Freight and General New England RR News

F-Line to Dudley

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Don't know who ended up with it (CSX or Mellon) but someone should sell the "Pan American Railways" name to these folks and have it actually mean something.
Mellon holds the Pan Am trademark and gets to keep it. It's under some other shell company of his registered in New Hampshire.
 

Stlin

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What are the chances that the CSX /PAR transaction gets caught up in this, and gummed up? Will it get additional scrutiny in the wake of the KSC/CP news, and/or held for analysis pending?fast tracked to provide more competition in the maritime lanes that PAR provides access to? Given that NS, CSX and PAS touch CP at albany, does that change things?

There's so many questions with this now. I assume that the Class I legal departments will be soon be focusing on the bigger fish here, and readying their stb filings.
 
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F-Line to Dudley

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What are the chances that the CSX /PAR transaction gets caught up in this, and gummed up? Will it get additional scrutiny in the wake of the KSC/CP news, and/or held for analysis pending?fast tracked to provide more competition in the maritime lanes that PAR provides access to? Given that NS, CSX and PAS touch CP at albany, does that change things?

There's so many questions with this now. I assume that the Class I legal departments will be soon be focusing on the bigger fish here, and readying their stb filings.
I would think neutral to slightly helpful. CP going for broke with port access lends credence to CSX implanting self in Maine as a competitor, and VRS's unfocused challenge not naming their trackage rights compensation seems more unfocussed with them getting large share of traffic from an enriched CP.

There's such an order of magnitude's difference in the stakes of these mergers that I doubt much changes overall. KCS is a smaller Class I, but midsize Class II Pan Am is practically a boil on their butt in comparison.
 

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Oh, dip. Canadian National tries to ratfuck Canadian Pacific's bid for acquiring KC Southern with a very-latecomer but 20% higher stock bid to the KCS board. Probably not going to fare well with the feds because CN has extreme amounts of route duplication with KCS down the whole Mississippi River Valley while CP+KCS has virtually zero overlap and was more plug-compatible at their respective endpoints. But Wall St. sure popped a boner over this move. Much like the CP, CN is a major gatekeeping force around the fringes of New England (they're primarily allianced with Genessee & Wyoming from Montreal to Worcester), so this slugfest in the middle of the continent definitely affects the freight economics around here in a big way.

Unclear if KCS's board is batting an eye back in CN's direction. Most of the hype about this counter-offer has come from CN itself during the first 24 hours since it's been announced. Definitely don't put any odds on the Surface Transportation Board getting its business done in any timely fashion for the rest of this year with how much their world has just been overcomplicated by this challenge.
 

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CSX updates its Surface Transportation Board filings re: the Pan Am acquisition for paperwork cleanup now that it's been considered a major transaction. Nothing major. STB also rules that Feb. 2022 is the worst-case end date for consumating the merger if it's blessed with approval (about what expected...and indicative of how much the Feds are going to have their hands full with the much bigger Kansas City Southern free-for-all for the balance of '21).


These new filings had some really interesting maps in them linked here, which are good for general reference (links are supposed to go to the direct pages...pages referenced if the links don't land).

  • PAR System and Operations Maps (page 67-70): More detailed than the System Map on PAR's own website. p.67 enumerates total system mileage of PAR vs. Pan Am Southern, all trackage and haulage rights, and the individual internal company names given for each branchline in the system. p.68 shows every regularly scheduled freight train on PAR's schedule by train symbol, with general flow of goods across system. p.69 shows where all of their interchanges with other RR's are, and what train-length capacity each interchange has. p.70 is an overlay of Amtrak passenger service in NY/New England in-and-around the merger parties.


