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Vital Lines Off the Beaten Track

Genesee & Wyoming’s $1.4 billion acquisition of RailAmerica’s 45 U.S. short line railroads boosted its presence in Alabama by adding the 350-mile Alabama Gulf Coast Railway. Another G&W line, the Meridian & Bigbee, cuts through the Black Belt.

The Meridian & Bigbee Railway serves a Georgia Pacific plant in Pennington (Naheola).

The Meridian & Bigbee Railway serves a Georgia Pacific plant in Pennington (Naheola).

Photos by Robert Reynolds, Courtesy of Genesee & Wyoming

From the wailing of the whistle to the clacking along the tracks, trains have been chugging their way into our hearts and minds for more than 200 years. Johnny Cash sang about trains, Agatha Christie set her most famous murder mystery aboard one and countless Western movie heroes have bounded across the top of boxcars in pursuit of the bad guys.

While this romantic vision of trains is an important part of our popular culture, the reality is that most rail travel simply involves the delivery of commerce. And a crucial but often overlooked element of this transportation workhorse is the short line railroads. These limited-length tracks connect the smaller dots along the national rail network, much in the way that state and county roads take over in parts of the country not served by the interstate highway system.

According to data released earlier this year by the OneRail Coalition, there are 558 short line railroads in the United States operating on more than 50,000 miles of track. They account for at least 25 percent of the rail network in 30 states, primarily in rural areas. All together, these railroads ship 7.8 million carloads annually and employ approximately 18,000 workers.

Instead of traveling from coast-to-coast, short lines concentrate on hitting all points in between. The result is a series of mini-routes, some only a few miles long. In Alabama, for example, the Conecuh Valley Railroad travels a grand total of 12 miles, connecting the town of Goshen with the major CSX line in nearby Troy.

Conecuh Valley is one of several Alabama short lines owned by Genesee & Wyoming, a freight railroad company that was formed near the end of the 19th century in New York state. G&W first expanded into Alabama in 2005, and then significantly increased its presence in the state last year with the acquisition of RailAmerica’s network of 45 short lines in the United States and Canada, including four in Alabama.

“Alabama is a great state for industrial growth and development,” says Jerry Vest, G&W’s vice president of government and industry affairs and the current president of the Alabama Railway Association. “I think there are some wonderful opportunities in this state, both for G&W and for the industry.”

G&W began in 1899 as a 14-mile railroad serving a single customer – a salt mine operation – in western New York, near Buffalo. The company’s name originated from the fact that the line traveled from Genesee County to Wyoming County.

Short line companies remained largely local entities until 1980, when the passage of the Staggers Rail Act deregulated railroads and allowed the major freight lines to sell their smaller routes that they could not operate profitably. G&W was one of several companies that began to focus strictly on these feeder networks, often referred to as “first-mile, last-mile” in the industry.

“Before the laws changed, if railroads weren’t making money on those lines, they basically just abandoned them,” Vest says. “The markets were regulated as such that they couldn’t sell or lease to a lower-cost operator like us. They weren’t happy with those lines, so they didn’t invest in them. Deferred maintenance became a problem for service, service would deteriorate, customers would further leave the line, and it became a vicious downward cycle.

“In 1980, the laws changed and made it much easier for these large railroads to spin these lines off, either to sell them or long-term lease them to companies like G&W. We just took off when that happened, and we’ve been growing ever since.”

A major portion of that growth occurred with last year’s approximately $1.4 billion acquisition of RailAmerica. According to G&W, that transaction increased the company’s total revenues by nearly two-thirds to approximately $1.4 billion and doubled its North American revenue to approximately $1.1 billion. G&W’s territory grew from 24 states to 37. The company now has a total of 111 railroads, with approximately 15,000 miles of track, 1,000 locomotives and 4,300 employees.

Among the Alabama lines that G&W acquired from RailAmerica, the largest is the Alabama Gulf Coast Railway. The AGR stretches nearly 350 miles from Mobile northward through the western part of the state to just past Columbus, Miss.

“The AGR is a fantastic property,” Vest says. “There is tremendous opportunity with it, getting down to the Port of Mobile, and another one of its lines goes to Pensacola (Fla.). It has tremendous traffic and great potential. It’s a significant line.”

The purpose of such short lines is to deliver products to and from companies that are located off the beaten track, such as paper mills and scrap yards. For much of rural America, short line rail service is the only connection to the national railroad network.

CSX and Norfolk Southern might be able to move a 100-car train across the country, but, because of bridge sizes and other infrastructure factors, it often is not physically or financially feasible for them to take all those cars the final 50 miles to a single customer in a remote location. That is where a short line carrier, such as G&W, comes in, picking up a dozen or so of the cars and transporting them the rest of the way.

Short lines carry a wide variety of valuable commodities. The AGR alone handles crude oil, coal, iron, steel, pulp, paper and limestone. The Meridian & Bigbee Railroad – a 145-mile line from Montgomery to Meridian, Miss. – serves a Georgia Pacific mill in Pennington (Naheola), southwest of Demopolis. And the Bay Line – a 103-mile stretch that goes from Abbeville through Dothan and on to the port at Panama City, Fla. – is a major transporter of wood products that are exported to Europe.

When used properly, Vest says, short lines can be beneficial to rural economies. He points out that the Meridian & Bigbee Railroad cuts straight through the Black Belt of Alabama, which has struggled economically for decades. Vest says increased rail traffic on the M&B can lead to more opportunities for new business and jobs.

“If we can provide service that is what the customer needs, that becomes a catalyst to help draw those sites along the railroad to be more competitive,” Vest says. “There are some great sites on the M&B, for example, in Dallas County (near Selma). That’s something we want to be able to work with the state and the county to develop. It will mean jobs for the community and an increased tax base.”

Improvements in tracking technology are helping the cause of the short line. One of the biggest concerns over the years is that the smaller railroads would mishandle the handoff of freight cars from the national carriers.

“The challenge is that those interchange points weren’t always as consistent or as smooth as they needed to be in order to compete with trucks,” Vest says. “What has happened in the rail industry through technology is those handoffs have become much more seamless. We’ve improved our service tremendously.

“The transponders that we put on all freight cars to help track their location is now universal. And there are readers at points of interchange. So with enhanced computer data bases and the interface with the transponders, we know where the freight cars are and we can manage the flows better because of it.

“There is a massive amount of flow over the network of freight railroads in the U.S. that has been developed over 100 years of refinement of interchange protocols. And short lines are an important part of that network.”

Cary Estes is a freelance writer for Business Alabama. He lives in Birmingham.

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