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Canadian Pacific Norfolk Southern Merger

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Posted by kgbw49 on Saturday, November 21, 2015 12:17 PM

I seem to recall an article (in Trains?) years back where they mentioned long trains, minimal horsepower per ton, and moving trains when they were scheduled to go, filling them out with blocks of other traffic "heading thataway" that were ready at departure time. I know in looking at CP or CN photos on Railpictures.Net, often you will see unit trains of various types with blocks of other traffic cut in to fill the train out to maximum length. Often those blocks are cut in right behind the power. Not necessrily an answer to your question but just a fuzzy recollection and an observation.

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Posted by Paul_D_North_Jr on Sunday, November 22, 2015 5:52 PM

Murphy Siding
 
BaltACD

 

 
Murphy Siding
schlimm
Murphy Siding

CP (not CN) can only gain the efficiencies of bypassing Chicago (and others which he did not specify) by acquiring NS.

  Oops!  I meant CP.  You know, those Canadian railroads all look alike to me.Embarrassed

     Why is taking over NS the only way?  Wouldn't the trains run on the same tracks they do now, but just under different ownership?

It can be done by voluntary and limited agreements such as interchanges, run-throughs, trackage rights, haulage rights, etc. - see:
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Posted by Murphy Siding on Sunday, November 22, 2015 6:35 PM

     I won't quote Paul's thread above, lest it weirds out and becomes unreadable.  So, the head guy at CP thinks he can pick up a lot of efficiencies simply by forcing NS to run their railroad his way.

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Posted by Dakguy201 on Sunday, November 22, 2015 6:50 PM

Murphy Siding

     So, the head guy at CP thinks he can pick up a lot of efficiencies simply by forcing NS to run their railroad his way.

 

 
Right!  You have one of the essential elements of the proposed deal.  I think the other one is that he gains control of the Belt Railway and changes their priorities.  If I were the STB, I would require the latter not occur through the sale of enough of the Belt to other majors so that he end up no better than he is now.   
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Posted by zugmann on Sunday, November 22, 2015 7:18 PM

Murphy Siding

    .  So, the head guy at CP thinks he can pick up a lot of efficiencies simply by forcing NS to run their railroad his way.

 

Depending how he runs his railroad - he may be correct.

 

  

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Posted by BaltACD on Sunday, November 22, 2015 7:33 PM

zugmann
Murphy Siding

    .  So, the head guy at CP thinks he can pick up a lot of efficiencies simply by forcing NS to run their railroad his way.

Depending how he runs his railroad - he may be correct.

And the immediate results of a number of mergers in the past tend to indicate that the 'new plan' by the new leaders demonstrated that they didn't know how to operate the acquired property like they thought they did.  Think the meltdowns and indigestion that UP had with CNW & UP.  Think of the proplems CSX & NS had digesting the parts of CR they purchased.

It is easy to criticize a carriers operating plan from the outside - once faced with the operating realities of the physical plant - in many cases these 'outside plans' aren't worth the thoughts that they overlooked in their creation. 

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Posted by zugmann on Sunday, November 22, 2015 7:46 PM

BaltACD
Think the meltdowns and indigestion that UP had with CNW & UP. Think of the proplems CSX & NS had digesting the parts of CR they purchased.

You'd think one could learn from them.  Granted, there always will be problems at the beginning, but now with oeprations so centralized (even now moreso than in 1999), I wonder if a meltdown couldn't be at least minimalized compared to past mergers. 

 

  

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Posted by dakotafred on Sunday, November 22, 2015 8:10 PM

Dakguy201
 
Murphy Siding

     So, the head guy at CP thinks he can pick up a lot of efficiencies simply by forcing NS to run their railroad his way.

 

 

 
Right!  You have one of the essential elements of the proposed deal.  I think the other one is that he gains control of the Belt Railway and changes their priorities.  If I were the STB, I would require the latter not occur through the sale of enough of the Belt to other majors so that he end up no better than he is now.   
 

Why, Dak? So one of the genuine positives, relief of congestion in Chicago, cannot be realized?

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Posted by Dakguy201 on Sunday, November 22, 2015 8:31 PM

dakotafred

 Why, Dak? So one of the genuine positives, relief of congestion in Chicago, cannot be realized?

What I am saying is that if the combination of CP and NS occured, the Belt would be run to the benefit of those roads at the expense of everyone else. That doesn't improve the Chicago situation; it just reallocates the problem among the participants.

