By Pat Foran, Editor
In the spring of 1998, I received a call from a business marketing leader for a short-line holding company.
He'd read a story I'd written in Progressive Railroading's February 1998 issue ("Avoiding the short end of the schtick") in which I interviewed a half-dozen short-line marketing execs.
He wondered if I would be interested in seeing, hearing and experiencing first-hand how short lines actually do what they do best: market. And serve customers.
"I can show you how I do it, anyway," said Allen Brown, marketing director for Peoria, Illinois-based Pioneer Railcorp, which at that time owned 13 short lines.
Brown, who handled Pioneer business development projects, had direct marketing responsibility for four short lines.
I took him up on his offer, and in June 1998, I spent couple of days watching and listening to Brown, who now serves as president and CEO of Railmark Holdings and its subsidiaries, call on customers.
I took notes and shared them in a story that was published in the August 1998 issue of Progressive Railroading.
In part because the American Short Line and Regional Railroad Association held its annual conference in New Orleans this week, and in part because I've been thinking about the phrase "every carload counts" of late, I'm sharing the story (which isn't online anywhere else) here:
By Pat Foran, Managing Editor
Cisco is a small Illinois town with big business opportunities for a short-line railroad. Grain elevators, which provide more shade in these parts in summer than trees do, line the many rail routes that run in and out of central Illinois. But there’s more to doing business here than getting into the grain game. You have to know where and how to look for customers. You also have to know what you’re looking at once you find them.
“See that gray shack over there? That’s my newest customer,” says Allen Brown, marketing director for Pioneer Railcorp, parent of the Decatur Junction Railway Co., which serves Cisco. “I don’t care what the building looks like. Never underestimate the opportunities.”
It’s a mantra short-line marketers repeat regularly, and one they hope Class I execs mumble at least once in a while. Brown’s no exception. Peoria, Ill.-based Pioneer operates 15 short lines. Pioneer — and, so, Brown — has business development relationships with every North American Class I railroad.
“I find Pioneer to be a very aggressive marketing group,” says Larry Cronin, director of short-line development at Burlington Northern Santa Fe, which does business with 130 short lines. “No business is too small for them.”
In mid-June, Progressive Railroading spent two days at Pioneer short lines in Illinois and Iowa, watching and listening as Brown called on customers, big and small. He cracked jokes with some, did business with others, developed relationships with all of them. Meetings evolved into discussions about what’s right — and wrong — with short lines, Class Is and the railroad industry.
Tagging along with Brown also shed light on how forward-thinking short lines like Pioneer’s can make a difference at a time when the shipper community is questioning rail’s ability to truly be a service-oriented industry.
Rail and remembrance
THURSDAY, JUNE 18, 8:07 A.M.: Pioneer’s Peoria headquarters is modest, yet modern, accented with railroad relics — that’s Chairman and CEO Guy Brenkman’s touch. In 1986, Brenkman launched Pioneer through a self-underwritten public stock offering. Staffers here are friendly, helpful.
“We’ve got a good bunch of people,” says Brown, who handles Pioneer business development projects and has direct marketing responsibility for the Decatur Junction, Pioneer Industrial Railway Co., Shawnee Terminal Railway Co. and Vandalia Railroad Co.
Catherine Busch, marketing manager, handles the Keokuk Junction Railway Co., Minnesota Central Railroad Co., Michigan Southern Railroad, Rochelle Railroad Co. and West Michigan Railroad. Another marketing manager, Brian Patton, is responsible for Alabama & Florida Railway Co., Alabama Railroad Co., Fort Smith Railroad Co. and Mississippi Central Railroad Co.
“We work as a team,” Brown says. These days, the team is working to develop more rail-truck transfer facilities, which allow Pioneer short lines to pursue industries that aren’t rail-served. Next week, Brown and Busch will call on a key Minnesota customer. But on this day, Brown’s going solo to visit customers served by the Decatur Junction and the Vandalia Railroad.
“I always grab a few things before I go out,” he says, carrying caps and key chains that display short-line logos and tag lines. “It’s important that people remember you.”
The Class I conundrum
THURSDAY, 9:12 A.M.: “This whole thing is about relationships,” says Brown, on hold on his car phone. “The first thing you have to do is be sincere. I think people know when you’re sincere.”
Sincerity isn’t enough. You’ve got to be able to think on your feet, and to keep your eyes open: “There’s a lot of business around the perimeter of your railroad,” he says.
