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August 2022
By Jeff Stagl, Managing Editor
The crux of short-line railroading is doing whatever it takes to add carloads to the ledger. Given the limited resources among regionals and short lines, it typically requires a lot of scratching and clawing to build business.
It also takes ingenuity, moxie, stick-to-itiveness, collaboration and a host of other characteristics, which many small railroads continue to exhibit.
There are many examples of proven approaches and strategies employed by small railroads that have led to solid growth, and that’s why the American Short Line and Regional Railroad Association (ASLRRA) created the Business Development Awards. Launched in 1996, the awards recognize business-building initiatives that show innovation, resourcefulness and success.
“The awards honor and highlight the core of what short lines are all about — how to get one more carload or one more customer. It’s the first thing they think about in the morning and the last thing they think about going to bed,” says ASLRRA President Chuck Baker. “It’s the existential imperative to grow the business, and you can’t do that by just sitting there. You’ve got to conjure up new business.”
Originally called the Marketing Awards, the program’s name was changed in 2019 because the honors “really are all about business development,” says ASLRRA Vice President of Communications Amy Krouse. The awards also have become quite competitive.
“Everyone wants to win one,” says Krouse.
ASLRRA member railroads are invited to submit nominations for the award each year. The association encourages regionals and short lines to nominate themselves if they created: a proven marketing program or concept; an innovative method for providing customer service that resulted in an improved relationship with clientele; new concepts, methods or models for better understanding a market and/or customers; a successful online presence; or an inventive promotion of e-commerce.
Strong consideration is given to examples of employing unique characteristics to develop new business while maintaining existing customers, or working successfully with economic development authorities and Class Is. Other efforts that tend to be deemed worthy include those that show a small railroad became a positive economic factor in a community, established strong relationships with a community and/or shippers, identified and addressed a customer’s specific needs, or reacted to market conditions with innovative and workable solutions.
Winners are chosen by a five-person panel that includes small railroad retirees, industry experts and Class I officials, but no ASLRRA staff members, says Krouse.
The 2022 Business Development Award recipients are Carload Express Inc.’s Allegheny Valley Railroad Co. (AVR), Travero Co.’s CRANDIC Rail (formally known as the Cedar Rapids and Iowa City Railway Co.) and North Shore Railroad Co.’s Union County Industrial Railroad (UCIR).
North Shore previously won the award in 2004 and 2017, while Carload Express’ Delmarva Central Railroad took home the honor in 2020.
Regionals and short lines that have won multiple awards over the years also include Arkansas Midland Railroad (1999, 2006, 2007 and 2012); Finger Lakes Railway (2011 and 2012); Heart of Georgia Railroad (2001 and 2015); Indiana Rail Road (2016 and 2020); Lake State Railway (2018, 2019 and 2021); Montana Rail Link (2008 and 2014); New York & Atlantic Railway (2002 and 2013); Providence & Worcester Railroad (2000 and 2011); R. J. Corman/Central Kentucky Lines (2005 and 2008); R. J. Corman/Memphis Line (2005 and 2009); Reading, Blue Mountain and Northern Railroad (2010, 2016 and 2020); and the St. Lawrence & Atlantic Railroad (1997, 2000, 2006 and 2009).
Following are summaries explaining why AVR, CRANDIC Rail and UCIR earned the honor this year.
Launched in 1995, AVR operates 77 miles of track in the greater Pittsburgh area. The short line interchanges with CSX, Norfolk Southern Railway, the Buffalo & Pittsburgh Railroad and Wheeling & Lake Erie Railway Co.
AVR won the award for establishing a Pittsburgh-area transload facility that has successfully served the local steel industry since opening in January 2021.
In early 2020, the short line began working on redeveloping a 4-acre-plus portion of its Glenwood Yard for the facility, which features an overhead gantry crane and a more than 1,000-foot side track. The transload center now serves Pittsburgh and surrounding markets in Ohio and West Virginia.
AVR officials first identified a key partner and main customer — a major steel producer that needed to ship plate steel by rail to the area for last-mile distribution by truck — and then began to engineer the facility. The railroad partnered with CSX and spent $725,000 on the project.
After shipments began coming to the facility in first-quarter 2021, AVR concentrated on expediting product offloading operations to maximize the utilization of rail-car equipment and deliver material in manageable truckload quantities in a sequence that fit the main customer’s last-mile delivery needs, ASLRRA officials said in an award summary. AVR spots inbound cars and then transloads materials to trucks for local deliveries.
Carload Express focuses on either adding business with existing customers by diverting trucks, adding new business through industrial development or providing transload services to reach shippers who aren’t otherwise rail accessible, says Mike Filoni, the company’s chief marketing officer. Company leaders decided transloading was the best option in Glenwood Yard.
“Pittsburgh is known as a steel-producing mecca, but raw steelmaking no longer is a big thing there. Now, there are lots of processing facilities in the area,” says Filoni. “We saw a demand for a transload facility in the area.”
The facility can handle any type of material moved by flat cars or gondolas, such as steel coils, structural steel, semi-finished steel, rebar and wire rods. It also can accommodate dimensional lumber.
Last year, AVR logged about 500 carloads entering the transload facility, which has helped diversify the commodity mix at Glenwood Yard. Carload Express expects a similar traffic target for the facility in 2022, says Filoni.
“We have room to grow the business there,” he says.
Owned by logistics services provider Travero, CRANDIC Rail operates 100 miles of track in east-central Iowa, including a 60-mile mainline from Cedar Rapids to Hills that runs through Coralville and Iowa City. The short line interchanges with or has connections to all the major Class Is as well as Iowa Interstate Railroad Ltd. and Iowa Northern Railway Co.
