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Pennsylvania & Southern seeks ownership of long-leased line

7/5/2023
With STB approval, the Pennsylvania & Southern Railway and its parent — Rail Enterprise Group — will acquire a 25-mile line that serves a major business park near Chambersburg, Pennsylvania. Rail Enterprise Group

By Jeff Stagl, Managing Editor 

For nearly 20 years, the Pennsylvania & Southern Railway LLC (PSCC) has operated a line owned by the Letterkenny Industrial Development Authority (LIDA) near Chambersburg, Pennsylvania. 

The arrangement has worked well for the authority and short line, which manages operations on the 25 miles of track serving the 1,200-acre Cumberland Valley Business Park. So well, the parties in 2015 extended the lease agreement’s term to 2039. 

But now, leaders of PSCC and its parent Rail Enterprise Group (REG) want to perform upgrades and develop more business on the line. And it’s more advantageous — and prosperous — to own the line to pursue those objectives, they believe. 

Late last year, REG and LIDA reached a purchase agreement, and the transaction closed at September’s end. However, REG inadvertently did not seek an acquisition and operation exemption from the Surface Transportation Board to gain approval for the transaction, according to a June 19 filing with the board. 

The company now has fulfilled that federal requirement and the transaction is expected to close by late July, pending board approval. 

locomotive The short line interchanges with CSX and provides transportation, car storage and other services. Rail Enterprise Group

The crown jewel of the deal for REG and PSCC is where the line is located: the Cumberland Valley Business Park, which formerly was part of the Letterkenny Army Depot. The park features more than 1 million square feet of space and hundreds of acres of industrial-zoned land, and is located along the rapidly growing, logistics-centric Interstate 81 corridor between Harrisburg, Pennsylvania, and Hagerstown, Maryland — in the heart of the Mid-Atlantic agricultural belt. 

It’s also close to major logistics centers in the Carlisle, Pennsylvania, region; Norfolk Southern Railway intermodal terminals in Greencastle and Harrisburg, Pennsylvania; CSX’s intermodal terminal in Chambersburg, Pennsylvania; and the Port of Baltimore. 

PSCC interchanges with CSX and provides car storage and transportation services, including multiple daily switches. Along with third-party logistics partners, the short line also offers cross dock, warehousing, bulk products transloading, reloading and on-site trucking services. 

PSCC handles agricultural products, steel, lumber, paper, machinery and heavy equipment, a variety of non-hazardous bulk products (dry and liquid), and other commodities. Since the business park was once part of a large military installation, it features specialized infrastructure for handling and storing machinery and heavy equipment. 

Becoming the line’s owner will incentivize the company to upgrade the track and pursue more industrial development in the area to boost business on the PSCC, REG officials say. 

“It gives us the opportunity to invest in buildings along the right of way,” said Eyal Shapira, the company’s president and CEO, in an email. “Over the years, I bought land along the railroad, but it was too risky to invest in warehouses and transloading services.” 

REG also owns the Raritan Central Railway, which serves the Edison and Woodbridge waterfront area in Edison, New Jersey. The railroad operates about 31 miles of track and interchanges with CSX and NS. 

Raritan Central Railway serves the Heller Industrial Park and the Raritan Center Business Park, which is located near the Port of New York and New Jersey.