By Billy Kelly, STATEWIDE Correspondent.
In the middle of an unexpected April blizzard, they're loading the fall corn crop into hopper cars at the Maywood Co-op Elevator. Rail service here is a lifeline. So when Burlington-Santa Fe announced it was leaving this stretch of track, Maywood got a little concerned.
[Gene Erpleding, Maywood Co-op] It would have meant that the farmers would have received a little less for their grain because the market would not be as competitive in this area.
Enter the newest railroad line in Nebraska, NKC Railnet. NKC, short for Nebraska, Kansas, Colorado. The line runs from Holdrege across the border to Sterling. About half way between are the world headquarters, an unassuming mobile home next to the tracks in Grant, Nebraska.
[George LaValley, MNKC Railnet] We had a fairly -- I think, a real good startup. And I think the customers could attest to that. What can you tell me about the releases on the west end of the railroad?
Well, right now...
George LaValley, a former Burlington Northern manager, now oversees a much smaller staff and customer base. All their customers, all the cars they're responsible for on any given day can be found on a single, desktop computer.
These show what track that they're on and what customer they're for, whether they're loaded or they're empty.
But it's that small size that is the salvation of short lines. You can run this stretch of track for less money than Burlington Northern used to.
[LaValley] Yes, I think that's a safe statement. Yeah, mm-hmm.
As the nation's largest railroads expand and merge, the focus of their business has changed. They are long-haul carriers now, extra long trains traveling at close to non-stop as possible to move goods quickly for customers, coast to coast. Those ever present, mile-long coal trains are a good example of that. One by one, all the major carriers have been sloughing off their feeder lines that bring traffic onto the major east-west main lines. In Nebraska, that's lead to the creation of seven new railroads, three in just the past six months. Each company bought the short lines because on paper, it appears a smaller company could make money where the railroad giants could not. To Burlington Santa Fe, that included this aging stretch in southcentral Nebraska.
[Greg Weber, Fillmore Western Railroad] It looked like it had a lot of potential. Some of the shippers on the line had just bought elevators there. They were rail-oriented. We thought it was going to be a good opportunity.
So Greg Weber bought 68 miles of track connecting 10 towns and called it the Fillmore Western Railroad.
[Weber] But there's still enough traffic along those lines to justify them keeping them. And the shippers want to keep those lines going. So that's where you end up with the short lines.
Don't let the name on the locomotive fool you. That's only because the Fillmore Western hasn't painted its engines with its own name yet. The triangular-shaped line links Geneva, Strang, and Ohioa and others with the Burlington-Santa Fe main line. The trains move slowly along much of the line. They have to.
This track right here is pretty -- I think a lot of this rail was laid in like 1886. So, it's pretty old. Most of the stuff they abandoned that connects to this is actually a better track.
The high cost of replacing aging track for its higher speed trains is just one of the reasons Burlington felt this line would cost them more money than it would earn. There are many other reasons. Delivering and collecting the tanker cars, box cars, hopper cars that make up long trains is a tremendously time consuming process. Just moving these four cars into proper order on a siding in Geneva took about 20 minutes. Multiply that by the number of stops a freight train would make that day and multiply it again by the cost of operating the train, especially for the larger railroads, their labor costs. There are no unions for employees of Nebraska's short lines, meaning few of the work rules that restrict who can do what on the job.
[Weber] On a short line, your engineer can also do track work. Your track guy can also be licensed as an engineer. You can have a lot of economies of scale. And you don't generally pay -- the scale is not as high as what a Class I railroad is. And they don't have the big corporate structure to support either. So you can usually do it quite a bit cheaper.
Cheaper because salaries are lower. Sometimes half the pay of Union rail workers. And crews are smaller. The Fillmore Western only has three employees. But still, these are prize jobs, even for those who once worked for much more. If not for the pay, then for the less tangible benefits.
Worked a lot of times where you left home and you were gone for two or three days before you got back. I've got a young kid so I'd like to see him grow up at least.
But these jobs are only secure if the short lines succeed. All these rail lines are still in their infancy. The good news is that they all have customers waiting for service up and down the line. Is this -- I don't want to make it sound too cocky, but is this a guaranteed success? Is this almost a, because you have a set customer base along the line, is this a guaranteed profit maker?
[LaValley] Oh, absolutely not. There's risk, lots of risk in the short line business.
It is risky because this is no monopoly. Grain elevators can still easily use trucks, especially if they doubt the reliability of the service they're going to get from the local rail line. And it is risky because any given short line is closely tied to the fortunes of the local agricultural economy.
[LaValley] We ship a lot of grain and with that said, corn, milo, wheat. We also ship agricultural products used to service the farms and communities that we run through, anhydrous ammonia, fertilizers. We also will bring in dimensional shipments of farm machinery. 95% of our traffic would be in those categories.
But the NKC hopes that customer service and rates lower than trucks can offer will help keep and even increase business in the months to come.
[LaValley] But when they look at this railroad, we're probably only enjoying 30 or 40% of what is possible. And our job is to explore what's possible. We're looking for new business opportunities, and we think they're there.
The Co-op in Elsie hopes the line can survive and provide the type of reliable service it needs. Here's an example why. Farmland mixes its chemicals by the rail tank car at a plant in Grant. It helps keep costs low. When they're delivered by rail, bulk fertilizers cost about $7 a ton. It would cost five times more if they had to import the liquid by truck from somewhere else.
[Leland Thomas] We'd pass it on, obviously. The producer would have paid extra for this fertilizer here.
Leland Thomas says keeping a rail line in town helps his customers, his employer, and it helps the little town of Elsie.
[Thomas] There's some advantage -- psychological advantage to it. You see a lot of towns that don't have them anymore. They've taken out a lot of lines.
What a short line offers first and foremost is small town service and a transportation business that's gotten very, very big. For instance, the Maywood Co-op, the NKC will be providing twice as many hopper cars at any given than the Burlington Northern was willing to line up. That service a customer appreciates.
[Erpleding] It's going to give us some very competitive rates to stay here. The way it looks to me that they're going to be here for the foreseeable future.
[LaValley] We're in the community. We want relationships with the community. We want to be part of the communities. I think that's quite a change in strategy from the larger railroads. And I think that's one of our advantages.
Each of the short lines have a long way to go before they prove themselves financially. But there will be more growth in the business no matter what. There are more feeder lines owned by the Class I railroad that are likely to go on the market, as much as 900 miles of track. There are investors from the seven short lines already running and some new speculators who are ready to snap them up and keep the trains rolling. For Statewide, I'm Bill Kelly.