The deal, which was announced last month, is an indication that CSX’s primary aim is to grow the business, Foote told an investor conference this week.
“Normally, a Class I would not have sold that line to another Class I railroad,” Foote says, noting there’s strong demand from potential short line operators. “Anytime we put a for sale sign up, we’ve got 22 bankers and 15 infrastructure funds at the door the next day wanting to buy it.”
But spinning off the Montreal route to a short line would put another railroad between CSX and CN, complicating the connection between the Class I systems and stifling potential traffic growth.
CSX and CN in October will begin joint intermodal service linking Toronto and Montreal with New York, New Jersey, and Philadelphia. The traffic will ride the railroads’ existing trains that are exchanged at the Buffalo, N.Y., gateway, and in Huntington, Quebec.
In Montreal, the traffic will use CN’s terminal inside the city limits instead of the CSX terminal in Valleyfield, which is southwest of Montreal.
“Our focus right now is to grow the business and we’re looking at unique and creative ways to do that,” Foote says.
Most line sales to short lines do not meet expectations, Foote contends.
“When we cut off that line, guess what? It doesn’t grow,” he says.
CSX’s ongoing network rationalization program has identified about 4,500-miles of low-density routes as candidates for potential sale or lease, a figure that includes the 1,325 miles of lines that have already been put out to bid, sold, or are in the process of being sold.
Foote spoke at the Morgan Stanley seventh annual Laguna Conference on Wednesday.