CRANDIC Rail continues to make strategic investments and show operational innovations that typify the short line industry’s entrepreneurial spirit, ASLRRA officials say. The short line also strives to keep anticipating customers’ needs. For example, CRANDIC Rail recently switched cars for a different shipper six times in a 24-hour period because that’s what it took.
Another example of the railroad’s business-building and customer-minded approach occurred last year, when CRANDIC Rail acquired 122 box cars in March 2021. The railroad typically leases such cars, as do most other regionals and short lines. Just prior to the purchase, the short line leased 225 cars.
The acquired box cars are used to serve a major customer that produces cardboard for boxes and to obtain flexibility — if needed — to support Travero’s rail-served and food-grade-certified public warehouse and transload facility in Logistics Park Cedar Rapids that opened last year, says CRANDIC Rail General Manager Cory Hoffmann.
“[The car] investment allowed local industries to meet their production schedules for their customers and move product as quickly as it was produced,” he says.
This year, the short line also increased its leased fleet by another 100 box cars, boosting its total box-car fleet to between 400 and 500 cars.
In early 2021, CRANDIC Rail needed to make a key business decision: purchase or lease the box cars, says Jillian Walsh, Travero’s senior manager of business development and marketing partner.
The number of box cars in the rail industry continue to decline steeply due to a meteoric rise in the use of containers — which can be employed by different modes without the need to unload or reload cargo — a sharp drop in newsprint and the advent of precision scheduled railroading that stresses more efficient asset utilization.
“In five years, the big issue is that the 50-foot standard box car could be gone,” says Walsh.
CRANDIC Rail opted to buy the cars in part to show its commitment to the major cardboard shipper, which uses a combination of trucking and rail. The company’s business has climbed since COVID-19 drove a big uptick in mail-order deliveries and cardboard box demand.
CRANDIC Rail’s efforts to improve customer service also meant the shipper could rely more on the short line while having additional box-car inventory on hand, says Hoffmann.
“Because the trucking industry, as a whole, had more available loads than drivers, it became more difficult to move some loads via truck at a competitive rate,” he says.
Another reason CRANDIC Rail acquired the cars: to generate more box-car business. The short line moved a record amount of box-car traffic in 2021. Key shippers increased loads 28% year over year, and 42% compared with the level achieved 10 years prior.
Box-car traffic is projected to remain strong in 2022 despite the Class Is’ service performance struggles, says Hoffmann.
Building business in a 750-mile-plus to 500-mile radius by exploiting the Logistics Park Cedar Rapids facility to better compete with trucking will help drive traffic this year, too. Despite additional product transfer costs, a customer could use the warehouse and short line to ensure they have enough products nearby to smooth out demand peaks and avoid problems from an ongoing truck shortage, CRANDIC Rail officials say.
UCIR operates 18.2 miles of track in central Pennsylvania and interchanges with Canadian Pacific and NS. Although the short line serves only eight customers, it’s found ways to grow carloads 300% over a recent 10-year period with zero Federal Railroad Administration-reportable injuries.
How? Primarily by forging new and innovative methods of providing customer service, customizing business processes to meet customers’ needs, fostering trust from shippers and deepening customer relationships, officials at UCIR parent North Shore Railroad say.
“It’s part of our personal touch. We have custom car releases that provide cars to customers when they need them,” says Loni Martz Briner, North Shore’s public relations and media manager.
A relentless drive to be a better business partner with customers has opened the door to various new traffic opportunities, says North Shore Business and Development Manager Joe Kantz.
“We don’t just deliver loads. We provide leads on pieces of land that are accessible and prolific pieces of real estate,” he says.
Such an approach helped North Shore and UCIR land a “massive” new customer: Country View Family Farms LLC, says Kantz. The company is building a $47.3 million, 100-plus-acre feed mill expansion plant in New Columbia, Pennsylvania, that will be served by UCIR with interchange partner NS. To open in 2024 or 2025, the facility will support Country View’s hog production business.
“This land was not on the market. We looked at what Country View’s needs were, including a loop track, and connected them to the landowner,” says Kantz. “You can’t find land like this that’s available in central Pennsylvania and on a short line.”
North Shore helped with the design of the loop track. The rail access was key to the project, says Kantz.
Several years ago, UCIR already had successfully attracted a major customer to its lines: GAF — North America’s largest roofing manufacturer — which built a $70 million facility. Last year, the company opened a $100 million neighboring facility that produces insulated roofing, says Kantz.
“We helped GAF with hiring and the ribbon-cutting ceremony at the newest facility,” he says.
Moreover, UCIR counts White Deer Gas Inc. as a large customer. The company operates the largest rail-served propane facility on the East Coast that features 48 30,000-gallon tanks stationed in a row, says Kantz. UCIR serves the facility nearly daily with NS.
“It’s enormous. We showed it to some Class I partners and they say the same thing about it,” says Kantz.
Currently, Winfield Storage is developing a transload facility along UCIR’s lines that will require the rehabilitation of an unused siding. It’s a good investment to make now since Pennsylvania is working on a $900 million throughway in the area — the largest highway project in the state’s history — that’s pegged for completion in 2027, says Kantz. The throughway’s north side is expected to open soon and construction crews are working on the south end.
“It’s a huge opportunity because of the access to a new highway,” says Kantz.
The future appears bright for more business-building opportunities at UCIR because the short line maintains and markets an inventory of available properties along its lines.
“We are just getting started. We have more parcels to develop,” says Kantz. “[UCIR] runs trains five days a week, but a day will come soon when that won’t be enough.”
Email questions or comments to jeff.stagl@tradepress.com.
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