Train of thought can't escape CN/EJ&E merger this week

I've been thinking a lot about Panama and not just because it's a land of sunny beaches, toucans and drinks with those little umbrellas while here's it's Siberia-ville.

No, I've been musing about the Panama Canal expansion and what it means for freight train congestion in the region, thanks to a conversation with Northwestern University transportation economist Aaron J. Gellman.

For those, such as myself, who may not be up to speed on the canal project, here's a quick recap. Panamanians voted overwhelmingly in 2006 to add a third set of locks to the canal, which like our freight system in Chicago is overloaded. The construction is expected to be completed by 2014.

"The new locks will give the canal capability beyond anything they've had before," Gellman said. "The new locks are longer and wider and substantially deeper. They can handle those bigger ships."

"It means a lot of cargo can go through the canal from the Far East to the East Coast."

Right now, the United States relies heavily on freight railroads to move goods manufactured in Asia, like cars and electronics, arriving at West Coast ports to markets across the country. And, Gellman says now's the time for railroads to pick up business while the canal is under capacity.

That takes us to Chicago, which for 150 years has been the rail hub of the nation with six major railroads crossing through the region. There's 7,343 miles of track in Illinois and the state ranks first in the amount of freight carried in the U.S. - a hefty total of 518.9 million tons. In the Chicago region alone, 1,200 trains pass through every day, according to the Chicago Region Environmental and Transportation Efficiency (CREATE) Program, which also anticipates rail traffic will grow by 89 percent between 2002 and 2035.

With such popularity comes a downside and that's congestion. Some railroads complain it takes as long to travel from the West Coast as it does to go through the Chicago bottleneck. And that's one of the reasons the Canadian National Railway says it's essential for it to buy the less-crowded EJ&E Railroad. CN would move its freights from city tracks onto the "J," which runs between Waukegan and Gary, Ind., in a semicircle - a move that's got everyone living along the EJ&E up in arms.

But back to Panama.

With logjams in Chicago and at California ports such as Long Beach and Los Angeles, the expanded canal could be a competitive threat by offering a viable alternative for big container ships from Asia to pass through Panama and deliver goods to ports on the Gulf Coast and East Coast.

Gellman expects the expanded canal "will have a pretty significant impact for Chicago," unless the railroads can "offer a faster and cost-effective service from the West Coast to the East Coast."

"It will take away traffic after 2014," Gellman predicted. "This illustrates what globalization can mean. No transportation system like the U.S. railroads can operate in a domestic vacuum."

I started writing this column on Monday before the U.S. Surface Transportation Board issued a final report on the environmental impact of the merger, which listed a bunch of conditions but basically seemed to assume the transaction will be approved - to the chagrin of opponents.

So at this turning point, I'm full of unanswered questions, just like the ending of a soap opera. If the merger goes forward, what will it mean for freight traffic here? What will be the ultimate impact of the Panama Canal expansion? And, (I could do a separate column on this alone) what about the new kid on the block, the Port of Prince Rupert in British Columbia, that backers hope will bring a bonanza of Asian goods eastward via CN rail lines?

I want a crystal ball in my stocking this year.

STB power vacuum?

The fate of the CN/EJ&E merger rests in the hands of the three members of the STB who will make a final decision in the near future. The are Chairman Charles Nottingham, a Republican, Vice Chairman Francis Mulvey, a Democrat, and Douglas Buttrey, a Republican. From their reactions during hearings, it appears Nottingham favors the merger while Buttrey is opposed. Mulvey's a little harder to read, but he had plenty of tough questions for STB planners. Board members are nominated by the president and confirmed by the Senate. While President-elect Obama opposes the merger, insiders say his focus now is on picking top-tier administrators and it could be weeks before appointments at the STB level are done.

That means Buttrey could still be around when the board finally votes on the CN plan since outgoing members can stay on the panel for up to a year until a replacement is named to ensure continuity.

Again, I ask for a crystal ball. The other interesting thing about Buttrey is that the man loves bow ties - just check out stb.dot.gov/stb/about/board.html.

CN/EJ&E reaction

E-mails, I get e-mails.

• Railroad historian Tom Fetters of Lombard wrote last month that "The Daily Herald seems to have overlooked the recent purchase by the Canadian Pacific of the Iowa, Chicago and Eastern Railroad Corp. that runs trains from Savannah, IL., through Davis Junction to Big Timber, and down the hill through the west bank area of the Fox River in Elgin and then over to Bartlett and Roselle and then on to Bensenville. Where were the NIMBY's when this transaction went through in a few short weeks?"

Incoming

• The Active Transportation Alliance, aka Chicagoland Bicycle Federation, says nothing warms the heart this holiday like a membership. If you've got an avid biker on your shopping list, call (312) 427-3325 or go to activetrans.org.

• The Chicago Transit Authority is promising a better, faster Web site at the end of the month. Good news but I don't think it will compensate for the sting of fare hikes in January.