  • PAR/PAS Freight Tonnage by Location, 2019 (p.187-188): p.187 shows freight density by line segment over the whole network, by millions-of-gross-tons. Gives a good sense of purely local freight volumes, and illustrates how mission-critical the Albany-Portland freight main's traffic lane is...as well as how utterly pathetic PAR's Greater Boston presence now is after 37 years of Tim Mellon ruination. The middle Lowell Line makes pretty good bank due to singularly huge Boston Sand & Gravel in Somerville and the Tighe Warehouse customer off Montvale Ave. in Winchester...and then everything drops off a cliff (large room for improvement @ Everett, for instance). Decent traffic to/from CSX in Worcester via their Albany-Portland joint-venture daily, utter shite at the interchanges with pretty much any other RR (incl. the not-at-all-tiny Genessee & Wyoming + Vermont Rail System). Microscopic loads in NH, VT, CT...including places with large growth prospects like Portsmouth cluster. Basically, the end result of 4 decades of "If it ain't on the main, we don't give a flying fuck!" philosophy and basically treating the formerly immense B&M system as pure cynical scrap value.
p.188 shows the projected tonnage changes Patriot Corridor vs. B&A main after the merger, after Norfolk Southern gains its double-stack trackage rights via Worcester to Ayer. Graphed in "million gross ton miles". The reason the B&A volume increases are fairly small outside of Worcester County while the Patriot Corridor deductions are so huge across-board is that by going double-stack and running longer+faster, NS gets *enormously* more efficient in the short-term at running same and/or growing carloads Albany-Ayer. And also that it's *only* Ayer that NS is after...they aren't really doing much with Greater Springfield/I-91 yet. It's illustrative of just how much a quantum-leap stacking is in efficiency that they shed so much deadweight with the routing flip. As described in earlier post, NS doesn't have much growth room inside 2 allowed B&A slots so eventually it will become worth their while to take the Patriot Corridor completely in-house and complete the double-stack upgrades in-house. But they get about 10 years of growth curve to play around with via their B&A trackage rights, and that's good for them. Chart does not speculate how much G&W could potentially grow the Patriot Corridor under temporary stewardship. As the data indicates, PAR has been utterly don't-give-a-shit pathetic at driving any interchange traffic with any of the other area RR's. So the Pat Corridor will probably see some immediate elastic bounceback just by having someone in a Marketing Dept. returning phone calls for the first time in 4 decades, thanks to that phone now being answered by G&W.​


  • CSX & PAR/PAS Freight Density, 2019 (p.264-265). Plotted as million gross ton miles by direction. These are good ones for snapshotting regional freight flows at the macroeconomic level. The CSX chart on p.264 gives good sense of the utter enormity of the CSX national network, and also how ginormous the Albany Hub is as center of our economic universe here in New England. Doesn't break it out down to Greater Boston level, which is comparably tiny on CSX's southside local network (though nowhere near as pathetic as PAR on northside Greater Boston). Surprisingly, Springfield is an enormously bigger in-state freight hub than Worcester. CSX's West Springfield yard is the largest and densest freight yard in New England...but I never thought it outslugged Worcester/etc. by that big a margin. Interesting. The PAR chart on p.265 is more granular, showing volumes by-direction. Again...cannot be understated what an absolutely fucking pathetic anti-job they are doing around Greater Boston. That right there is own-self cooties plotted in chart form. A dead-cat-bounce could do better...and ultimately will when CSX starts running a tighter ship.
Note that the "ton miles" maps are skewed high in the direction where empty cars run. For example...they ship outbound to Peabody, only take empties inbound. That's because it's matter-of-fact understood that transporting empties is more cost-inefficient than transporting full loads you're getting paid for, so of course the return trip to Somerville is going to be skewed-high on its "ton miles". What you want given the layout of this system is really huge numerators in the TO Ayer, TO Portland, and TO Waterville directions running up the score against the empties-heavy denominators in the opposite direction, because that's the macro-level flow of goods for driving growth. The Ayer-Portland main would ideally have a lot more bi-directional loaded pull since it links those two nodes (right now it's kind of half-cocked on that calculation), and if CSX is really bullseyeing Canadian port access there's a lot of unfulfilled bi-directional growth to be had between Portland-Waterville (though it's going to take punishing amount of self-effort to realize those particular gains).​
 

Stlin

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Looks like the CSX-PAR deal hit a snag; as it explicitly invites reapplication, and as CSX has said it'll revise, I assume that it isn't fatal. However, it'll push things back... 6 months to a year?

 

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Looks like the CSX-PAR deal hit a snag; as it explicitly invites reapplication, and as CSX has said it'll revise, I assume that it isn't fatal. However, it'll push things back... 6 months to a year?

The STB's response is chock full of breadcrumbs to other "major" transactions from recentish-past caselaw that do provide a model for what they're looking for, so definitely not fatal. They wouldn't have provided such obvious direction if that wasn't exactly what was gonna sway them.

