Courtesy / Pan Am Railways
A map of Pan Am's rail lines show Maine routes stretching from York County to Mattawamkeag.
Updated: July 6, 2020
Maine's largest railroad is for sale, but implications are unclear
Photo / William Hall
A view of the rail spur on West Commercial Street in Portland, owned by the state and served by Pan Am Railways. The regional rail carrier is up for sale.
By William Hall
About Pan Am ... and did it ever fly to Maine?
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Pan Am Railways — successor to two of Maine’s most storied railroads, owner of 300 miles of track across the state and a key player in the proposal for a 108,000-square-foot freezer warehouse in Portland — could soon change hands.
Pan Am Systems Inc., led by banking heir Timothy Mellon, has put the Billerica, Mass.-based freight rail company up for sale, according to industry reports and confirmed Monday morning by Nate Moulton, director of freight rail for the Maine Department of Transportation.
Based on recent communication he’s had with Pan Am, Moulton told Mainebiz the New Hampshire parent company “is soliciting buyers and looking to sell the railroad.” Bank of Montreal Financial Services Group is reportedly advising the seller.
Pan Am did not immediately respond to inquiries from Mainebiz.
Industry insiders have speculated about who might make an offer, and what the result of a deal could be. Candidates include some of the seven sprawling, Class I railroads that criss-cross huge swaths of North America.
Pan Am operates the largest regional, Class II railroad on the continent, running over 1,700 miles of track in Maine, five other Northeastern states, and New Brunswick, Canada, according to the Pan Am website.
“There are a lot of folks out there with potential interest in acquiring Pan Am,” Moulton said.
Anthony B. Hatch, a longtime railroad industry analyst, said in a trade magazine, “I would expect that everyone is going to be interested in [a potential acquisition].”
Moulton said the DOT isn’t picking favorites, nor is it looking for the railroad to be sold. “Our hope is simply for a good, well-funded railroad that can continue to invest in the infrastructure,” he said.
That’s similar to the reaction from George Campbell, chairman of Yarmouth-based Treadwell Franklin Infrastructure, part of a consortium behind the proposed Maine International Cold Storage Facility.
But questions remain about potential impacts of a sale, if it happens.
Making connections
Potential buyers include Norfolk Southern Corp. (NYSE: NSC), which runs Norfolk Southern Railway on 20,000 miles of track and already operates a joint venture with Pan Am in Massachusetts and New York.
Another Class I railroad that might take interest in the sale is Canadian Pacific Railway (TSX, NYSE: CP), which last month completed a $130 million acquisition of Bangor-based Central Maine & Quebec Railway.
With the purchase of the CM&Q’s 481 miles of track in Maine, Vermont and Quebec, Canadian Pacific now owns over 13,000 miles of rail between the Atlantic and Pacific coasts, across six Canadian provinces and 11 U.S. states.
An article last week in Railway Age magazine quoted an “industry observer,” who said, “Maybe [Canadian Pacific’s] hands are full. On the other hand, CP does have a direct current connection with Pan Am in Mechanicville, N.Y. Maybe it would step into NS’s shoes and pick up the Pan Am Southern.”
Another possibility that has been floated is Canadian National (TSX: CNR, NYSE: CNI), Canada’s largest railroad. “If you had CN, that would in turn bring other linkages in Canada as well,” said Campbell, who once served as Maine commissioner of transportation and worked for Pan Am Railways in the 1980s, when it was known as Guilford Transportation Industries.
Regardless of the buyer, he said, a direct connection between the planned cold-storage warehouse on West Commercial Street and a large network of rail lines is important to the intermodal facility.
A site plan for the warehouse is now under review by the Portland Planning Board. If built as proposed, the facility would streamline logistics between Icelandic container shipping line Eimskip, which berths at the International Marine Terminal to the east, and the rail spur to the west. The DOT purchased that portion of track from Pan Am in 2014 in anticipation of building out the marine terminal, and the railroad continues to serve the line.
Courtesy / Pan Am Railways
Pan Am Railways carries freight along 1,700 miles of track in the Northeast and Canada.
“Pan Am has been doing a very good job, but anytime you don’t have to go through two carriers, you’re always better off,” Campbell said. “We think a sale would only improve the financial commitment to the long-term success of intermodal in Portland. It’s only to our advantage.”
It’s unclear what if any impact a sale might have on Amtrak Downeaster passenger rail service, which operates in Maine on 79 miles of track owned by Pan Am, between South Berwick and Brunswick.
Pan Am, formed by Mellon in the the early 1980s with the acquisition of the former Boston & Maine and Maine Central railroads, initially opposed the launch of the Downeaster over disagreements about speed limits on the line.
Attempts to reach the Northern New England Passenger Rail Authority, which oversees the Downeaster, were not successful.
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