlay

newpylong wrote: ↑Wed Jan 18, 2023 8:38 am Furthermore, for all of the arm waiving about PSR and its benefits I would argue that PSR is exactly what prevented NS from acquiring full ownership of PAS.

It just didn't make sense for NS...

Go one step further: PSR prevented NS from buying all of Pan Am.

“PSR prevented NS from buying all of Pan Am”

How so?

NS VP of Engineering Ed Boyle presented at the 2022 and 2022 annual National Railroad Construction conferences re: how NS spent and plans to spend its roughly $1.5B annual capital budgets. As reported by Trains Magazine on-line, Boyle did not break down capital spend by project or category but suffice it to say that a big chunk gets plowed back into infrastructure renewal (eg, ~500 miles of rail renewal/year, 2.25M new crossties replaced, 20 bridges replaced, 2700 miles of resurfacing, etc) and the rest goes to capacity expansion primarily projects focused on the Chicago-Cincinnati-Jacksonville and Atlanta-Birmingham-New Orleans/Mobile corridors with 5-10 15,000 ft siding projects and IM pad expansions/improvements in Chicago (Landers, 47th Street, and Calumet); Charlotte, N.C., and Memphis, Tenn. The only NS IM pad improvement project in the northeast US is repaving Croxton pad at Secaucus NJ. IOW, NS has a preference for capacity expansion and improvements of its facilities primarily where it sees traffic growth, ie, not the northeast US.

With regard to NS opting to buy the 50% of PAS it didn't own (I forget - was this figure $140M?) and then add to that some portion of the $300M cost of the Hoosac Tunnel clearance project, I'm surmising that NS believes this would impose a large opportunity cost on its $1.5B annual capital plans for apparently little return in terms of revenue growth. NS can get more bang for its capital expenditures elsewhere in its vast network where it sees significant growth opportunities.

https://www.trains.com/trn/news-reviews ... ital-plan/

https://www.trains.com/trn/news-reviews ... tal-plans/

Spot on, Mr. Barlow, and go one step further with all of PAR and the capital investment it would have required not only on that system, but all the way down to Harrisburg and out to Buffalo (if not further).

Bracdude181 wrote: ↑Wed Jan 18, 2023 10:07 pm “PSR prevented NS from buying all of Pan Am”

How so?

CSX went through PSR mode, e.g. consolidating functions beginning in 2017 two years before NS did. That permitted CSX to move on from full PSR and begin to look for other opportunities to better its network such as their Pan Am acquisition while NS was still working through their initial PSR phase.

With all due respect to your well-reasoned and reasonable point, CSX never moved on from full PSR, they just simply pivoted to growth after implementation as part of the plan.

The very basic, essential characteristics that drive the railroad business, like being a capital-intense network business with multiple lines-of-business, is the dog here (and elsewhere) to the tail of a tool, not a magic wand, for growth in PSR.

I don't see much, if any, chance NS coulda, woulda moved for PAR. Since the industry was deregulated they never were able to get the dominant Water Level/West Shore network serving New England. Consequently, the amount of money they would have had to spend from Keag, across PAS and down to Harrisburg and out to Buffalo to try to unseat CSX's market dominance and squeeze out the benefits justifying the move simply looks like a bridge too far. Unlikely even in a scenario where Hunter Harrison applied PSR to NS with CSX playing catch up, including a protected New England ownership exit, and certainly, to Mr. Barlow's point, in light of other competing ways to invest for growth.

Looks to me like CN was more of a contender, probably from the kind of opportunity and threat the sale presented in light of limited other ways for them to grow, even with an even-poorer network. I wouldn't doubt that might have had some part to play in CSX pulling the trigger instead of a neutral non-Class 1 keeping the chessboard pretty much static. And, CP, well they definitely had much bigger fish to fry.

So, did PSR really keep NS from buying ST? Nope. But it did allow CSX to and might allow NS to stay in the long PAS/B&E game. And, it will be interesting to see how the 3 Class 1's try to maintain or improve their position in New England given the STB-conditioned open ex-PAR gateways, neutral operation of B&E including in its relationship to GWI-owned properties, and improved NS intermodal business.

Circling full round, in the impact of a declining coal business once accounting for ~40% of revenue with a sub-50's operating ratio covering up the sins in the carload merchandise business and providing the virtue to give rise to the tougher intermodal business, all within a serious on-going industry struggle with how to grow, it's easy to see why PSR came to the US and spread so quickly, and, why it will remain.

Casual observation of 426/427 on birch hill Subaru guy’s videos suggest that csx is not moving huge amounts of traffic to and from Maine via Worcester. It seems on the low side by historical standards.
We will see if they can grow it. Perhaps some has moved to other gateways? Eg nmj, Danville or even off of pas?

It hasn't gone anywhere. Tonnage in winter is far slower than any other period. The only plus side is more LPG.

Anecdotally if your sample set for 426/427 is only between Ayer and Worcester you're missing a lot of of the tonnage that comes out of Maine and terminates in Ayer on PAS ie Poland Spring, paper for Tighe, wallboard, etc.

Thanks
Yes, sampling Ayer-Worcester
Am watching to see if csx increases traffic between its core system and the former PAR, much of which must go via Worcester. Maritimes traffic for example could move via Worcester in theory

Take the commentary on those videos with a grain of salt.

I do
I’ve just been looking at train lengths and easy to identify stuff like loads of forest products or other building materials

Only about 20 cars on 427 south of Ayer this afternoon.

Over 60 cars to head north today. But, if you're looking for the feast they're still setting the table and haven't even served the appetizers!

I'm anticipating ~5-10 years out, ~2-3 times the annual number of loaded and empty cars moving over the ex-Barbers gateway, exclusive of the NS trackage rights traffic.

For color, that'll be traffic to/from the ex-eastern-B&M MA, NH, and ME; ex-MEC ME; ex-BAR northern ME; and, ex-CP New Brunswick territories.

For once we agree.

It's hard to market what you can't deliver and they can't deliver until not only the physical plant is resolved but all systems (AND labor) are integrated into CSXT.

40 years of sh*t sandwiches are not going to be unpacked in a day, or a year. I don't think a PHD is required to understand that they aren't dumping this kind of money in to move 50 cars a day to/from the rest of the system long term.