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CSX reviewing 8,000 miles of rail lines for potential sale NEWSWIRE

By Bill Stephens | January 22, 2018

Lines in Illinois and Florida are first put out to bid

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CSX Transportation eastbound auto rack train Q264 slices through the fog on the former Boston & Albany route in Westfield, Mass., in 2008. The B&A, as well as branches in Massachusetts, are among the 8,000 miles CSX is reviewing for potential sale.
Bill Stephens
JACKSONVILLE, Fla. — CSX Transportation is reviewing 8,000 miles of rail lines as potential candidates for sale or lease, Trains News Wire has learned.

People familiar with the situation do not expect all 8,000 miles to go on the block.

But they say the sheer amount of mileage under review — more than a third of CSX’s 21,000-mile network — is an indication of management’s intent to leave no rock unturned in a drive to cut costs and boost profitability.

Last year, CSX executives said everything’s for sale at the right price.

“Everything we’ve got out there is going to go through some scrutiny. If it creates shareholder value to sell it, we’re going to sell it,” then CEO E. Hunter Harrison told the Credit Suisse Industrials Conference on Nov. 29. “If it creates shareholder value to keep it, we’re going to keep it.”

The review effort is continuing under new CEO Jim Foote. The first four subdivisions were put out to bid last week, including a pair of routes in Illinois and Florida.

CSX is expected to put a handful of subdivisions on the block every few weeks, according to people familiar with the matter.

Routes under review include:

  • The former B&O from Greenwich, Ohio, to Baltimore. (Update: CSX has since removed this route from the review list and will retain the line.)
  • The former Boston & Albany main and related branch lines in Massachusetts.
  • The former Louisville & Nashville between Cincinnati and Atlanta.
  • Most of the former Baltimore & Ohio main linking East St. Louis, Ill., and Cincinnati.
  • Former Pere Marquette trackage in Michigan.
  • CSX’s cross-border incursions into Canada and related U.S. trackage.
  • The railroad’s hard-hit Appalachian coal network, including portions of the former Clinchfield.
  • Large sections of the Florence Division in the Carolinas.
  • The Dothan sub in Alabama and Georgia.
  • The Auburndale sub in Florida.
  • Branches and redundant trackage scattered around the system, including some in Alabama, Connecticut, Georgia, Illinois, Indiana, Ohio, and New York.
CSX Transportation eastbound auto rack train Q264 prepares to enter State Line Tunnel on the former Boston & Albany route in Canaan, N.Y., in July 2014. The B&A, as well as branches in Massachusetts, are among the 8,000 miles CSX is reviewing for potential sale.
Bill Stephens
Also under review: the Northwest Ohio Intermodal Terminal, which became a white elephant after CSX dropped its hub-and-spoke intermodal strategy. The terminal, in North Baltimore, Ohio, served as a sorting hub for low-density intermodal moves and now is an underused block-swapping facility that may be attractive to a western railroad.

In a statement, CSX said it’s continuing to evaluate all aspects of its network and operations.

“Based on an initial review of our network, the company has decided to put forth two rail segments near-term for a potential transaction: the Decatur and Danville Secondary Subdivisions in western Illinois and the Tallahassee and PA Subdivisions in the Florida Panhandle. CSX is communicating with its customers on these rail lines, as well as union representatives and employees,” CSX says.

The railroad will coordinate with buyers to ensure a “safe, smooth service transition that minimizes impacts to customers and allows for long-term growth on these rail lines,” CSX says.

Short line and regional railroad operators, as well as private equity investment firms, have already expressed interest in some of the lines under review, according to multiple sources familiar with the situation.

The route sales would represent a potential expansion bonanza for short line and regional railroad holding companies such as Genesee & Wyoming, Watco, OmniTRAX, and RJ Corman, as well as independent short line operators.

The line review and potential sales go much further than the CSX of Tomorrow strategy hatched under former CEO Michael Ward, which envisioned focusing the railroad’s resources on high-density routes while retaining a lower-density feeder network.

Under CSX of Tomorrow, CSX would have concentrated its capital spending on the so-called Outer Triangle, the high-density main lines linking Chicago, New Jersey, and Florida, as well as routes to New England, St. Louis, and the former B&O from Ohio to Baltimore via Sand Patch.

This 9,200-mile primary network carries 84 percent of the railroad’s train miles and accounts for two-thirds of its originating and terminating traffic, former CSX officials said last year.

But Ward’s CSX did not want to part with its lower-density lines — including the coal network — because they still originated a third of the railroad’s traffic. Instead, CSX downgraded the lines and reduced track speeds to cut maintenance costs.

Now, by looking at spinning off non-core routes, CSX aims to shed maintenance costs altogether while still handling most of the traffic the feeder network generates.

Harrison, who became CEO in March 2017, died last month. Foote was named CEO on Dec. 22 and has vowed to pursue Harrison’s vision for the railroad.

