UNITED States Class 1 CSX submitted an “amended and supplemented application” to acquire control of Pan Am Systems and its shortline railway subsidiaries on July 1, which the railway says “provides all of the additional details of the proposed transaction requested by the Surface Transportation Board (STB)”, after the STB rejected an application filed on May 26.
Pan Am, headquartered in North Billerica, Massachusetts, owns and operates an approximately 1900km rail network across New England and has a partial interest in the more-than 950km Pan Am Southern system, jointly owned with Norfolk Southern. The transaction will expand CSX’s reach in Connecticut, New York and Massachusetts while adding Vermont, New Hampshire and Maine to its existing 23-state network.
The terms of the transaction have not been disclosed.
CSX launched its bid for Pan Am in February and the Class 1 says the proposed combination will bring benefits to stakeholders across New England, as evidenced by the more-than 80 letters of support that shippers, elected officials and business organisations have submitted to the STB. “CSX has also worked to reach agreements with other rail operators and organisations in the region to ensure that the transaction results in enhanced competition and a strengthened rail network in the Northeast,” the railway says.
CSX adds that the proposed transaction would result in significant investments in the region’s rail infrastructure over the next five years. CSX says it will operate Pan Am with a smaller, more reliable and more fuel-efficient locomotive fleet, significantly reducing fuel consumption and improving rail’s environmental footprint in the region.
In a conversation with IRJ’s sister publication Railway Age, CSX spokesperson Ms Cindy Schild identified potential areas of traffic growth as forest products, construction materials, paper and intermodal, all of which would benefit from new single-line service. For example, Maine paper manufacturers will have better access to markets outside of New England.
Schid says CSX’s strategy for New England is based in large part upon, modal shift—truck-to-rail conversions. While the railroad’s capital investment plan for the Pan Am network is still in its early stages, she said that CSX intends to upgrade existing main line and branch line Class 1 trackage, which is limited to 16km/h, to 40km/h or Class 2 standards.
“CSX is pleased to submit an expanded application for the acquisition of Pan Am Railways, which explains the tremendous benefits of the proposed transaction for stakeholders in New England and beyond,” said President and CEO Jim Foote. “Adding Pan Am to our network will extend the reach of our service to a wider customer base over an expanded territory, creating new efficiencies and market prospects for customers to capitalize on a robust pipeline of growth opportunities to move freight to, from and within New England.”
“Pan Am remains excited about this merger with CSX, a North American leader in rail-based freight transportation,” said Pan Am Railways President David Fink. “We have continued to receive support from our customers about the transaction as they know that CSX’s investment in the region will benefit not only New England shippers but also those who will have new access to their goods and products through the direct connection into CSX’s national rail network.”
