CSX has announced a deal to acquire New England regional railroad Pan Am Railways, Inc, a move Norfolk Southern (NS) plans to fight at the Surface Transportation Board (STB).
Pan Am Railways an Am) bills itself as ‘North America’s largest regional railroad system’. Headquartered in North Billerica, Massachusetts, Pan Am owns and operates a highly integrated, nearly 1,200-mile rail network and has a partial interest in the more than 600-mile Pan Am Southern system. Its network and haulage agreements cover an area ranging from Saint John, New Brunswick to New York.
The reach to Saint John is via a haulage agreement with Irving Railroads, which owns the Maine North Railway. Altogether Pan Am has connections with four Class I Railroads (CN, CP, NS and CSX) and over 20 regional short line railroads. It shares ownership in the Pan Am Southern system with NS.
“Pan Am’s network across New England has access to multiple ports and large-scale commodity producers. The transaction will expand CSX’s reach in Connecticut, New York and Massachusetts, while adding Vermont, New Hampshire and Maine to its existing 23-state network,” stated CSX.
James M. Foote, president and CEO of CSX, said: “In Pan Am, CSX gains a strong regional rail network in one of the most densely populated markets in the US, creating new efficiencies and market opportunities for customers as we continue to grow.
“We intend to bring CSX’s customer-centric focus and industry-leading operating model to shippers and industries served by Pan Am. We look forward to integrating Pan Am into CSX, with substantial benefits to the rail-served industries of the Northeast, and to working in partnership with connecting railroads to provide exceptional supply chain solutions to New England and beyond.”
David A. Fink, president of Pan Am Railways said: “Pan Am is pleased to reach this agreement with CSX, a North American leader in rail-based freight transportation. This is great news for New England shippers and the national freight network overall.”
The transaction is subject to regulatory review and approval by the STB, where CSX’s main eastern competitor NS has already filed a letter raising concerns about CSX acquiring Pan Am’s partial interest in Pan Am Southern.
As noted above, NS owns the other half of Pan Am Southern, and it does not want to see CSX take control of Pan Am’s stake. In 2009, the STB approved NS taking a 50% share in Pan Am Southern. According to NS, that was because that deal would “strengthen competition with CSXT”.
NS added: “Any CSXT effort to acquire Pan Am would threaten to materially undermine this existing competition, thus impacting not only NSR, but also rail shippers and other railroads. We recognise that the Board would address these competitive harms in a proceeding to authorise CSXT to control Pan Am.”