CN expands rail holdings
Rail company buys back previously divested routes to service northern Alberta
By TIMOTHY LE RICHE, SUN MEDIA
Canadian National Railway will spend about $40 million to upgrade rail lines serving the oilsands and the Northwest Territories which it bought yesterday.
Read full story at:
http://calsun.canoe.ca/Business/2006/01/20/1402765-sun.html
and also at:
http://www.canada.com/edmontonjournal/news/business/story.html?id=a981222a-a656-4c01-a5e0-71353f1cab7d&k=12304
Two of these lines are properties CN divested themselves of earlier. Think Northern Alberta Railway and Alberta Resources Railway. Another example of business wizardry at work.
Any bets on what’s gonna happen now? Think “buy it back, and close it down”.
I am a little puzzled by the purchase myself. These days the major railroads are trying to divest themselves of secondary rail lines rather than acquiring them. However, what benefit would CN get from spending money to purchase them and then shut the down?
I wondered if there was sometype of buyback clause in the original contract with Rail America that has been triggered.
Who knows maybe we will see CN eventually re-acquire the Hudson Bay Railway. It is a strange world.
Andrew
One trend you might be noticing of late, in addition to consolidation of terminals, is for a consolidation of interchange. Shortline connections require the Class I to run out the locals to collect/drop off the cars of the shortline. If you have half a dozen shortlines to interchange with, it can get complicated. Better if you can consolidate all your shortline traffic at a single point (or get those shippers to truck to your mainline mega terminal rather than dealing with carload).
What I percieve CN is doing is to take back those lines, then induce a loss of the online shippers (via service refusals and arbitrary per car surcharges, basically force them switch to truck) until there is no more traffic left. Then it’s relatively easy to get an okay for abandonment. Once the shortline is gone, you can get rid of the connecting local. Look at what BNSF is doing in Eastern Washington state, they’re doing everything possible to force the elimination of it’s shortline connections.
Then RE-Open it again?[:0]