Plus there is the matter of Mr. Harrison's experience.  His record, while something to be admired, is built mostly on railroads that went from point A to point B with few diversions.  That strikes me as very different than being able to manage the complexity of Chicago or the NS route structure.

 

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Posted by schlimm on Sunday, November 22, 2015 9:06 PM

Why would control of the BRC be the only improvement in efficiencies?  It does not really bypass Chicago.   It really seems that as usual EHH is generating strong negative emotional reactions.  They may not be based on potential rail efficiencies but on preservation of the status quo.

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Posted by Paul_D_North_Jr on Sunday, November 22, 2015 9:42 PM

zugmann
BaltACD
Think the meltdowns and indigestion that UP had with CNW & UP*. Think of the proplems CSX & NS had digesting the parts of CR they purchased.

[*BaltACD likely meant "CNW & SP", not UP]" 
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Posted by Paul_D_North_Jr on Sunday, November 22, 2015 9:56 PM

schlimm
Why would control of the BRC be the only improvement in efficiencies?  It does not really bypass Chicago.   It really seems that as usual EHH is generating strong negative emotional reactions.  They may not be based on potential rail efficiencies but on preservation of the status quo.

Nah, I don't think I'm negatively emotional - but I will admit to being skeptical, based on past experience with these kinds of things.

Because to date, all of the purported efficiencies that EHH claims will be created have been non-specific, thus mere "puffery" = smoke and mirrors.  Where's any credible study that identifies and quantifies them ?  Without that, what's his basis for making those claims, other than mere wishful thinking ?  How does he expect to persuade anyone without that hard information ?  If this move was planned and thought through at all, he really should have that kind of information at hand and be able to quote it, instead of spouting vague generalities.  Is he accustomed to going off half-cocked like this, making claims and assertions without being to back them up ?  Not the kind of guy I'd want running my company.

Interesting, too, is that EHH's "Come to Jesus" moment didn't occur when he was retired from CN and could have been viewed as a kind of 'elder statesman' in the industry.  Instead, it comes only now when he thinks his current company will directly benefit from it - and when his puppetmaster William Ackman needs the money, too (see several articles in the Wall Street Journal in the past few weeks).

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Posted by Murphy Siding on Sunday, November 22, 2015 10:07 PM

     I can't imagine a company with very centralized control taking over another company with decentralized contraol and not imposing very centralized control on  the whole shebang.

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Posted by tree68 on Sunday, November 22, 2015 11:18 PM

Murphy Siding

     I can't imagine a company with very centralized control taking over another company with decentralized contraol and not imposing very centralized control on  the whole shebang.

Check out CSX, which, despite having centralized ops in Jacksonville, retained most, if not all, of the Conrail DSs.  The lines in NYS are dispatched out of Selkirk, NY (near Albany).

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Posted by zugmann on Sunday, November 22, 2015 11:35 PM

tree68
Check out CSX, which, despite having centralized ops in Jacksonville, retained most, if not all, of the Conrail DSs. The lines in NYS are dispatched out of Selkirk, NY (near Albany).

Didn't they centralize and then decentralize?  Balt?

 

NS' DSes are decentralized, but with autorouter, it's only a matter of time...

  

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Posted by CMStPnP on Monday, November 23, 2015 7:31 AM

schlimm

Why would control of the BRC be the only improvement in efficiencies?  It does not really bypass Chicago.   It really seems that as usual EHH is generating strong negative emotional reactions.  They may not be based on potential rail efficiencies but on preservation of the status quo.

I thought it was BRC he was after as well but as it turns out he is after Indiana Harbor Belt (IHB).

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Posted by BaltACD on Monday, November 23, 2015 7:42 AM

zugmann
tree68

Didn't they centralize and then decentralize?  Balt?

NS' DSes are decentralized, but with autorouter, it's only a matter of time...

CSX centralized in 1988 with most system dispatching offices being moved to Jacksonville, with a couple of stragglers arriving as late as 1992, and the RF&P arriving in 1994 after CSX obtained ownership.  Chicago was less than a week from moving day before it was decided to leave it in Chicago.

Dispatching was decentralized in 2008, and ran well with the decreased traffic volumes of the Recession.  Once traffic picked up, threshold conflicts between divisions picked up - talking to your counterpart face to face is not the same as trying to get a faceless being answer the phone.  There are rumors circulating of centralization again.

Personal observation, Dispatching is the most forgotten and least understood of the railroad crafts.

