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JACKSONVILLE, Fla .– CSX Transportation will acquire Pan Am Regional Railways in a deal that redraws the railroad map in New England.
CSX, already the dominant freight railway in the region, will expand its reach to Vermont, New Hampshire and Maine, as well as to Saint John, New Brunswick, via the Pan Am transportation rights agreement with branch lines owned by Irving.
“In Pan Am, CSX acquires a strong regional rail network in one of the most densely populated markets in the United States, creating new efficiencies and market opportunities for customers as we continue to grow,” said today hui Jim Foote, CEO of CSX, in a statement announcing the deal. “We intend to focus on the customer and industry-leading CSX operating model to the shippers and industries served by Pan Am. We look forward to integrating Pan Am into CSX,” with substantial benefits to the Northeastern rail industries, and to work in partnership with the Link Railways to provide exceptional supply chain solutions in New England and beyond.
Pan Am, a private company owned by Tim Mellon, 78, and other investors, entered the market earlier this year. CSX’s bid defeated two other contenders interested in acquiring the largest regional railroad in North America.
“Pan Am is pleased to enter into this agreement with CSX, a North American rail freight leader,” said Pan Am Chairman David A. Fink. “This is great news for New England shippers and the national freight network as a whole.”
Including transportation rights, Pan Am spans 1,700 miles from the Albany, New York, Maine area. It includes the route of the old Maine Central, Boston & Maine, Portland Terminal and Springfield Terminal railways. Pan Am connects to four Class I railways – CSX, Norfolk Southern, Canadian National and Canadian Pacific – and 14 branch lines. It also operates the Massachusetts Bay Transportation Authority’s commuter lines in the Boston area and hosts Amtrak’s Downeaster service from Boston to Portland, Maine.
CSX connects to Pan Am in Rotterdam Junction, New York, on its old New York City water central level route, and outside of Worcester, Massachusetts, via its old Boston and Albany mainline, which is by far New England’s busiest freight route. .
Pan Am entered the rail business in 1981 when the company, then known as Guilford Transportation Industries, purchased Maine Central for $ 15 million. Two years later, Guilford bought the bankrupt Boston & Maine for $ 24.5 million. Guilford acquired the Delaware & Hudson from Norfolk & Western for $ 500,000 in 1984, but filed for bankruptcy in 1988.
Guilford Rail System was renamed Pan Am in 2006. Despite the long-term decline of Maine’s paper and forest products industries, as well as manufacturing across New England, Pan Am and Guilford have managed to make profits every year.
Pan Am’s traffic and revenues have increased in recent years. Maine’s paper mills have rebounded after shifting production from paper used in printing to high-demand paper used in packaging. Propane, biodiesel, municipal solid waste, aggregates and spring water from Poland are growing sources of traffic for the railroad, which also maintains considerable land holdings in the Boston area.
The CSX-Pan Am agreement will be subject to regulatory review by the US Surface Transportation Board. Terms of the deal were not disclosed, although people familiar with the matter said the purchase price was around $ 700 million.
Norfolk Southern, in a November letter to STB, raised regulatory concerns about a possible CSX acquisition of Pan Am.
NS serves New England through its Pan Am Southern joint venture with Pan Am Railways. A CSX acquisition of Pan Am Railways would include Pan Am’s half of the Pan Am Southern joint venture.
The Pan Am Southern consists of 437 miles of rail lines and right-of-way routes, including the B&M Mainline between Mechanicville, New York, and Ayer, Massachusetts, which provides NS access to the Boston area via its so called Patriot Corridor. Pan Am’s Springfield Terminal subsidiary operates the Pan Am Southern, which also includes the north-south route that Pan Am uses between White River Junction, Vt., And its branches in Connecticut via Springfield, Massachusetts.
On Monday, NS expressed concerns about what a CSX-Pan Am deal could mean for competition.
“In 2009, Pan Am Railways and Norfolk Southern negotiated a pro-competitive joint venture which resulted in the creation of Pan Am Southern,” NS said in a statement. “This transaction was approved by the Surface Transportation Board in large part because the joint venture created competition in the market. Over the past decade, Norfolk Southern has ensured the success of this business and remains true to it today. We now understand that CSX is in the process of acquiring Pan Am Railways. We are carefully examining the effects of this transaction, in particular any competitive harm in the market. We remain committed to working with any potential buyers of Pan Am Railways, the STB and any other applicable regulator to protect shippers, commuters and rail passengers in the New England market. “
But in a CSX acquisition from Pan Am, only a few shippers would go from two railroad access to one, and no local line of interest would go from two Class I connections to one. .
– Updated at 5:05 p.m. CST with a statement from Norfolk Southern.
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