By Jeff Berman, Group News Editor ·
April 15, 2022
Earlier this week, the Surface Transportation Board (STB), an independent arbitration and economic regulator appointed by Congress to resolve disputes over rail fares and services and to review proposed rail mergers, approved the Revised merger petition filed by Jacksonville-based Class I. rail carrier CSX Transportation Inc. to acquire control of North Billerica, Massachusetts-based short-line rail carrier Pan Am System Inc. and its short-line rail subsidiaries.
In its ruling, the STB said it had concluded that CSX’s control of Pan Am and the subsequent merger of six of Pan Am’s subsidiary railroads into CSX was unlikely to result in a substantial lessening of competition or create a monopoly or restriction of trade. And STB added that it had concluded that any anti-competitive effects that might be caused by the transaction – in the unlikely event that they did occur – would be outweighed by the public interest in meeting important transmission needs.
Regarding the benefits that this merger will bring, STB highlighted the following:
- it would entail much-needed capital investment in the Pan American network, as well as more consistent maintenance;
- it concluded that shippers would have additional marketing opportunities and more efficient single-line service, and that CSX would have the opportunity to better compete with long-haul trucking traffic; and
- he noted environmental benefits in the form of fuel efficiency and reduced emissions resulting from CSX’s use of newer line haul and switch locomotives, compared to Pan Am’s locomotives
“After careful review of the well-developed record of this proceeding, which included a two-day public hearing before the full board, the board has concluded that this transaction meets the statutory criteria based on CSX’s representations to the board. I look forward to improvements in the rail network for reliable service and competitive transportation options in New England and beyond,” STB Chairman Martin J. Oberman said in a statement.
CSX originally signed a definitive agreement to acquire Pan Am in November 2020. Financial terms of the acquisition were not disclosed at the time. The media pegged the sale price at $700 million.
CSX noted that Pan Am owns and operates a highly integrated rail network of nearly 1,200 miles and has a partial interest in the Pan Am Southern system of more than 600 miles. Its network across New England has access to multiple ports and large-scale commodity producers.
As for what this acquisition brings to CSX, the company said that by adding Pan, it would expand its reach into Connecticut, New York and Massachusetts while adding Vermont, New Hampshire and Maine to its existing network of 23 States. Additionally, CSX added that it will provide various benefits to shippers and local communities as it integrates Pan Am into its best-in-class network.
Kevin Boone, Executive Vice President, Sales and Marketing, said at the Northeast Association of Rail Shippers (NEARS) Fall 2021 Conference last September in Portland, Maine that CSX views Pan Am as a opportunity to extend efficient Class I rail service to an important region of the country.
“We see many benefits and opportunities, including: supporting and developing the regional economy and relieving traffic congestion; provide single-carrier service from Maine and Eastern Canada to the United States; access new ports and offer more options to customers; continue to streamline operations for our customers and provide a more consistent service product; leveraging our cutting-edge technology which will provide a more environmentally friendly service and also leverage the customer-facing tools we continue to invest in,” he said. “This will give the customer more visibility to manage their supply chain.”
April 15, 2022
About the Author
Jeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics management, Modern material handlingand Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine where he covers all aspects of the supply chain, logistics, freight forwarding and material handling industries on a daily basis. Contact Jeff Berman
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