(The following article by Christopher Dinsmore was posted on the Virginian-Pilot website on October 2.)
NORFOLK, Va. — Norfolk Southern Railway and Canadian Pacific Railway filed Friday to seek federal permission for a trackage rights deal in the Northeast that will extend the Norfolk-based railroad’s reach to near Montreal and into eastern Canada.
The two railroads are seeking authority for the deal from the U.S. Surface Transportation Board. The transaction will “improve operational efficiency and enhance rail service in the U.S. Northeast,” the railroads said.
Under the deal, Norfolk Southern would be able to run its own trains along Canadian Pacific’s Delaware & Hudson Railway subsidiary from Binghamton, N.Y., to Saratoga Springs, N.Y. Canadian Pacific would haul the Norfolk Southern trains from there to Rouses Point, N.Y., at the U.S. border with Quebec.
“It gets us right to the Canadian border,” said Rudy Husband, a Norfolk Southern spokesman in Philadelphia. “It does extend our reach into Canada.”
As part of the deal, Canadian Pacific would discontinue its trackage rights along Norfolk Southern lines from Buffalo, N.Y., to Binghamton, N.Y., and Norfolk Southern would haul Canadian Pacific trains along those cities. Norfolk Southern would provide Canadian Pacific switching services in Buffalo; Canadian Pacific would provide Norfolk Southern switching services in Binghamton.
Canadian Pacific sees the deal as a lifeline for its struggling Delaware & Hudson unit.
“It has been operating at break-even or at a loss for some time,” said Len Cocolicchio, a spokesman for Canadian Pacific, which is based in Calgary, Alberta. “This offers us the opportunity to reduce our operating costs in the short-term and bring more freight volume onto our line in the long-term.”
Norfolk Southern also is working with Canadian Pacific to give it a new, shorter route from Detroit to Chicago that would open in 2005, the railroads said.
Norfolk Southern operates a 21,500-mile rail network in the eastern United States and the Canadian province of Ontario. Canadian Pacific is a 13,900-mile transcontinental railroad that reaches into the Midwest and Northeast regions of the United States. Its Delaware & Hudson unit runs several hundred miles from upstate New York to Harrisburg, Pa.
Norfolk Southern shares rose 53 cents to $30.27 each in trading Friday.