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Hello
CSX has reached an agreement with Vermont Rail System and the State of Vermont regarding the proposed CSX purchase of Pan-Am Railways which connects with Vermont Rail System in Bellow Falls, White River Junction and Hoosick Junction, NY and is (or has been recently) Vermont Rail System’s largest connecting carrier.
VRS had been concerned because CSX proposed to subcontract to Genesee & Wyoming these connecting operations now undertaken as a joint venture with Norfolk Southern. G&W already owns the New England Central Railroad, Vermont’s other major regional railroad and itself a big VRS connection. VRS was concerned that all connections but one would fall into G&W control, giving it market power to purposely or inadvertently damage VRS.
The agreement gives Vermont Rail System trackage rights between Bellows Fall and White River Junction, gives limited trackage rights between Bellows Falls and East Deerfield to be used only if cars are not forwarded for more than 48 hours (and also familiarization runs for train crews), and gives VRS legal guarantees in regard to existing “haulage” contracts that connect VRS to CSX and Norfolk Southern in trains run by Pan-Am (to be taken over by G&W). There are additional details in the 20 page legal brief filed with the Surface Transportation Board, the regulatory body to which the transaction must be submitted. The state of Vermont and Vermont Rail System have withdrawn their opposition to the transaction.
In essence, the deal gives Vermont Rail System the status quo, but with some additional service and rate guarantees. It mitigates the risks of harm to VRS but does not create significant new opportunities for VRS. It ensures that VRS will have continued access to CSX, NS and existing markets at commercially reasonable terms.
The transaction does create opportunities for G&W to combine trains, lowering costs and improving service for former Pan-Am shippers outside of Vermont.
When one railroad interchanges with another, it often introduces institutional friction in rail moves. Train schedules are often not coordinated, running according to the different priorities of each railroad. Rates are split between the railroads involved, but sometimes when the trip on one railroad is short and unremunerative, there is no incentive to create competitive service or rates and the move goes to truck. As a result there is practically no rail freight traffic between New York, Boston or Connecticut. If Vermont Rail System could operates its trains itself without delay into the Port of Albany and the CSX classification yard and serve industries in Albany, it would be able to convert to rail some of the truckloads now going up 22a and through Vergennes. But for VRS to ask for such a thing would be an over-reach as the railroad industry is now organized. The other railroads invoked (which includes CP) would view such a demand as stealing their franchise. It’s a complicated idea, that just is not possible the way things are.
The STB will hold hearing on Thursday and Friday. Your advocacy organization will be monitoring them. A decision is due later this spring. With these agreements, CSX is attempting to remove opposition and make it easy for the STB to approve the deal, but conditions may be imposed by the STB which is supposed to ensure that competition is not diminished. This deal removes the most significant sticking point, but given recent STB cases a completed transaction is probable no sure thing.
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Wishing you the best,
Christopher Parker Executive Director
(802) 536-4607 railvermont.org/civicrm/?civiwp=CiviCRM&q=civicrm/mailing/url&u=568&qid=46517
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VERMONT RAIL ACTION NETWORK
PO BOX 6094 RUTLAND, VT 05702-6094 United States
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