Norfolk Southern Railway (NS) will buy the Cincinnati Southern Railway from the municipality for $1.62 billion, the rail company, mayor, and railway board announced. The 336-mile line between Cincinnati and Chattanooga is a critical segment of the corridor connecting Chicago with Atlanta and the southeast. Currently, an NS subsidiary leases and operates the line.
The deal, which is expected to go through in 2024, is subject to approval by Cincinnati voters and the Surface Transportation Board. Also, the transaction requires the Ohio legislature to permit the sale’s proceeds to be put into a trust fund devoted to infrastructure projects in the city rather than to paying off debt. Specifically, the money would be used for improving bridges, streets, and parks.
“The Cincinnati Southern Railway plays a critical role in Norfolk Southern’s railroad operations and our nation’s supply chain infrastructure,” Norfolk Southern Chief Strategy Officer Mike McClellan said in a statement. “Through this sale, our customers and the nation’s economy will have certainty around future operations and the health of the railroad.”
Norfolk Southern is a freight railroad formed in 1982 when Norfolk and Western Railway merged with Southern Railway. It operates 19,500 miles of track.
Currently, NS pays the city about $25 million per year to lease the line. The sale agreement resulted from a standard lease renewal conversation held in 2021. The lease was set to expire in 2026.
Owning lines is preferable to leasing them, according to NS, because costs can fluctuate over time, adding to uncertainty surrounding expenses. NS will own the 9,500 acres of land upon which the railway is built as part of the deal.
“This agreement sets the framework for Norfolk Southern to own a core line in our network in perpetuity, allowing us to advance our strategic objectives of improving service, enhancing productivity, and creating an even stronger platform for accelerated growth, all while eliminating uncertainty around future control of the line and lease costs,” NS CEO Alan H. Shaw said in a statement.
The city of Cincinnati is poised to benefit from the deal, according to Mayor Aftab Pureval. The purchase represents “an historic opportunity to deliver great value to citizens of Cincinnati and realize a substantial return on the investment and foresight of our predecessors,” he said in a statement. “We are fortunate that a number of events have brought us to this point and will provide for the transportation needs of our city for decades to come.”