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October 2023
Compiled by Michael Popke
Demand’s up. Inventories are down. It’s a world wood crosstie producers are getting used to toiling in — and working through.
“The wood flow is up over 20% from this time last year, yet railroad tie inventories are debilitatingly low,” said Railway Tie Association Executive Director Nate Irby in an email. “We are on a path for that to remain status quo for the next 12 to 18 months. Inflation also is still prevalent in much of our sector, and part shortages and supply-chain disruptions are lingering — limiting flexibility.”
Wood-tie producers are processing ties as fast as they can, but because of railroads’ high demand, they are “artificially seasoning” a number of ties for immediate use rather than naturally air-seasoning them, and then placing the ties in drying inventory, Irby said.
That said, Class Is, regionals and short lines are planning robust track maintenance or improvement projects for 2024 as part of their ongoing commitment to safety and reliability, he said. Many small railroads recently secured grants from the Federal Railroad Administration’s Consolidated Rail Infrastructure and Safety Improvements (CRISI) Program that will help fund infrastructure work.
Meanwhile, tie suppliers are also focused on sustainability efforts that include repurposing older ties, recycling preservatives from ties when they reach the end of their service life, and installing solar panels to help offset plant electricity costs and reduce carbon emissions.
Progressive Railroading recently reached out to a sampling of wood-tie suppliers and treaters to find out what they’ve been dealing with so far in 2023 and what they’re thinking about as they prepare for 2024. Their emailed responses follow.
Last fall, Koppers Inc. acquired Gross & Janes, an untreated wood-tie supplier with operations in Missouri and Arkansas. The move allowed Pittsburgh-based Koppers — which provides treated wood projects and wood treatment chemicals — to offer a fully integrated lifecycle management solution for wood ties, said John McDonald, the company’s director of Class I sales.
Despite some of the trends Irby cited, Koppers officials have noticed a slowdown of competing hardwood industry products, which has improved the company’s procurement efforts.
“We have been working to rebuild dry inventory to increase efficiencies in our plants,” McDonald said. “Our team is currently on pace to procure over 7 million ties, representing our highest procurement year since 2015. We project further normalization of inventories heading into 2024, which translates into additional capacity for customers demanding our product.”
Koppers also continues to work with customers on potential price adjustments. The difference in cost is what the company believes is the fair value of its high-quality preservative that extends the life of ties in service by 15 to 25 years, McDonald said.
Along with increased procurement, Koppers stabilized its workforce in 2023 by ratifying three major labor contracts in key areas, he said. The company also modernized and expanded capacity at its treatment facility in North Little Rock, Arkansas. When fully operational, the plant will have the capacity to treat nearly 20% of the annual Class I tie market, Koppers estimates.
Additionally, the company invested $65 million in its Recovery Resources business, which specializes in reusing, repurposing or recycling ties as they reach the end of their service life.
Ground tie- and crosstie-derived fuel provide a renewable energy source with a good BTU value for those seeking to move away from fossil fuels, McDonald said. It’s part of a company-wide sustainability program that prompted USA Today to name Koppers one of “America’s Climate Leaders” and Newsweek to rank it among “America’s Most Responsible Companies.”
For Stella-Jones Corp., both tie procurement and production have continued to increase throughout 2023, said Jim Raines, vice president of global railway tie sales.
“While most of the challenges from last year — like labor, energy costs, transportation and inflation — have stabilized, the procurement of untreated ties from our sawmill base continues to be a priority,” he said. “Pricing for these ties has leveled off, but we do not expect any softening in the foreseeable future. And though incoming procurement continues to be at an acceptable level, the long-term strength of the sawmill base is something we must continue to watch.”
While Stella-Jones officials are aware of possible headwinds with that base, they will be prepared to efficiently supply customers with the products they need and when they expect them, Raines said.
Meanwhile, Class I tie demand continues to be steady, and the company is beginning to see the positive effects of the FRA’s CRISI program on its short-line business, he added.
And similar to other companies in the wood-tie space, Stella-Jones has placed sustainability atop its priority list.
“In 2024, we plan to invest in robotics, automation and special projects like the recent solar panel installation in Clanton, Alabama,” Raines said, referring to the company’s installation of 2,100 panels on two roofs of a manufacturing facility earlier this year that are projected to cover 70% of the plant’s electricity needs. “This industry-first project is already saving the emissions equivalent [of] the combustion of 92,000 gallons of diesel fuel each year.”
As demand for wood ties remains strong, more railroads are recognizing the increased longevity and subsequent cost savings of wood-tie preservation, said Jeff Thomas, eastern region manager for wood preservative supplier Nisus Corp.
“We’re in the low-double-digit percentage increase over 2022 and we expect to maintain that pace,” he said, citing significant growth in both the use of Cellu-Treat® liquid borate dip treatment prior to air seasoning, as well as in the use of QNAP® copper naphthenate during the pressure treatment of cross and bridge ties.
Nisus officials expect the double-digit-percentage growth to continue in 2024.
Meanwhile, new pressure-treatment plants continue to add Cellu-Treat dip treatments prior to air seasoning, and Nisus anticipates that two more plants will begin pressure-treating ties with QNAP by 2023’s end. As the aluminum and steel industries decarbonize — resulting in less coking and less creosote production — QNAP is helping railroads keep prices competitive, Thomas said.
“The Class Is have proven to be good stewards of the environment,” added Jeff Lloyd, the company’s senior vice president of innovation and sustainability.
It’s not surprising that railroads are reviewing end-of-life issues for crossties, and what they’re determining is that QNAP ties can go to any EPA-permitted boiler (compliant with the non-hazardous secondary material rule) as well as be used for residential landscaping, in most states, per the EPA-registered label, he said.
“Greater flexibility with end-of-life options creates opportunity for additional cost savings,” said Lloyd.
Work also marches on with recycling preservatives from ties when they reach the end of their service life. In addition, Nisus continues &ldquoto produce biochar in the process to realize carbon sequestration to close the carbon cycle as part of a circular economy,” Lloyd said.
In terms of end-of-life options for ties: Railroad tie processor and supplier Omaha Track annually processes more than 2.5 million crossties, turning discarded ones into landscaping materials and using lower-quality ones to provide an eco-friendly fuel source for power plants and various industries, said Jillianne Gates, the company’s corporate communications and office operations manager.
The reclaimed materials are processed and distributed through Omaha Track’s network of facilities.
“[We source] these discarded wood ties primarily from railroads and track abandonments,” Gates said. “The supply of wood ties remains steady, ensuring a continuous stream for repurposing efforts.”
However, the soft landscape market has prompted Omaha Track to pursue additional tie chip outlets, she said.
As for 2024? Omaha Track anticipates facing several challenges.
“Our company’s dedication to environmental responsibility means it must navigate shifting landscapes in both the fuel and landscaping markets,” Gates said. “There has been a large quantity of biomass facilities closing their doors for good. There is also an excessive quantity of legacy ties that needs to be disposed of. Increasing scrutiny on sustainability practices has placed pressure on finding alternative disposal methods for scrap ties.”
Michael Popke is a Madison, Wisconsin-based freelance writer. Email comments or questions to prograil@tradepress.com.
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