Scouting the perimeter — “30 miles on all sides” — takes time and persistence. But it can pay off. Pioneer’s Alabama Railroad initiated a cement transload business in 1996 after two years’ worth of selling. Now, “it’s 90-95 cars of cement, year after year,” Brown says. “If you take care of the customer, you never lose business.” But short lines don’t live and die on their own. They need Class Is to care about their customers, too. And Class Is, short lines say, don’t care often enough. “The biggest hurdle we have is integrating the various Class functions and issues — car supply, interchange, pricing — into our business development process,” Brown says. “A healthy percentage of their business originates or terminates on a short line.”
How much? Up to 25 percent, short-line executives say.
So how do you get Class Is to spend more time nurturing the relationship? Re-educating Class I employees about short lines would help, Brown says: “Not just the marketing guys — car supply, terminal operations.”
It’d also help if Class Is had more people dedicated to working with short lines. Big railroads also should review their pricing policies: Most quote tariff rates, if they get around to quoting at all, short-line execs say. Class Is “will give it a little more consideration” if they know it’s a transload deal, Brown says. But rates still ought to be incrementally based, he believes. Others wish Class Is would sell cars to short lines instead of scrapping them.
“That would help, but it’s not just selling us their older rail cars. It’s committing to support the traffic,” Brown says.
Class I short-line liaisons say they are committed to supporting the traffic, and that they’re getting better at providing that support. But they know where Brown and his marketing brethren are coming from.
“When you deal with a Class I, sometimes it’s like dealing with the Pentagon,” says Cronin of BNSF, which has boosted its short-line staff from two to four. “What we’re trying to do is look at each interchange and find out how well it works. Short lines can’t afford to be sitting around waiting for a Class I to bring them cars.”
Earlier this year, BNSF established the Direct Account Resource Team, or DART, in order to ferret out “carloads that fall through the cracks,” Cronin says. “It’s a slow evolution, but it’s been successful.”
Officials at Norfolk Southern Corp. and CSX Corp. say they, too, expect success in the short-line lane, post-Conrail.
“We consider short-line railroads our partners in the transportation business,” says Howard Starkloff, NS’ manager of short-line marketing.
‘It’s an ongoing process’
THURSDAY, 10:45 A.M.: On the road to Cisco, the discussion turns to doing business, short-line style: Short lines need to dig deeper, mine for business others never see, Brown says. That’s his approach on the Decatur Junction.
In 1992, Pioneer purchased the line and solicited customer feedback. Grain customers said they wanted dedicated hopper cars. Pioneer got some.
The Decatur Junction also worked on fostering a better relationship with interline partner Illinois Central Railroad. Last year, the short line signed a marketing pact with IC and Grain Systems Inc. (GSI), Assumption, Ill., to move GSI commodities and containers for domestic and export markets.
Meanwhile, Brown and his staff studied the market: What’s moving by truck, and what would it take to convert it to rail? They also met with local economic development officials to get an inventory of sites that could be rail-served.
“Are there previously used sidings? Who’s adjacent to your railroad? Is there a dormant siding that needs to be reactivated?” Brown asks.
Brown & Co. then developed a brochure listing the railroad’s services and contacts — material all short lines should issue to chambers of commerce and economic development officials, Brown believes.
“It’s an ongoing process, converting truck to rail,” he says.
THURSDAY, 11:14 A.M.: Brown cold-calls the former Cisco Grain Cooperative in Cisco, which is 18 miles northeast of Decatur. The grain shipper, which has been hauling about 400 carloads a year on the Decatur Junction, recently merged with two other co-ops and now is known as Topflight Grain Co-operative.
Brown learns his long-time co-op contact has retired. Unfazed, he pitches new business to the new general manager’s associate: “We can quote you rates to export your excess (grain).”
The associate tells him she’ll relay the information to the new GM; Brown leaves behind a few key chains and hats.
(A month later, Brown is ecstatic about the co-op’s response: “We’re seeing things out of them that we never saw before,” he says. “They’re talking about making 25 to 50 trains using private cars. They’re talking about shipping out of Decatur, which, like Peoria, is a black hole for grain. I haven’t seen that since February 1995.” He now expects the co-op business to double within a couple of years.)
