The railroad is seeking to prove to regulators and existing and potential Pan Am customers how the acquisition would provide more modal options, including shifting more shipments from truck to rail in order to take advantage of environmental benefits, according to CSX (NASDAQ: CSX).
The acquisition would benefit existing Pan Am customers, such as those shipping forest products, aggregates and sand, and particularly those that need to ship their goods over 500 miles to and from the New York market, CSX said. The acquisition would expand CSX’s reach in Connecticut, New York and Massachusetts while adding Vermont, New Hampshire and Maine to its existing 23-state network, CSX said in a Friday release.
The Surface Transportation Board didn’t approve CSX’s earlier application to acquire Pan Am, saying in a May 26 ruling that more details were needed about how Pan Am and its customers would be integrated into CSX’s network.
CSX says this revised application takes a deeper look into potential operational opportunities and growth projections that would come from an end-to-end, single line service.
“Adding Pan Am to our network will extend the reach of our service to a wider customer base over an expanded territory, creating new efficiencies and market prospects for customers to capitalize on a robust pipeline of growth opportunities to move freight to, from and within New England,” CSX President and CEO Jim Foote said.
Meanwhile, an end-to-end network means that there would be no overlap between the areas that CSX and Pan Am serve, meaning that CSX’s and Pan Am’s networks wouldn’t be competing against each other.
“They’re in New England. We serve a little bit of New England but not as much as they do. We have the rest of our network that they don’t touch. If you look at a map and put us together, there’s no overlap. We connect in one or two places in Massachusetts, and that’s it,” CSX spokeswoman Cindy Schild told FreightWaves.
CSX said it is working on an agreement with Vermont Rail System to address that short line’s concerns about a stretch of PanAm’s line operated by PanAm Southern, a subsidiary of PanAm that is jointly owned by CSX and Norfolk Southern (NYSE: NSC). Vermont Rail System is concerned how its access to Pan Am Southern would be affected since Genesee & Wyoming would be the operator of Pan Am Southern and Vermont Rail Systems sees itself as one of G&W competitors.
The railroad also said it has the support of numerous stakeholders in New England, as seen by the more than 80 letters of support from shippers, local businesses and local and state elected officials sent to STB.
CSX plans to deploy more fuel-efficient equipment to the Pan Am network as part of a wider goal to upgrade and modernize the Pan Am system over the next five years and improve network fluidity there.
Those benefits would extend to passenger rail, including Amtrak, which has come out with concerns about the acquisition.
“We have a longstanding history of working cooperatively with them. If anything, we have been hosting passenger service and commuter rail successfully for certainly a long time,” Schild said. CSX’s operational changes have also resulted in improving Amtrak’s on-time performance metric to over 90%, she said. The railroad has also worked with public partners to expand passenger rail capacity in central and southern Massachusetts and around Boston.
The Pan Am network consists of nearly 1,200 miles, while the Pan Am Southern system is more than 600 miles. The network accesses multiple ports and large-scale commodity producers in New England, CSX said.
“Pan Am remains excited about this merger with CSX, a North American leader in rail-based freight transportation,” said David A. Fink, president of the North Billerica, Massachusetts-headquartered Pan Am. “We have continued to receive support from our customers about the transaction as they know that CSX’s investment in the region will benefit not only New England shippers but also those who will have new access to their goods and products through the direct connection into CSX’s national rail network.”