STB signs off on CSX’s acquisition of Pan Am

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Earlier this week, the Surface Transportation Board (STB), an independent adjudicatory and economic-regulatory agency charged by Congress with resolving railroad rate and service disputes and reviewing proposed railroad mergers, signed off on the revised merger application filed by Jacksonville-based Class I railroad carrier CSX Transportation Inc. to acquire control of North Billerica, Mass.-based short-line railroad carrier Pan Am System Inc. and its short-line railroad subsidiaries.

In its decision, the STB said that it found that CSX’s control of Pan Am and subsequent merger of six of Pan Am’s subsidiary railroads into CSX would not likely cause a substantial lessening of competition or create a monopoly or restraint of trade. And STB added that it found that any anticompetitive effects that might be caused by the transaction—in the unlikely event they were to occur—would be outweighed by the public interest in meeting significant transportation needs.

As for benefits this merger will provide, STB highlighted the following:

  • it would result in much-needed capital investments in the Pan Am network, as well as more consistent maintenance;
  • it found that shippers would have additional marketing opportunities and more efficient single-line service, and CSX would have the opportunity to better compete for traffic moving via long-haul trucking; and
  • it noted environmental benefits in the form of fuel efficiency and lower emissions resulting from CSX’s use of newer line-haul and switching locomotives, compared to Pan Am’s locomotives

“After a searching review of the well-developed record in this proceeding, which included a two-day public hearing before the full Board, the Board concluded that this transaction satisfies the statutory criteria based on CSX’s representations to the Board. I look forward to improvements in the rail network with respect to reliable service and competitive transportation options in New England and beyond,” said STB Chairman Martin J. Oberman in a statement.

CSX initially inked a definitive agreement to acquire Pan Am in November 2020. Financial terms of the acquisition were not disclosed, at the time. Media reports pegged the sale price at $700 million.

CSX noted that Pan Am owns and operates a highly integrated, nearly 1,200-mile rail network and has a partial interest in the more than 600-mile Pan Am Southern system. 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 with adding Pan will expand its reach in Connecticut, New York and Massachusetts while adding Vermont, New Hampshire and Maine to its existing 23-state network. What’s more, 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, EVP, Sales & Marketing, said at last September’s Northeast Association of Rail Shippers (NEARS) 2021 Fall Conference, in Portland, Maine, that CSX sees Pan Am as an opportunity to expand efficient Class I rail service in an important region of the country.

“We see many benefits and opportunities that include: supporting and expanding regional economy and relieving highway congestion; offering single-carrier service from Maine and eastern Canada into the United States; access new ports and provide customers with more options; continuing to streamline operations to our customers and deliver a more consistent service product; leveraging our industry-leading technology that will provide more environmentally-friendly service and also leverage the customer-facing tools we continue to invest in,” he said. “This will provide the customer with more visibility to manage their supply chain.”

About the Author

Jeff Berman, Group News Editor

Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman

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