By Justin Franz
BILLERICA, Mass. — Hours after CSX Transportation announced that was buying New England’s Pan Am Railways, officials with Norfolk Southern said they were “carefully considering the effects” of a deal between the two carriers.
Weeks before Monday’s announcement, NS had filed a rare preemptive objection with the U.S. Surface Transportation Board to any deal between CSX and Pan Am. At the core of NS’ complaint is its joint venture with Pan Am called Pan Am Southern, which includes more than 400 miles of track in Massachusetts, New York and Connecticut. The venture dates back to 2009 and allows NS to go head-to-head with CSX in the Boston market. But now CSX is aiming to control both east-west main lines across Massachusetts: its own former Boston & Albany route and Pan Am’s former Boston & Maine.
Rumors have emerged that CSX is interested in acquiring Pan Am’s main line so that it can in turn sell its east-west line to the Commonwealth of Massachusetts. In 2012, CSX sold part of the former Boston & Albany between Boston and Worcester to Massachusetts enabling MBTA Commuter Rail to expand service. Fueling that rumor is the fact that MassDOT is interested in expanding passenger rail service west toward Springfield and Pittsfield. Acquiring Pan Am would also give CSX a more direct link to the Maritimes, by way of haulage rights agreement with Eastern Maine/New Brunswick Southern Railways at Mattawamkeag, Maine.
But the NS agreement with Pan Am could still derail any deal between the regional railroad and CSX. On Monday evening, NS said they were watching the situation closely.
“In 2009, Pan Am and Norfolk Southern negotiated a pro-competitive joint venture that resulted in the creation of Pan Am Southern. That transaction was approved by the STB in large part because the joint venture provided competition in the marketplace,” officials told Railfan & Railroad. “Over the last decade, Norfolk Southern has ensured the success of that venture and remains committed to it today. We now understand that CSX is poised to acquire Pan Am. We are carefully considering the effects of this transaction, especially any competitive harm to the marketplace. We remain committed to working with any potential Pan Am purchaser, the STB, and any other applicable regulatory agencies to protect shippers, commuters and rail passengers throughout the New England market.”
As of Tuesday morning, CSX had not filed a petition with the STB for what is sure to be an extensive and unique review because of the relationship between Pan Am and NS. It is possible that the STB will only approve the deal with certain conditions to maintain or increase rail competition within the region.
If the sale is approved it would result in a seismic shakeup in the New England railroad landscape and would eliminate one of the United States’ last large independent regional railroads. Pan Am’s system stretches 1,200 miles through Maine, New Hampshire, Vermont, Massachusetts, Connecticut and New York. It was created as Guilford Rail System in 1981 with the merger of the Boston & Maine and Maine Central. It was renamed Pan Am after the company purchased the name and logo of the iconic air carrier with the same name.