Zug - Autoroute is still a 'feature' of the CSX CAD system, it doesn't get used by the dispatchers for some of the quixotic and just plain wrong decisions it makes.  Example - on a specific territory, Commuter trains are restricted to operating on a particular track because of the design of the passenger stations - autoroute doesn't know or believe this.  If a lot of effort was put into developing autoroute it might become an effective tool, to date that development effort has not been undertaken.

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Posted by oltmannd on Monday, November 23, 2015 8:56 AM

zugmann

 

 
tree68
Check out CSX, which, despite having centralized ops in Jacksonville, retained most, if not all, of the Conrail DSs. The lines in NYS are dispatched out of Selkirk, NY (near Albany).

 

Didn't they centralize and then decentralize?  Balt?

 

NS' DSes are decentralized, but with autorouter, it's only a matter of time...

 

I don't think so.  NS doesn't need autorouter/movement planner to centralize.  Just having UTCS is enough.  Any desk can be dispatched from any other desk on the system right now.  But, NS's whole operations managment is decentralized to a greater degree than on other roads.  

Most places, whether to run an extra or annul a train is made by a central office.  On NS, these decisions are made at the division level - sometime to the detriment of the network as a whole.  

That would have to change before you'd see consolidated distpatch offices.

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Posted by schlimm on Monday, November 23, 2015 9:23 AM

Paul_D_North_Jr

 

 
schlimm
Why would control of the BRC be the only improvement in efficiencies?  It does not really bypass Chicago.   It really seems that as usual EHH is generating strong negative emotional reactions.  They may not be based on potential rail efficiencies but on preservation of the status quo.

 

Nah, I don't think I'm negatively emotional - but I will admit to being skeptical, based on past experience with these kinds of things.

 

Because to date, all of the purported efficiencies that EHH claims will be created have been non-specific, thus mere "puffery" = smoke and mirrors.  Where's any credible study that identifies and quantifies them ?  Without that, what's his basis for making those claims, other than mere wishful thinking ?  How does he expect to persuade anyone without that hard information ?  If this move was planned and thought through at all, he really should have that kind of information at hand and be able to quote it, instead of spouting vague generalities.  Is he accustomed to going off half-cocked like this, making claims and assertions without being to back them up ?  Not the kind of guy I'd want running my company.

Interesting, too, is that EHH's "Come to Jesus" moment didn't occur when he was retired from CN and could have been viewed as a kind of 'elder statesman' in the industry.  Instead, it comes only now when he thinks his current company will directly benefit from it - and when his puppetmaster William Ackman needs the money, too (see several articles in the Wall Street Journal in the past few weeks).

- Paul North.        

 

One only needs to look at operating ratios at both CN and CP pre-EHH and after he implemented his plans and then examine CP's current operating ratio and NS's to see that it is not smoke and mirrors and puffery, but a proven record of success.   Of course the consequence might be elimination of deadwood, but that is what shareholders want these days. 

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Posted by zugmann on Monday, November 23, 2015 12:07 PM

oltmannd
I don't think so. NS doesn't need autorouter/movement planner to centralize. Just having UTCS is enough. Any desk can be dispatched from any other desk on the system right now. But, NS's whole operations managment is decentralized to a greater degree than on other roads. Most places, whether to run an extra or annul a train is made by a central office. On NS, these decisions are made at the division level - sometime to the detriment of the network as a whole. That would have to change before you'd see consolidated distpatch offices.

 

UTCS without autorouter required people to run the system.  With autorouter enabled, not as much.  I think that will be the key to consolidation (if it ever gets to the point of running the railroad unencumbered).  And you know many of those decisions made at the division level used to be made at the local level.  It's heading in that direction already.  CYO/OSS now handles all customer issues - many of which were at one time local decisions.  Writing's on the wall.

 

I could be wrong, but I would be surprised.

 

 

 

 

 

  

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Posted by MP173 on Monday, November 23, 2015 2:56 PM

How does EHH squeeze efficiencies you ask?

Last Friday I happened to see the Halifax - Chicago intermodal train pass thru town and as is my habit, I counted the containers on the train....354 domestic and international containers were being handled.

My estimate was this was over 13,000 ft in length.  No second section, just run the train.

 

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Posted by BaltACD on Monday, November 23, 2015 3:11 PM

MP173

How does EHH squeeze efficiencies you ask?

Last Friday I happened to see the Halifax - Chicago intermodal train pass thru town and as is my habit, I counted the containers on the train....354 domestic and international containers were being handled.

My estimate was this was over 13,000 ft in length.  No second section, just run the train.

 

Ed

and don't care that it can't meet opposing traffic effectively and no terminals can originate or terminate the train without extraordinary measures and delays to other traffic.

