News & Reviews News Wire Norfolk Southern to buy CNO&TP line from city of Cincinnati for $1.6 billion

Norfolk Southern to buy CNO&TP line from city of Cincinnati for $1.6 billion

By Bill Stephens | November 21, 2022

Deal to acquire key portion of Chicago-Atlanta route requires approval of voters and federal regulators, plus Ohio law change

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Southern Railway history: Black locomotives pulling a freight train.
Three six-axle diesels, led by Southern Railway SD40 No. 3186, pull a southbound freight train out of Tunnel 26 on the Rat Hole line near Oakdale, Tenn., in May 1984. Norfolk Southern will buy the Cincinnati-Chattanooga route for $1.6 billion. John P. Baukus Jr.

CINCINNATI — Norfolk Southern has agreed to purchase the assets of the Cincinnati Southern Railway, the municipally owned railroad that forms the 336-mile Chattanooga-Cincinnati backbone of NS’s key corridor linking Chicago with Atlanta and the Southeast.

Cincinnati Mayor Aftab Pureval, the municipal railway board, and NS today announced the proposed sale of the Cincinnati Southern Railway to NS for $1.62 billion.

Norfolk Southern subsidiary Cincinnati, New Orleans & Texas Pacific has leased and operated the line since 1881. No operational changes would come to the route as a result of the transaction, which is subject to the approval of Cincinnati voters and the Surface Transportation Board.

To move forward, the deal also would require the Ohio legislature to allow the proceeds of the sale to be put toward current infrastructure needs in Cincinnati, rather than to paying off debt. The city wants to put the proceeds into a trust fund that would be devoted to improving streets, bridges, and parks.

Map of rail line from Cincinnati, Ohio, to Chattanooga, Tenn.
Norfolk Southern has agreed to buy the Cincinnati Southern Railway. City of Cincinnati

“The Cincinnati Southern Railway plays a critical role in Norfolk Southern’s railroad operations and our nation’s supply chain infrastructure,” Norfolk Southern Chief Strategy Officer Mike McClellan said in a statement. “Through this sale, our customers and the nation’s economy will have certainty around future operations and the health of the railroad. We appreciate the efforts of Mayor Aftab and the Board of Trustees to reach a deal that provides long-term benefits to the citizens of Cincinnati and businesses of all sizes who rely on freight rail for base products and finished goods.”

The route carries about 30 trains per day, NS says.

Under the current lease that was set to expire in 2026, NS pays the city around $25 million annually. Negotiations over renewal of the lease began last year, as required, and resulted in the sale agreement.

NS officials say it’s always better to own critical rail lines than to lease them due to the uncertainty around future lease costs. As part of the transaction, NS will own 9,500 acres of land that the railroad is built upon.

“The Cincinnati Southern Railway is a critical artery linking the Midwest and the Southeast and plays an important role in our powerful network that serves more than half the U.S. population,” NS CEO Alan H. Shaw said in a statement. “This agreement sets the framework for Norfolk Southern to own a core line in our network in perpetuity, allowing us to advance our strategic objectives of improving service, enhancing productivity, and creating an even stronger platform for accelerated growth, all while eliminating uncertainty around future control of the line and lease costs.”

NS expects the transaction to close in the first half of 2024.

Pureval, the Cincinnati mayor, said in a statement that the deal provided “an historic opportunity to deliver great value to citizens of Cincinnati and realize a substantial return on the investment and foresight of our predecessors. We are fortunate that a number of events have brought us to this point and will provide for the transportation needs of our city for decades to come. This transaction marks a seminal moment for the City of Cincinnati, and I look forward to submitting it to voters for their approval.”

The NS deal comes 10 months after BNSF Railway agreed to an early termination of Montana Rail Link’s lease on the former Northern Pacific main line in Montana and Idaho. The price tag for that transaction, which is currently before the STB, was around $2 billion.

A law creating the Cincinnati Southern Railway was enacted on May 4, 1869. A month later, the Ohio legislature adopted a resolution designating Chattanooga as the railway’s southern terminus.

Construction of the railroad, which required 27 tunnels and 105 bridges, was completed in 1880. The line was leased to the CNO&TP in October 1881. The CNO&TP came under control of the Southern Railway in 1893.

The tunnels were built on the most rugged section of the line, the 158 miles between Wilmore, Ky., and Emory Gap, Tenn., which gave the route its “Rat Hole” name. Many of the tunnels were daylighted or bypassed over the years, leaving just 13 original bores in service by 1955.

A $35 million line improvement project in the early 1960s vastly improved the Rat Hole by eliminating more tunnels, straightening curves, reducing grades, and adding more sections of double track.

— Updated at 7:20 p.m. CST with statement from Cincinnati Mayor Aftab Pureval.

4 thoughts on “Norfolk Southern to buy CNO&TP line from city of Cincinnati for $1.6 billion

  1. An interesting “what-if” – CSX sought a purchase the CS in exchange for selling its Cinncinnati-Knoxville to NS.

    1. During the last lease negotiation CSX made an offer on the line. No reason they won’t try that again if only to jack up the price.

  2. CSX has two rival routes with one direct between Cincinnati and Atlanta via Knoxville (bypassing Chattanooga); and another via Louisville, Nashville and Chattanooga (also proceeding to Atlanta). The latter route diverges at Nashville for New Orleans via Birmingham,, Montgomery and Mobile.

    Norfolk Southern has its own route to New Orleans from Cincinnati to Chattanooga, then via Birmingham, Tuscaloosa, Meriden and Slidell. This route was predecessor Southern Railway’s “Queens Limited” which ran in competition to CSX predecessor L&N Railroad”s Cincinnati – New Orleans “Pan-American”.

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