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To
make the comparisons even more graphic, look at Estonia -- US$60 million
for 64%. Let’s therefore
say it was US$100 million to buy 100% of Estonian Railways which is
handling 40 million tons. Or you can flush US$180 million into the
Harlem River for the Oak Point Link, to accomplish nothing.
This is the difference and this is why I am here today. |
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So,
to conclude…the overseas market will continue to be relatively opaque;
and there are not a lot of buyers driving the prices up. However, it is a very risky market because it is far away,
there are logistical gaps, etc. And
to reemphasize culture, success in this business will depend mostly on
the ability to understand the country – as opposed to understanding
railways – and a high tolerance for risk. Domestically, at least on the other side of the Hudson River, the market will continue to be relatively competitive in the USA. There will be buyers for every deal; the price will continue to be relatively high. Therefore success will depend more on the process, in other words – how to play the game – than on the customer. A classic example: offer a higher price than anyone else; take over; then go to your state government to take over your track budget because, after all it’s infrastructure and it’s not fair to have to compete with trucks; so let’s have the State pay for our vision. Finally, financing for these deals is prospectively driven more by politics than economics. Now the Class 1s are going to the government and saying, “We just found out that we’re competing with trucks. And we’ve got to pay for the premium that we paid for Conrail, so could you please take over our track budget?” Now, to focus on New York City: as long as the primary focus is on building infrastructure as opposed to creating transportation, the impact on the market will be minimal, if anything. The inconsistent policies of the past and the present therefore create the following equation: |
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Construction of rail tunnel to Brooklyn |
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Forcing NYCH out of business |
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Road to Nowhere |
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Let’s assume that New York does build a rail tunnel to Brooklyn, which
I understand will be something like US$2 billion, and at the same time
succeeds in its current efforts to force the New York Cross Harbor out
of business; where will this tunnel go?
I presume it will go to Brooklyn, where there are actual rail
customers and carload traffic. The result created will be the opposite
of the New York Central. The New York Central was “The Road to the
Future” – this, my friends, is the Road to Nowhere. I
would like to close with something I received earlier this week.
As many of know, May 1st is May Day. Because of our
close relationship with the former Soviet people, one of them has sent
us this fraternal greeting, which I have been told translates as
follows: “The Oak Point Link – Glorious Manifestation of the Hand
of the State.”Thank you. |
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