Vermont Rail Systems and the Vermont Transportation Agency have raised some of the most serious objections to the proposed “merger” of PAR into CSX. Their primary concern is that, if G&W subsidiary Berkshire & Eastern is to be the operator of PAS, VRS will be “surrounded,” by G&W railroads at six of its seven gateways to the national rail network. We warned of the risks VRS faced competing not just with several G&W-family lines, but with a “Class II railroad with Class I resources,” that would inevitably out-strategize VRS.
The Amended Application (No. 2, filed 25.March) provided VRS with haulage rights between Bellows Falls VT, and East Deerfield MA, where VRS stores loads, and interchanges with PAS. The Amended and Supplemented Application has further added subtle yet significant tweaks and clarifications to the prior considerations given in the Amended Application. These matters are governed by the NS-CSX Settlement Agreement, which focuses primarily on NS access to the CSX Mainline, but secondarily on the disposition of PAS, including the rights of connecting carriers. Relative to VRS, the Amended and Supplemented Application specifies these CSX/NS commitments (modifications in italics):
(1) For movements to and from the east with connections to the PAR System, PAS will establish rates on existing lanes via Deerfield and Ayer at current levels, subject to future reasonable escalation, as long as B&E is operator of PAS.
(2) For movements to and from the west with connections to CSXT at Rotterdam, NY, PAS will establish rates for movements between Hoosick Junction (where VTR interchanges with PAS today) and Rotterdam (where PAS connects with CSXT) on existing lanes at current levels on existing lanes, subject to future reasonable escalation, as long as B&E is operator of PAS.
(3) VTR moves traffic to and from storage facilities at East Deerfield, MA, a location on PAS. To ensure that rates on these movements remain at competitive levels, PAS will agree to provide haulage between the storage facilities at East Deerfield and Bellows Falls (haulage already exists between Bellows Falls and White River Junction) at rates that are the average of current commodity-specific interline rates for those movements for as long as B&E is operator of
(4) PAS will commit to providing VTR with five day per week service in the above lanes as long as volumes support this level of service.
(5) Finally, B&E will not share with any other GWI-controlled rail carriers any information regarding rate divisions from connecting railroads that B&E becomes aware of as a result of operating PAS.
Furthermore, according to CSX spokespersons interviewed last Friday, CSX is in advanced discussions with VRS and VTrans to codify an agreement along the lines of the Settlement Agreement reached with the State of Maine.
CSX has gone to a lot of trouble in the new filing to explain the “enhances competition” mantra that they have been chanting since February, but which has failed to resonate until now. They’ve finally made their point, which is that VRS — and every rail-connected enterprise in the region — will, when this transaction is completed, be part of a vastly larger market that will present opportunities orders of magnitude beyond what they are now. Imagine a local fisherman venturing beyond the Bay out to the open sea. Suddenly it’s not about fighting for the same few fish as the other locals. In broader, deeper waters there are many more, much bigger fish.
With access to national markets and a local rail system to match, VRS will be able to effectively face its real competition — trucks. That’s what its all about.