OmniTRAX this week filed to abandon the 67.5-mile line, citing its dim prospects and millions of dollars in operating losses since it acquired the route in 2016.
The prime culprits: New crushed rock traffic that never materialized as expected and rapidly declining shipments of frac sand.
The entire route was placed under embargo on July 25 due to bridge problems and unsafe track conditions that would require $2.3 million in repairs, OmniTRAX said in its filing with the Surface Transportation Board. The line has more than one bridge per mile.
OmniTRAX spent $2 million to improve the Central Texas & Colorado River trackage after acquiring it from the Heart of Texas Railroad.
“The traffic base weighed heavily toward lower-margin minerals traffic (particularly sand) and agricultural materials, but CTXR reasonably believed that the on-line customers would provide a consistent revenue baseline from which to grow the railroad to profitability,” the railroad’s filing says.
A proposed rock-crushing facility was expected to generate 8,000 to 10,000 loads annually. But the facility never opened as planned in 2017 and is unlikely to ever be developed.
“The collapse of the crushed rock traffic opportunity was, by itself, enough to doom CTXR,” OmniTRAX Chief Commercial Officer Peter Touesnard wrote to the board.
CTXR’s frac sand volumes have declined considerably as oil and gas drillers rely on new sand mines closer to their operations in western Texas.
The railroad expected to haul just 553 carloads in total this year, down from 1,210 in 2018.
“Despite CTXR’s good faith efforts to work with existing and potential customers to generate sufficient operating revenues to keep the line in service, and despite CTXR’s sizeable capital investments, hoped-for traffic increases, which had motivated the purchase of the line, have not materialized,” OmniTRAX said in its filing. “Worse, a substantial on-line customer plans soon to cease operations, and the largest customer by revenue carloads recently sold its Brady-area facility to a new operator that projects to move roughly 20% of the traffic volumes of its predecessor. Collectively, all of these developments will only contribute to CTXR’s already-unprofitable operation.”
The route, which connects with BNSF Railway’s Lampasas Subdivision at Lometa, Texas, some 85 miles northwest of Austin, was built in 1910-11 by Santa Fe subsidiary Gulf, Colorado & Santa Fe Railway.
