Could two railway companies merging in Massachusetts cause a nearly two-mile problem for drivers on Main Street in Altamont?

A proposal currently being reviewed by federal regulators would allow Norfolk Southern the right to use CSX’s rails between Voorheesville and central Massachusetts to move “one” 9,000-foot-long double-stacked “train pair” — a single train, nearly two miles long, traveling to and from Massachusetts — per day.

Other than acknowledging the company “is proposing to upgrade the rail line between Delanson and Voorheesville, New York, as part of the overall transaction, which is subject to STB approval” Norfolk Southern did “not have any further comment” on the proposal.

The federal Surface Transportation Board has economic regulatory oversight of railroads in the United States. 

So it remains unclear if Norfolk Southern would soon be running a 9,000-foot-long double-stacked train along the 15.5 miles of rail once known as the Voorheesville Running Track — starting in Delanson, traversing through the heart of Altamont, and picking up with a CSX line in Voorheesville. 

Or if Norfolk Southern would close its Mechanicville terminal, which was supposed to create 85 jobs when it opened.

Because the rail company currently uses the Saratoga County facility for auto storage and to disassemble double-stacked trains heading east into Massachusetts — two services that could be rendered moot by the daily running of a single 1.7-mile-long speciality train with a vehicle volume, conservatively, nearly half of Mechanicville’s 1,000-auto capacity.

In November of last year, CSX reached an agreement to acquire Pan Am Railways, headquartered in North Billerica, Massachusetts, its seven subsidiaries, and their nearly 1,200 miles of rail. But Norfolk Southern, owner of the former Delaware and Hudson line that crosses over Route 146 in Altamont, raised objections to the federal agency charged with oversight of the deal. 

At issue for Norfolk Southern was its 50-percent stake in a Pan Am Railway subsidiary, Pan Am Southern, a 600-mile system that runs across four New England states and New York.

Norfolk Southern raised concerns with the Surface Transportation Board that the deal could be anti-competitive and was “further concerned” about CSX’s “potential use of a voting trust to acquire Pan Am,” a legal mechanism with the potential to relegate Norfolk Southern to bystander-status in its own subsidiary. So Norfolk Southern requested the Surface Transportation Board to “immediately open a proceeding to consider the deleterious effects such a transaction would have on competition” should CSX continue to pursue the voting-trust option.

On Feb. 25, with all involved parties apparently placated, CSX filed its merger application with the board and Norfolk Southern terminated the lease SMS Rail Lines held on the 15.5 miles of Norfolk Southern track between Delanson and Voorheesville. The Surface Transportation Board filing also stated that SMS Rail hadn’t “moved any local traffic over the Line for at least two years.”

Between the CSX deal and agreements with three other local Massachusetts rail companies, Norfolk Southern’s acquisition of track rights would allow the carrier access to rail lines between Voorheesville and the Ayer Intermodal Facility, a 52-acre freight hub 35 miles northwest of Boston, which is also home to a 13-acre Norfolk Southern automotive distribution facility.

Getting around a too-small tunnel

The rail company needs to obtain the track rights because they are “necessary to improve [Norfolk Southern’s] ability to move intermodal [freight moved in containers] traffic and automotive vehicles into the greater Boston marketplace,” the STB filing states.

With the agreements in place, Norfolk Southern would no longer have to use its Mechanicville facility in Saratoga County or the rail system it sits on to run freight loads of cars and trucks into the Bay State.

Completed in 1875, after 24 years of construction, the 4.75-mile-long Hoosac Tunnel in North Adams on the Pan Am Southern line simply wasn’t built to allow entry to today’s modern double-stacked-cargo-container trains. To remedy this situation, Mechanicville was set up as a “fillet” and “toupee” operation, where the top containers of double-stacked trains headed for Massachusetts were removed, allowing the trains to fit through the Hoosac Tunnel.

The CSX agreement also states that, prior to Norfolk Southern “commencing operations over the trackage rights,” the rail company is to prepare plans and cost estimates for constructing a connection, which Norfolk Southern would pay for, between the company’s track that runs between from Delanson to Schenectady and CSX track running from Rotterdam Junction to Voorheesville. Currently, the Norfolk Southern tracks pass under CSX’s in Rotterdam, near the intersection of Princetown Road and Route 443.

Rolling stock

Norfolk Southern and CSX are considered Class I carriers, meaning the rail companies took in at least $504.8 million in annual revenue in 2019, according to the STB — there are seven such freight carriers in the United States.

Those carriers generated approximately 7.8 percent of the transportation industry’s $946 billion operating revenue in 2019, which pales in comparison to the trucking industry’s 45-percent contribution — but is considerably more impressive considering that, for every person employed in the rail-freight industry in 2019, there were nearly 25 people employed as truck drivers.

Norfolk Southern, headquartered in Atlanta, owns 27,532 total miles of rail in 22 states and the District of Columbia while leasing or contracting for another 7,930 miles. Its primary rail competitor and also partner in the proposed deal, the Jacksonville-based CSX, owns and operates 35,485 miles of rail in 23 similar states east of the Mississippi River.

In 2008, Norfolk Southern agreed to a $140-million deal with Pan Am Railways that led to the creation of Pan Am Southern, and a 50-percent stake for each company in the new venture.

In 2015, Norfolk Southern paid $215 million for 282.55 miles of rail line once owned by the Delaware and Hudson Railway Company — approximately 267 route miles made up the old main freight line that ran from Sunbury in Central Pennsylvania’s Susquehanna River Valley (about 175 miles east of New York City) to Schenectady, while the remaining 15.5 miles of track ran between Voorheesville and Delanson.