THURSDAY, 12:17 P.M.: All salesmen have customers they’re dying to win over. For Brown, it’s Greif Bros. Corp., Oreana, Ill., which is located on the Decatur Junction.
The container-maker had a bad rail experience years back. But Brown hasn’t given up the ghost. He checks in every once in a while, hoping to sell rail service. But company officials “never had time to see me,” Brown says.
That could change today: The company’s changed hands, there’s a new owner; Brown has another chance. “You just can’t give up,” he says.
Brown introduces himself to the receptionist and asks to see the general manager. The receptionist takes his business card and disappears. She returns a few moments later, telling him there’s no one available to see him now, but that she’ll see to it that his message is received.
Brown thanks her for her time, leaving behind a brochure and a Decatur Junction baseball cap.
“Sometimes, it takes years,” he says.
Every grain of salt
THURSDAY, 1:25 P.M.: Brown travels to Moweaqua, Ill., to check in with Bob Moberly of the Moweaqua Farmers Cooperative, a key customer.
The co-op accounts for about 650 carloads a year — probably more this year, considering the grain harvest.
A conversation with Moberly prompts a visit to GSI in Assumption to make a pitch for steel-coil business.
For a year now, the Decatur Junction has operated the intermodal facility with GSI; the facility also serves as a bulk transfer reload center. Last year, the short line hauled 300-plus carloads for GSI, which helped offset fewer grain loadings elsewhere along the line. And the intermodal/bulk transfer facility business continues to grow.
“I’m real proud of this facility,” Brown says. “I worked on it for years. It took a long time to convince JC to work with me on this.”
But Brown never makes his steelcoil pitch to GSI; at the company’s corporate office, his contact doesn’t respond to the receptionist’s page. Brown leaves behind a business card and a cap.
“GSI’s steel coil business is up. I couldn’t resist stopping in,” he says.
THURSDAY, 4:29 P.M.: Brown makes another unannounced stop — in Vandalia, Ill., at Laclede Steel, which for nearly two years has shipped 800 carloads’ worth of steel products in articulated bulkhead flat cars via Pioneer’s Vandalia Railroad.
The move boosted the Vandalia Railroad’s annual tonnage and transportation revenue by 16.5 percent between 1996 and 1997, and by at least that much this past year.
Brown’s Laclede contact isn’t in; he leaves key chains with a shipping foreman (“I’m just saying ‘hi’”) and drives to the Vandalia Railroad’s main office. The Vandalia sets up shop in an old IC switching tower, which once controlled a Conrail-IC interchange. Tracks criss-cross this small town, where the fabled “National Road” ends and a series of baseball fields never seems to.
“I’ve been trying to get them to put sidings in for years,” says Brown, pointing to two warehouses. “We’re going to do more rail-to-truck transfer in this area.”
Service? It plays in Peoria
FRIDAY, JUNE 19-8:06 A.M.: Brown’s in his Peoria office, preparing for calls. An easel displays a blueprint for a proposed Shawnee Terminal Railway warehouse in Cairo, Ill. Shelves hold Pioneer mugs and caps; the walls, an array of railroad calendars and a framed photograph of a car (“1970 Hemi Cuda”).
Today, he’ll visit customers of Pioneer’s newest (Pioneer Industrial) and most profitable (Keokuk Junction) short lines. First stop: the Pioneer Industrial in Peoria.
Pioneer leases the eight-mile Pioneer Industrial from the city, whose mayor is an economic development advocate. That bodes well for Pioneer Industrial, which runs through the city’s industrial park.
“A lot of these companies have sidings, and there’s a series of spurs,” Brown says. “But we’re competing with poor service from the past. We have to try to get business back.”
They also must retain customers like Gateway Milling Co. The bakery and agricultural product supplier ships a variety of products, including salt from Lake Mountain, Utah, and Hutchison, Kan.
“Without rail service, we’d be out of the salt business,” says Dennis Pitcher, president of Gateway Milling, which ships about 325 carloads a year via the Pioneer.
Peoria hasn’t been immune to Union Pacific Railroad’s service problems, which have forced Gateway Milling to bring in 250 trucks over the last year, Pitcher says.
But Pioneer hasn’t been perfect, either. In the spring, Gateway Milling couldn’t get a flour car for several days. But the problem was an isolated one.
“Their service has been phenomenal,” Pitcher says. “When they get a car from UP, we have it either that day or the next day, compared with six or seven days in the past. They’re paying attention to business.”