My carrier is emulating this kind of operation.  Trains crossing division borders are limited to 12000 feet (formerly 9000), there is no limit on the size of divisional trains, largest I have seen is 15300 feet - there may have been larger trains.  While 130 car coal trains have become the norm, some divisions are 'playing with distributed power' and are running 170 car 24000 ton coal trains.  Nobody appears to care these trains are movable derailments when they get to terminals where they have to work.

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Posted by StaynerBob on Monday, November 23, 2015 6:25 PM

The problem is Chicago and the CP merger with NS will have a great benefit for both Canada and the USA.  The CPR is and has always been well run.

 

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Posted by Paul_D_North_Jr on Monday, November 23, 2015 9:21 PM

Last week (Thurs., 19 Nov. ?) the Wall Street Journal had an article on page B-1 about how this deal would have to bear of heavy burden of proving that it's in the public interest, submitting "a tower of paper", and other railroads would oppose it, meaning it would take several years at best.  Ignoring or minimizing that reality and claiming this deal would be done by 2018 is mis-apprehension of the obstacles at best, and delusional at worst. 

Mischief What if NS turned the tables and made an offer for CP - providing EHH with a "golden parachute", of course ? (reminds me of the joke about the mouse and the cat . . . ).

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Posted by schlimm on Monday, November 23, 2015 9:27 PM

Paul_D_North_Jr
Ignoring or minimizing that reality and claiming this deal would be done by 2018 is mis-apprehension of the obstacles at best, and delusional at worst. 

The suggestion that EHH does not understand the realities of rails or is delusional is a pretty strong indication of a kneejerk opposition.

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Posted by Murphy Siding on Monday, November 23, 2015 10:58 PM

schlimm

 

 
Paul_D_North_Jr
Ignoring or minimizing that reality and claiming this deal would be done by 2018 is mis-apprehension of the obstacles at best, and delusional at worst. 

 

The suggestion that EHH does not understand the realities of rails or is delusional is a pretty strong indication of a kneejerk opposition.

 

 I disagree.  The history of railroad mergers suggests a lot about how future proposed mergers might play out.  Those who forget the past are doomed to repeat it?

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Posted by jeffhergert on Tuesday, November 24, 2015 12:50 PM

schlimm
 
 

One only needs to look at operating ratios at both CN and CP pre-EHH and after he implemented his plans and then examine CP's current operating ratio and NS's to see that it is not smoke and mirrors and puffery, but a proven record of success.   Of course the consequence might be elimination of deadwood, but that is what shareholders want these days. 

 

But is CP's lower operating ration sustainable?  Is the rise in stock prices due to short term policies that could damage CP in the long term?  Long after EHH is gone and Ackman has dumped his shares.  I have read (admittadly anecdotal) accounts from people working for CP or who work for customers of CP.  

EHH may have gone has far as he can with cutting CP into prosperity.  That's why some think he has been proposing mergers, first with CSX now with NS.  Only way to keep the stock price up.  Well, maybe not the only way, but the easiest way.

Jeff

 

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Posted by Paul_D_North_Jr on Tuesday, November 24, 2015 8:01 PM

schlimm
Paul_D_North_Jr
Ignoring or minimizing that reality and claiming this deal would be done by 2018 is mis-apprehension of the obstacles at best, and delusional at worst. 

Nope.  He probably does understand the realities; but for such a high and experienced official to then fail to even acknowledge they exist raises serious doubts about his credibility, capability, and competency (in both the technical and medical meanings).  What I really find objectionable is the usual merger mania and hype of completely failing to acknowledge the existence and difficulties inherent in those realities in public statements.  Even Anthony Hatch - the best-known financial analyst of the rail industry - doubts this merger will succeed.  I find EHH's conduct - and the complete lack of objective data supporting his claims - to be misleading, manipulative, and deceitful. 
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Posted by schlimm on Tuesday, November 24, 2015 8:35 PM

Gee I guess you don't like EHH! As to his medical competence, I am in a far better place to offer an informed opinion on that.  Watching his interview, I would conclude your dislike of the man has led you to make a rather rash and ill-informed comment.  But go ahead and vent, as you are free to say almost anything you want.

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Posted by Dakguy201 on Tuesday, November 24, 2015 8:45 PM

I think the silence from Ft. Worth and Omaha is a vote on the probability this ever gets done.  Should either of them believe this deal stands a snowball's chance, I believe one or both or them would jump into the fray with a clearly superior offer.

 

 

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