(The following story by Lisa Nicely appeared on the Crescent-News website on January 28.)
DEFIANCE, Ohio — With the economy moving off track, there’s mixed news for the train industry. There’s even a possibility of longer waits at railroad crossings for many motorists in the region because of that.
“The economy is really slowing down,” said Rudy Husband of Norfolk Southern Railroad. “It’s been hitting every railroad in the country. With the drop off of the automotive and housing industries our overall carloading is off.”
Steve Davis, development officer for CSX Ohio, said while 2006 was a record year for the railroad, 2007 brought changes.
“In 2007, our earnings continued to improve, but the number of items being shipped dropped off slightly, mainly because of the housing and automobile industries,” he said.
Garrick Francis, spokesman of the CSX Midwest division, said it’s a mixed bag now for railroads.
“We see the first half of the year being pretty challenging for volume and traffic because of the slump primarily,” he said. “On the other hand, we’ve seen some strengthening markets in areas like export coal, metals and chemicals, which has picked up and done pretty well. There are some segments of our markets that continue to do well. Our carloads are down, but we’ve done things to maximize resources.”
Those include having the engines pull more train cars and adjusting schedules to allow for fewer runs if necessary. That means commuters may have to wait longer for trains to pass through crossings.
Smaller, regional railroads that run mostly on short-line rails have seen a slight decrease in traffic, but overall are still doing well. Some economic experts say smaller and larger railroads may see an increase in the need for their shipping services.
Philip Randall, marketing director of Maumee & Western Railroad through its holding company, TransMark Associates, said that Maumee & Western isn’t affected by changes in automotive or housing industries because not many of those goods are shipped on their lines.
“We have general merchandise such as Campbell Soup,” he said. “Soup sales are pretty rapid this time of year. All and all we have a slight decrease over last year, but not an appreciable decrease.”
He said the company is still generating new rail traffic.
“The cheapest way to ship something is water by barge, next is rail, then truck. Rail actually becomes the preferred mode for saving transportation dollars around here,” he said. “We are able to generate new traffic. We have taken traffic off of the roads and put it on rail. Every company is looking to save transportation costs.”
Randall said short lines, in general, can cut costs easier than class I railroads, which include CSX and Norfolk.
“We are more responsible to customer demands and customer service than class I can do (because of labor agreements),” he said.
Jerry Hayes, executive director of Defiance County Economic Development, said the Maumee & Western Railroad is very important to the region.
“We need that railroad,” he said. “We have companies in all three counties that need the option of shipping via rail via Maumee & Western. That railroad is in our thoughts and plans for the future.”
Hayes noted heavier industries are actively seeking rail sites.
“A few years back, even though rail was an option, they were opting for trucks because of rates,” he said, adding that that is no longer the case. “Rail transportation overall has a brighter future than we thought 10 years ago.”
One of the reasons for that brighter future is the rising cost of fuel for trucks. While diesel fuel is also rising, it is less expensive than gasoline in most places.
Lee Schroeder, Henry County CIC director, said that while the quantity of carloads on trains has decreased, there is not more of “an emphasis on rail traffic because of the cost of gas.” Yet.
Schroeder pointed out while the automotive and housing shipments may be down, other facets will open up because of rising gasoline costs.
“When the industry makes the change from truck to train there is a delay (because of logistics),” he said. “The dynamics are different for some of the industries. The short line may see more and more traffic coming.”
In Paulding County, economic development director Tony Langham said that rail customers there are continuing to use the short rails. Overall, he said he believes the railroads will see more traffic in the future.
“The customers in Paulding County that use the train are still using the train — the short line. My opinion, from what I had understood, was that train traffic was actually on the increase. … The train is more efficient in hauling a large load than trucks,” said Langham. “When the fuel price goes up for trains it also goes up for trucks.”