WASHINGTON – CSX Transportation’s proposed acquisition of Pan Am Railways threatens the viability of the former Boston & Maine Hoosac Tunnel route that provides competition for CSX’s own New England main line, Canadian Pacific has told federal regulators.
The vast majority of CP’s traffic to and from New England runs via Mechanicville, N.Y., and the former B&M main line that is now part of the Pan Am Southern joint venture between Pan Am Railways and Norfolk Southern.
CSX, already the dominant freight railroad in New England, plans on stepping into Pan Am Railways’ shoes in the Pan Am Southern. A new Genesee & Wyoming subsidiary, the Berkshire & Eastern, would become the neutral operator of the Pan Am Southern. NS would continue to route a pair of merchandise trains, 11R and 16R, over the Pan Am Southern to and from East Deerfield Yard, but its daily pair of intermodal and automotive trains to and from Ayer, Mass., the 22K and 23K, would shift to new trackage rights over CSX’s parallel former Boston & Albany route via Worcester, Mass.
“Today PAS is owned by NS and Pan Am, each of which has a strong and undivided incentive to support the viability of the PAS route in competition with CSX,” James Clements, CP’s senior vice president of strategic planning and technology transformation, wrote in an Aug. 27 filing to the Surface Transportation Board. The filing was posted Monday on the STB’s website.
That would change if CSX were to acquire Pan Am Railways and its 50% stake in Pan Am Southern. “CSX will become the one-half owner of PAS and have incentives to degrade PAS’s competition against CSX single-line routes,” Clements wrote. “CSX will have a veto over capital maintenance and other investments in the viability of the competing PAS route.”
The diversion of NS intermodal traffic to CSX’s former Boston & Albany would reduce NS’s incentive to support the viability of the Hoosac Tunnel route, Clements argues, while CSX over the long term would route its single-line traffic away from Pan Am Southern onto the B&A. And that, Clements says, would eliminate or significantly diminish the viability of the B&M main line.
CP also questioned whether the Berkshire & Eastern could be a truly neutral carrier due to G&W’s ownership of neighboring lines in New England, including New England Central, Providence & Worcester, and Saint Lawrence & Atlantic.
“These structural changes resulting from the Transaction will permanently alter the New England rail map, with long-term risks to the continued viability of the only real competitive option to CSX,” Clements wrote.
CP Seeks Conditions
CP asked the STB to impose conditions that would prevent “the long-term decline and possible demise of the competition that efficient through service over the Hoosac Tunnel Route enables.”
Among the conditions CP seeks:
— Require that CSX and G&W keep open all Pan Am Southern gateways via the Hoosac Tunnel route.
— Require Pan Am Southern to maintain the former B&M main line at or above pre-merger levels.
— Require that Pan Am Southern maintain current service levels, including frequency, transit times, and consistency.
— That the STB monitor the impact of the merger on the B&M and maintain the ability to impose additional conditions to “protect the viability of the route.”
CP says the Pan Am Southern is its only viable route into the heart of New England from the west. “Though PAS’s Hoosac Tunnel Route hosts relatively few daily freight trains, it serves as a vital and unique competitive discipline to CSX, which dominates traffic volumes,” Clements wrote.
Post-merger, traffic on the line would fall by about a third due to the diversion of NS intermodal and auto trains and the shift of CSX-Pan Am Railways carload traffic to CSX’s former Boston & Albany line, Clements contends. This loss of traffic, he says, poses a risk that Pan Am Southern’s owners would not restore service if there were another collapse in the Hoosac Tunnel like the one that occurred in 2020 [see “Hoosac Tunnel experiences partial wall collapse …,” Trains News Wire, Feb. 12, 2020]. It took almost two months to reopen the tunnel after that incident.
Clearance Project in Doubt
Absent the CSX-Pan Am merger, traffic on the B&M would be likely to grow, CP says, noting that Massachusetts is pursuing a potential clearance project that would allow the route to handle domestic double-stacked containers.
“The intermodal diversions will almost surely pull the rug out from under any possibility that NS would support the investments necessary to expand clearances at the Hoosac Tunnel to support the movement of additional double-stack intermodal traffic,” Clements wrote.
“More fundamentally, the substantially reduced revenue-generating potential of the Hoosac Tunnel Line from the combined effect of the intermodal/automotive traffic diversions and the future loss of overhead manifest traffic to/from the former PAR lines that CSX will acquire, coupled with the line’s diminished strategic value to NS, will leave the long term viability of the Hoosac Tunnel Route as a through route from New England to/from the west in grave doubt,” Clements wrote.
The CP filing came just a day after the U.S. Justice Department expressed its own concerns about the CSX-Pan Am deal, saying the STB should require CSX to sell its share in Pan Am Southern [see “Justice Department raises competitive concerns …,” News Wire, Aug. 26, 2021]. It was among a flurry of new filings on the deal.
The CSX-Pan Am merger last week won support from the New Hampshire Department of Transportation; several elected officials in Connecticut, Massachusetts, and New Hampshire; U.S. Sen. Angus King, I-Maine; Massachusetts short line Pioneer Valley Railroad, which interchanges with Pan Am Southern; and a trio of Massachusetts shippers. The proposed merger now has more than 100 letters of support from shippers and officials in New England.
CSX says shippers will benefit from single-line service and investments to upgrade the condition of Pan Am Railways’ track.
The U.S. Department of Transportation submitted a filing but did not take a final position on the merits of the proposed merger.
The Massachusetts Water Resources Authority says it is generally in agreement with CSX regarding track upgrades and operational restrictions near the Wachusett Reservoir, which supplies the Boston area with drinking water. But the agency and the railroad have not yet signed a written agreement.
The water authority is seeking specific track upgrades to Pan Am’s Worcester Main Line alongside the reservoir, including the use of heavier rail, a 25-mph speed restriction, and installation of defect detectors on the approaches to the reservoir area.