A winning formula: Short lines go beyond just being 'the railroad'

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A Reading & Northern coal train is loaded at sunrise at Jeddo, Pa., in September 2016. The railroad's efforts to develop transload business earned an award earlier this  year from the American Short Line and Regional Railroad Association.
Scott A. Hartley

The four railroads that earned short line association business development awards this year have one thing in common: They all gained new traffic by going beyond merely moving freight from Point A to Point B. 

Officials from the Reading, Blue Mountain & Northern Railroad, Delmarva Central Railroad, The Indiana Rail Road, and the Ann Arbor Railroad shared their success stories during a panel discussion at the American Short Line and Regional Railroad Association’s virtual conference on Wednesday.

The Reading & Northern started two transload operations that won the railroad new business in Ransom, Pa., and Hazleton, Pa., says Daren Geschwindt, vice president-distribution services. 

In Ransom, the railroad purchased an 83,000 square foot warehouse that had lost its rail spur decades ago. Within days of the purchase, the railroad learned of a new forest products customer who was looking to warehouse raw material to supply its mills in the region. The railroad cleared the building, built a 400-foot boxcar dock, a new switch, and 600 feet of track. The warehouse is now running near capacity despite being three times the size of the railroad’s previous site in the area.

In Hazleton, the Reading & Northern landed new steel coil business it had sought for years. “This is a story of persistence,” Geschwindt says. 

The off-rail customer didn’t have room at its site for a spur. So the railroad built a transload center and started its own sister trucking company, Reading Railroad Transfer, to move the coils from the West Hazleton Transload terminal to the plant. “It’s a complete package of rail, transload, storage, and final truck delivery,” Geschwindt says.

Poultry-related traffic dominates on the Delmarva Central, the 188-mile railroad operated by Carload Express. Chief Marketing Officer Cliff Grunstra set out to learn all he could about the poultry industry and found that amino acids, which are essential ingredients in chicken feed, were trucked long distances to suppliers in the railroad’s service territory.

The railroad purchased a former BASF chemical facility in Seaford, Del., that was rail served. Delmarva Central didn’t have any traffic lined up at the time, but wanted to preserve a site that had rail spurs, Grunstra says.

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Ultimately the railroad was able to sign deals with a couple of producers of amino acids, Illinois-based ADM and Missouri-based Novus, who now ship via rail to a pair of new transload centers, including the former BASF site.

The Indiana Rail Road was looking to diversify its traffic base and began scouting for potential warehouse sites that would be suitable for a transload facility, CEO Peter K. Mills says. It found a site and partnered with trucking firm Venture Logistics to build a 406,000-square-foot, rail-served distribution center in Indianapolis.

“We built a facility that is unrivaled in this market,” Mills says, noting that Venture funded the warehouse while the railroad funded the rail infrastructure. The Venture Rail Warehouse features 58 truck docks and 15 indoor rail car spots. The facility now handles 3,000 carloads a year, up from 1,200 when the warehouse opened in 2017.

In Toledo, Watco’s Ann Arbor Railroad used an underutilized warehouse site to land a partnership with Fiat Chrysler Automobiles, General Manager John Vance says. The Silver Creek Vehicle Distribution and Homologation Center is where different equipment packages are added to Jeep Wranglers and Gladiators before the vehicles are shipped by rail to their destinations. 

“The whole story here from all of us is you really have to be experts in the accessorial services to win this business. You can’t just be the railroad,” says panel moderator Stefan Loeb, who is Watco’s chief commercial officer.

The four railroads each received the ASLRRA’s Business Development Award in May.

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