25 thoughts on “CSX reviewing 8,000 miles of rail lines for potential sale NEWSWIRE

  1. Not entiirely surprised to see Auburndale on the list, there can’t be a lot of freight on the line these days given the success of the FEC and most it ends on the passenger-oriented Tri-Rail line. How are they expecting a sale to work though? Shortlines?

  2. Good bye Newcastle Sub. It was nice knowing you since you were built in the 1870’s. I hope the track removal gangs are gentle on you. But maybe Wheeling and Lake Erie and/or RJ Corman might scoop you up. Either way, I hope you have a nice retirement.

  3. I’m curious about the “New Rock” that CSX owns and operates between Rockdale and Bureau, IL. You would think that IAIS would be a natural fit for this. Also, what about the Tolleston, IN – Crestline, OH portion of the former PRR Chicago – New York mainline that is operated by CFE (and presumably still owned by CSXT)? Would think that CPRS may be interested in this in addition to getting their own way between Chicago and Detroit.

  4. I also thought that the “New Rock” would be a good disposition candidate after EHH came on the scene. When I asked the question on the Iowa Interstate Yahoo Group, I learned that CSX doesn’t own the line from Joliet-Bureau (and Bureau-Henry on the Peoria branch); CSX leases it from International Mining Corporation.

    After Maytag bought Chicago Pacific Corporation (the successor of the post-liquidation Rock Island) for $1 billion in 1988, Maytag sold the line to International Mining and kept the non-rail assets (such as Hoover).

  5. Some of this was coming anyway, even without EHH. Mainline triangle was already in motion. Coal was in significant decline. Center of RR was in jeopardy. “Mainline” converted to “local” only had a certain lifespan before maintenance was going to overtake revenue and was going to be outsourced. The intermodal piece is the real game changer to what CSXT was working towards under the previous Management Team.

  6. Iowa Interstate already is operating everything from Utica west (sublease from CSX at that east end). So CSX could sublease to them Joliet-Utica.

  7. They are looking for the P/E ratio. They don’t care about making $14 by spending $10. They are only interested in returns of $16 and more. If that means running one train around a triangle (in a circuit) then that’s what they will do. It’s not about profit, it’s about profit ratio.

    CSX has always been profitable.

  8. One item said large portions of the Florence Division would be up for sale. What portions would this be? Certainly not the A line!

  9. Bring back Chesapeake & Ohio, Western Maryland, Columbia Newberry & Laurens, Charleston & Western Carolina, Piedmont & Northern, Durham & Southern, Tampa Northern . . .

  10. The BLET union is firmly denying that CSX informed them of any potential sales involving the properties listed in this article. “Trains” reported that CSX had informed customers and union officials. Evidently this wasn’t the case.
    Either “Trains” has a bad source, or the Union is lying to its members. This type of thing needs to be confirmed before it’s released. These aren’t model railroads we’re talking about-they’re people’s careers and livelihoods! I don’t think there’s more than 2 comments on here dealing with that reality.

  11. Take it eaaaasy, they will also sell you the Brooklyn Bridge, hey everything is on sale for a price if the right moron is around. God save the Queen and the hapless Foote, yes there is someone lower in the IQ scale than the Brit’s royals.

  12. Wow, 8000 more miles of rinky dink scab railroads and bike trails – wonderful. Railroading is about the only industry where management is rewarded for destroying the infrastructure they oversee.

  13. Map of the month showing all the proposed lines to be sold as they connect with CSX and other railroads. Fantastic

  14. Commenters have not mentioned the Florida panhandle line actively posted for sale. This former L&N/SAL property was prime candidate for reinstated Amtrak service (New Orleans-Orlando) until new management at CSX turned hostile to the project last year. Would sale to a Class ll or lll allow for the due diligence to continue?
    On the freight side, the panhandle line has been used by CSX as a safety valve to relieve congestion on the preferred ex A&WP segment to the north, with most traffic headed to and from the Waycross, GA yard. About 10-12 trains daily currently on the panhandle. If it were sold to an Omnitrax or G&W type, would we expect that CXS would continue to use it much as BN has with Montana Rail Link, i.e., dispatching CSX trains on the line as needed?
    I’d be interested in your thoughts.

  15. I believe the segments in AL and in N.FL.would be excellent additions , as well as profitable for G &W. They already have existing lines presently in the area, and they seem to be constantly increasing in traffic.

  16. How about if CSX sells some of it’s track in Kentucky to the group restoring the C&O 2-8-4? Then they would have a place to run excursions. Even 25-50 miles of track would be enough. I don’t see CSX lifting their steam ban anytime soon, Foote might carry over Harrison’s anti steam attitude, and CSX was against steam even before Harrison, since around 1995. But a line that is sold is out of CSX’s hands, and the new owner can do what they want with it including running excursions.

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