From CSX's standpoint, the original app played it as conservative as possible re: their business plans for New England, emphasizing continuity of service more than where they were going to drive biz increases the hardest. Intentionally opaque so direct competitors like CP wouldn't get any clear signals on how they planned to magnificent bastard their way into superior alliancing from the Maritimes ports, for instance. Vagueness of that sort was fine and dandy for a minor transaction. Major requires them to spell it out more. They've already spelled it out internally and (via NDA) with most of the affected customers. It won't end up hurting them or changing anything to have to be more publicly specific now. Vagueness was mainly a tactic for keeping the Wall Street hot-stove in optimal guessing mode for their gains.

Since the customers already know the whole-enchilada plan, a resubmit won't end up creating any more potential adverse-filing litigants. Those folks are already out...most had no specific comment other than preferring "major" review...and the remaining grievance potential will be lower not higher with a re-file (more time for the least-serious scammers to gum up the works, though!). Beware any "Oh noes! They're gettin' cold feet! Ready to call this off!" insider pronouncements, as they're probably sourced from somebody with a direct monied rooting interest in seeing this fail. The sequence of events this week runs completely contrary to how they'd be proceeding if it were indeed on verge of collapse (i.e. Wall Street is going to render its displeasure on them loudly if the re-file is just a "deepfake" to eventual pulling the plug).

Apparently this also isn't a sign of any major policy shift by the Biden STB, either, as most of the board vote for this re-file decision was from Trump holdovers. Probably means elevation to "major" was a high-odds chance all along, and CSX simply didn't see that as big enough setback to be the least bit risk-averse about trying to squeak it through as "minor" transaction. If they feared this very re-file outcome much, they would've provided more than minimal biz detail in the first place.

What it does unfortunately signal is that the KC Southern megamerger has gone so off-the-hook now that it's going to paralyze the perennially underfunded/overworked Surf Board for the balance of '21. KCS has now broken it off with CP and tried to elope instead with late bidder CN in a *MUCH* more antitrust-fraught union, with extra stock voting-trust sketchiness on top. It's quite likely the Board had excess motivation to throw their own hides a life raft by not needing to hash out 2 major transactions in one year. CN-KCS is shaping up to be such a black hole singularity time/resource suck with so many unwieldy third parties stirring the pot that they simply said "nuts to this; how bout we do you next year instead?"
 

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Per NErail photo spotters*, CSX's executive business passenger train is laying over in Worcester for the week (arrived yesterday) for a regional touring itinerary TBD. A relatively massive-sized consist, meaning quite a lot of corporate hotshots* making the trip. Obvious speculation is that they're visiting Pan Am to talk turkey for the merger app re-filing to the STB. Definitely telegraphs the complete polar opposite of any cold feet.

*Yes, that's a tricked-out observation car on the rear with black-tinted floor-to-ceiling/wall-to-wall rear-view window for surveying one's corporate conquests in complete privacy and HD aspect ratio. And yes, they maintain their own fleet of ride-smooth ex-Amtrak F40PH locos so nobody suffers the indignity of a single drop of spilled martini from 'uncivilized' rough-gear freight acceleration while riding in style. Go big or go home.
 

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*Three* locomotives? Is that 1 for hauling, 1 for Head End Power, an 1 spare?
 

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*Three* locomotives? Is that 1 for hauling, 1 for Head End Power, an 1 spare?
The third one in standard/non-special paint is just a GE Evolution freight switcher coupled to it. It's been wyed around in the P&W yard and repositioned across from Union Station since arrival, and is being used as a static boardroom for this week's local meetings. I guess the local crews qualified in P&W territory were the ones who moved it to that spot, so they had to use the local power they're trained on rather than the F40's they're likely not. It came in with just the F40's, and one of them is no-doubt always on low idle providing power to the coaches while it's parked there across from Union Station (guess they could've paid off the T to hold their confab in the commuter layover yard next door on plug-in power, but for the vistas apparently being nicer up on the station viaduct).

Timmy Mellon's much shorter Pan Am business train (which I bet he gets to keep) is pretty nice with its E-unit locos and antique stainless steel dome cars. But CSX's biz train largesse makes it look like dinghy vs. superyacht in comparison. Go big or go home indeed.
 

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