Joy in Eggsville
FRIDAY, 10:14 A.M.: Brown visits Peoria Plastics Co., which ships plastic pellets for the manufacture of plastic Easter eggs. “Welcome to Eggsville, USA,” reads a makeshift lobby placard.
Peoria Plastics hasn’t used rail in 14 years, but Pioneer convinced the company to give rail another chance. The convincing involved making repairs to the track, bridge and siding leading up to the shipper’s silo storage area. Peoria Plastics will net Pioneer two or three dozen carloads this year.
Brown asks if the general manager is in; he isn’t. But the purchasing manager is. She asks if there are any procedures the firm should take before service begins.
“We’re looking forward to getting started,” she says. “We’re talking about getting a pretty hefty savings here.”
Brown is pleased to hear the purchasing manager is pleased. Whether it’s hauling 200 loads for O’Brien Steel or moving less-profitable aggregates for Nyle Staley Ready Mix Inc., every carload — and every contact — counts.
"All I want is an opportunity to quote them a rail rate,” Brown says. “You have to treat every rate request like it’s gold. And you may have to quote 30 rates before something develops into business.”
FRIDAY, 2:17 P.M.: Brown makes the drive from Peoria to Keokuk, Iowa, in about two hours. Keokuk is home to Pioneer’s 38-mile Keokuk Junction and Roquette America Inc. The short line moves 8,000 carloads a year for Roquette, including inbound corn and additives; and outbound corn syrup, corn starch and other byproducts.
“The Keokuk Junction switches us six hours a day, seven days a week - that allows us the flexibility to get more cars in, to change more often,” says William Mudd, Roquette’s director of logistics. “They need us, we need them.”
But Roquette, which has been squabbling with UP over a service agreement signed before UP acquired SP, needs more from rail than the Keokuk Junction can give.
“Rail service has gotten worse and we, as shippers, have accepted that — we write it into contracts now,” Mudd says. “We used to go to Chicago in three days, sometimes five. Then it was nine days. Now, it’s 12. You begin to build inventories with that in mind.”
Mudd’s message is troubling. How many other shippers think this way? And how does a short line sell service to a shipper who presumes railroads can’t provide it?
This perception may be Brown’s, and the railroad industry’s, biggest problem.
“If you keep a real pure mind-set about it — that you’re going to help customers no matter what the situation — it eventually will help everybody,” Brown says. “I tell customers, ‘if you have any problem with any element of this move, you call us.’ It’s our job to make it easy for you to do business with the railroad industry."
Awake at the switch
FRIDAY, 3:12 P.M.: For short lines, interchange partners can lead to interesting business development opportunities. In Keokuk, the Keokuk Junction interchanges with BNSF and the Toledo, Peoria & Western.
“It’s hard to get business for customers you don’t directly serve, but that’s what we’ve got to do here,” Brown says.
And they’re succeeding. Keokuk Junction now serves eight customers through reciprocal switching: Stone Container Corp., ADM Milling, Mississippi Blending Co. Inc., Keokuk Steel Castings, Midwest Carbide Corp., Griffin Wheel Co., S&T Warehouse and Keokuk Ferro-Sil.
The Keokuk Junction is coming up with other ways to build Keokuk-area business. The railroad is developing a seven-acre yard, and has asked Iowa for aid in rebuilding a four-mile line adjacent to a BNSF mainline.
“We’re going to take this cast steel siding and build it back into the new line,” Brown says. “Iowa Gateway Terminal needs a place to transload.”
Officials at Iowa Gateway, a Mississippi River barge terminal, are just happy a railroad wants to serve them.
“They’ve been a breath of fresh air,” says Walter Caldwell, Iowa Gateway’s president. “It’s also good business — for us, for them and for the community.”
Now, developing intermodal business with BNSF may be on the horizon.
“There’s just a lot of intermodal business that’s not being served,” Brown says.
The way Brown figures it, there’s just a lot of customers out there, period, that aren’t being served. It’s an attitude short lines have to have — and one Class Is might be wise to adopt — to succeed in an increasingly competitive transportation world.
“You have to look around you at all your opportunities, even if they’re two or three years down the road,” says Brown, sizing up a Keokuk power plant situated along an abandoned rail route.
He pauses for a moment, then points to where new rail could be layed.
“We could make this work,” he says.
Source: Progressive Railroading, August 1998