The company quickly began upgrades, replacing 32,ooo wooden ties, resurfacing 80 miles of track, and replacing another 14 miles of curved rail. Improvements in Altamont did not begin for another few years.

In 2019, SMS Rail, which began leasing the 15.5-mile Voorheesville  line in 2007, was in the process of swapping out rail ties when a local resident said work taking place right behind her Mountaindale Court home had caused rats to migrate from beneath the old Delaware and Hudson Railway line and into four townhomes in the court.

The superintendent of operating practices for SMS Rail Lines told The Enterprise at the time that, in 25 years of business, SMS Rail Lines had never encountered such a situation. The company, he said, had “never had any rat problems with a track rehabilitation project.”

For her part, the homeowner said that, in the 13 years of living in her home, she had never seen a rat. 

Innovating and drawing ire 

Recently, in a bid to improve efficiency and service while also assuaging concerned Wall Street investors, the country’s major freight carriers began instituting sweeping measures to an industry that had more or less been run the same way for the previous 100 years.

Under the old system, freight carriers would wait for customer shipments to be delivered to the rail yard and would depart only after the cargo had been loaded. With the new system, known as “precision-scheduled railroading,” or PSR, railroad operations are modeled on the commercial-airline industry, with set departure times and newly-alienated customers.

PSR was successfully pioneered in the United States by CSX, although initially the company’s plan wreaked havoc on nearly all railroad traffic east of the Mississippi River as CSX began to implement its new scheduling plan.

The company also began shutting down specialty rail yards that were used to break down and reassemble trains for their next runs while additionally taking hundreds of freight cars and locomotives out of service.

CSX eventually and successfully worked out the kinks in its system, and soon found imitation was the sincerest form of flattery. 

Norfolk Southern in 2019 began reporting to Wall Street analysts that, by running fewer but longer and heavier trains at faster speeds, its implementation of PSR had already led to more business, which yielded increases in both profit and revenue.

Fewer trains also meant fewer jobs.

The company had already laid off 400 employees at the time of the March 2019 earnings call, and expected to lay off 100 more workers before the year was out. Norfolk Southern’s strategic plan called for another 2,500 workers to lose their jobs by 2021. 

The company ended 2019 with 24,587 employees, down from 26,662 the year prior. By the end of 2020, Norfolk Southern had shed another 4,500 jobs.

Freight haulers in general have shed jobs at every level, industry-wide. The seven Class I carriers employed nearly 31,00 fewer workers last month than they did four years ago, in February 2017, a near 21-percent drop in overall employment.

But it’s the jobs associated with maintaining the trains and rails they run on, good-paying and likely union, that have really felt the impact of the industry’s efficiency play — from about 64,100 to approximately 46,300, an employment decrease of close to 28 percent; in comparison, nearly 80 percent of executives, officials, and their staff assistants kept their jobs.

On its 2020 fourth-quarter earning call with analysts in January, Norfolk Southern said its “push for efficiency” had led to record train weight and lengths, a 10-percent increase in both metrics compared to the year prior, which in turn helped keep down costs and increased productivity. 

Freight train lengths have increased significantly over the past decade-plus.

Two Class I carriers told the United States Government Accountability Office in 2019 that the average length of their trains had increased by 25 percent between 2008 and 2017. One carrier said its trains went from about 6,000 feet in length to 7,500 feet, or from 1.13 miles long to about 1.4 miles, while the second carrier said its trains had increased from an average of .92 miles long in 2008 to 1.2 miles in 2017.

One of the carriers even told the GAO that it ran a twice-weekly 3-mile-long train. About 10 percent of the trains currently operated by Norfolk Southern are over 10,000 feet in length, or nearly 1.9 miles.

Additionally improving Norfolk Southern’s efficiency in 2020 was the company’s ability to rid itself of 703 locomotives either by selling them or scrapping them and recording the loss, resulting in a $99-million tax write-off.

But not long after management, analysts, and stockholders began basking in the reflective glow of precision scheduled railroading, Norfolk Southern, CSX, and other Class I freight-carrier PSR devotees began taking heat for trying to shake up their hidebound industry.

In January 2019, the Surface Transportation Board began to take a close look at the fees freight carriers were charging their customers in an almost carrot-and-stick attempt to get them to fall in line on precision scheduling.

To goad customers into getting on board with their efficiency plans, the railroads were charging customers fees for being unprepared to pick up their cargo or taking too long to unload their shipments.

The STB noted that, under a system where only one side is penalized for not living up to its side of the bargain, it was unfair for freight carriers to charge fees inducing better behavior while customers had no means of recompense for having to endure shoddy service. 

In an attempt at oversight, the STB told Class I freight carriers it needed to see quarterly reports on the fees they charged. 

In 2018, the country’s seven largest carriers collected over $1.8 billion in fees.

Norfolk Southern’s demurrage fees, “revenue from the detention of cars incident to loading, unloading, reconsigning, and stops in transit upon the basis of lawful tariffs,” and accessorial or incidental charges, “includ[ing] charges for items including lift charges, charges for dumping railcars, mixing center charges, docking and undocking charges, charges for overloaded railcars, charges for improperly loaded railcars,” have never dipped below $75 million in any quarter between 2018 and 2020; in nine of the 12 quarters during the three-year period, fee revenue never dropped below $80 million.