Car storage making it possible for short lines to survive in tough economic times
By Elaine Williams of the Tribune
Sunday, June 22, 2008
A Bountiful Grain and Craig Mountain Railroad engine pulls a variety of cars along the downriver run from Orofino to Lewiston.
The same weak economy that's reducing the number of cars running on two rail lines in north central Idaho and southeastern Washington is providing an opportunity that makes it possible to keep the marginal routes operating.
The operators of the tracks connecting Lewiston with Kooskia and Cottonwood and those that link Moscow and Princeton with Spokane are storing cars to make ends meet.
Housing starts and consumer spending have fallen so much that big carriers such as Union Pacific are willing to pay for a place to let their cars be idle.
"It's either that or the whole railway (between Spalding and Cottonwood) going away," says Karl Nelson, general manager of the Bountiful Grain and Craig Mountain Railroad in north central Idaho. "We're doing everything we can to keep the railroad here."
The weak demand for retail goods is helping in another way. Nelson is able to allow customers to keep cars available for orders they receive at the last minute, reducing delivery times.
Normally it's difficult to convince big carriers to send their cars to north central Idaho since it's the end of the line. All of the tracks serving the region dead-end in north central Idaho without crossing the mountainous terrain along the Montana border.
The Bountiful Grain and Craig Mountain Railroad had faced charges of 75 cents per hour per car once its cars left the lines of major carriers in eastern Washington. Previously, Nelson passed those fees on to customers when they took longer than 48 hours to load cars.
The Washington and Idaho Railway, headquartered in Marshall, Wash., saw business decline last year when wheat hit $10 a bushel, said Stan Patterson, president of the line. His partner is Mike Williams, the owner of the Bountiful Grain and Craig Mountain Railroad.
In 2007, some growers didn't care that, in some instances, it cost a few cents a bushel less from some places on the Palouse to send their harvest to Portland by train instead of trucking it to the Snake River to be barged, Patterson says. "Just hauling freight is a money-losing operation."
The problem doesn't extend to the line that runs from Lewiston to eastern Washington where it connects with large carriers. Potlatch Corp. in Lewiston provides the bulk of the business on that line, which is owned by Watco.
Watco is storing some cars on that line because it has space, but it is not dependent on the income to make the line viable, says Mark Blazer, vice president of strategic planning and business development for the Helena, Mont.-based rail company. The situation is the most dire on the lines between Cottonwood, where regular service has been suspended since 2000 after the federal Surface Transportation Board allowed the line to be abandoned.
The Bountiful Grain and Craig Mountain Railroad is still paying taxes, insurance and maintenance for the route even though it has no income, Nelson says.
That abandonment holds so no additional due process would be required to scrap it, Nelson says. "If we wanted to go in tomorrow and tear the whole line out, it would be gone."
But Nelson and his superiors hope to avoid that. The line is in good enough shape that trains could be running on the tracks today if there was something to ship, Nelson says.
He would like to get enough grain farmers to agree to ship that he could get Burlington Northern to send one of its 110 car unit trains for grain.
That business would supplement the 25 to 30 cars per week the Bountiful Grain and Craig Mountain Railroad hauls off the Clearwater River section of the line where the primary customers are sawmills, such as Bennett Forest Industries, which brings lumber from Grangeville, and Three Rivers Timber in Kamiah.
Such ideas seem to be a long shot. Nelson would have to solicit the business and possibly find a way to construct the circular depot the trains require to have fast loading, a project that would likely cost in the hundreds of thousands of dollars.
Increasing diesel prices could work in Nelson's favor. Patterson's territory is drifting southward. He's gaining customers who weren't interested as recently as last year.
Six months ago it cost 7 cents more to ship wheat by train to Portland from just north of Pullman than if it went by barge. Now it's even and an elevator there is ordering cars for harvest.
The biggest share of his business continues to be on the northern part of the Palouse. Co-Ag in Rosalia is his largest customer.
"We're optimistic things are going to be good this fall," Patterson says. "...The fuel price being what it is, no one wants to go to the river."
Patterson has good reason to be hopeful, says Ken Casavant, a Washington State University agricultural economist who specializes in transportation issues.
Trains are 10 times more energy efficient than trucks that get about five miles per gallon and diesel is approaching $5 per gallon, Casavant says.
But while some smaller trucking firms are struggling, business isn't immediately shifting to rail for a variety of reasons such as long-term agreements that may be in place for transporting freight. "Right now the issue is 'Will our short lines survive until that time?' " Casavant says.
The other variable that Patterson faces on the Washington side of his operation is the state's ownership of the track, which took affect about a year ago.
Initially it was a setback because Burlington Northern increased rates, Patterson says. The cost of getting a grain car from the Palouse to Portland went from about $1,275 to $1,475.
But in the long term, Patterson expects it will help, noting the state's plans to refurbish pieces of track where the speed limit has been reduced to 10 mph. "The state has track money and they're investing in the infrastructure and they're doing a good job."
Williams may be contacted at email@example.com or (208) 848-2261.