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Norfolk Southern Railway and Pan Am Railways (PAR) are partnering to establish an improved East Coast route and form a joint venture railroad.

Yesterday, the two railroads announced they agreed to create the "Patriot Corridor," a route between Albany, N.Y., and the greater Boston area that will offer improved track quality and customer service, higher train speed and reliability, and increased capacity. NS and PAR each will retain a half interest in newly formed railroad company "Pan Am Southern."

PAR agreed to transfer its 155-mile mainline between Mechanicville, N.Y., and Ayer, Mass., to the joint venture, along with 281 miles of secondary and branch lines (including trackage rights) in Connecticut, Massachusetts, New Hampshire, New York, and Vermont. PAR's Springfield Terminal Railway subsidiary will provide all rail services for the joint venture.

NS will provide cash and transfer to the joint venture other property valued at $140 million, $87.5 million of which is expected to be spent the next three years to improve the Patriot Corridor, such as terminal expansions, and track and signal upgrades. NS and PAR — which will seek Surface Transportation Board approval for their transaction — also plan to build intermodal and automotive terminals in the Albany, N.Y., area.

"The Patriot Corridor creates a new level of rail competition in upstate New York and New England by improving train speed, reliability, and capacity, as well as strengthening connections between the region's short line and regional railroads and Norfolk Southern's 22-state network," said NS Chairman, President and Chief Executive Officer Wick Moorman in a prepared statement.

The Northeast's largest regional, PAR (formerly Guilford Rail System) operates 2,000 track miles in Maine, New Hampshire, Massachusetts, Vermont, Connecticut, New York and Atlantic Canada.

Since the Conrail integration in 1999, PAR has been working with NS to "bring additional high-quality rail transportation options to our New England customer base [and] this joint venture is the culmination of those efforts," said PAR President David Fink. "With energy prices continuing to rise, the Patriot Corridor will give our customers additional capacity and speed to get their products to market."