(The following story by Bill Lewis appeared on The Tennessean website on June 15.)
NASHVILLE, Tenn. — Rising diesel fuel prices — which make goods more expensive to ship by truck — combined with local strength in the manufacturing sector, are leading three Nashville-area short-line railroad companies to plan for growth in the second half of 2007.
The companies — Tennessee Southern Railroad, Nashville and Eastern Railroad and Nashville and Western Railroad — are upgrading their fleets of locomotives and investing in track and bridge improvements to handle growth in carloads of freight and to serve new customers.
“With one locomotive, we can move as much as 40 trucks,” said Matt Prince, general manager of Tennessee Southern Railroad, which operates 118 miles of track in Maury, Lewis, Lawrence and Giles counties in Tennessee and in Alabama, where it maintains a port facility for river barges in Florence.
“When diesel went over $2 per gallon, that was the point where we started seeing more activity” as more shippers turned from trucks to rail, Prince said. On Thursday, the U.S. average price of diesel fuel was $2.89 a gallon.
Train engines run on diesel fuel as well, but they are more fuel-efficient and cost effective than trucks, especially when it comes to shipping goods 600 miles or more, according to Rick Chavez of Louisiana-Pacific Corp., the Nashville-based building supplies manufacturer.
Truck traffic is reduced
LP hired Tennessee Southern in December to operate a 10-acre depot in the Maury County town of Mount Pleasant, where the manufacturer unloads building materials from rail cars to trucks, which then distribute the products to their destinations. LP uses major railroads to ship the materials from Quebec, Canada, and other locations to the Tennessee Southern depot.
“With every rail car, you have eliminated three or four tractor-trailers and congestion on the highways,” said Chavez, LP’s director of corporate logistics
To prepare for continuing growth, Tennessee Southern is replacing its 10 45-year-old locomotives with eight newer, more-capable engines that are up to 20 percent more fuel-efficient. The 30-employee company is spending $5.3 million on track improvements.
Tennessee Southern, whose other customers include WR Grace, Synagro and Smelter Services, reported a 53 percent increase in carloads, to 3,419 from 2,230, for the six-month period following its acquisition by Patriot Rail Corp., based in Boca Raton, Fla.
Meanwhile, Nashville and Eastern Railroad, which owns the track used by the Music City Star commuter train between Nashville and Lebanon, is adding two locomotives to its eight to handle anticipated growth, said President Bill Drunsic. A subsidiary of Nashville and Eastern, Transit Solutions Group, has a contract with the Regional Transportation Authority to operate the Music City Star.
Nashville and Eastern, which has 34 employees, operates 130 miles of track between Nashville and Monterey, on the Cumberland Plateau. The railroad is laying three new miles of track at Monterey to serve a sand quarrying operation.
Nashville and Eastern handled 5,500 carloads of freight in the past year, a number that Drunsic said has been flat for 2007 but is expected to grow, thanks to a new customer, Kenwal Steel in Lebanon, which is expected add up to 1,200 carloads a year. Nashville and Eastern also moves freight for Lojac Materials Inc., which manufactures concrete blocks and bricks in Lebanon.
Diesel adds to costs
Nashville and Western Railroad, a sister company to Nashville and Eastern Railroad, also has seen tremendous growth since its launch in 2000.
Drunsic, who heads both companies, said NWR operates with two locomotives and 100 freight cars on 18 miles of track between Nashville and Ashland City, primarily hauling materials for Trinity Marine, an Ashland City-based river barge construction company, and scrap paper for recycling.
NWR moved 220 carloads when service began and this year will move 1,400, said Drunsic.
The additional business won’t translate into a windfall for railroads, however, since, like trucking companies, they have to pay higher prices for diesel fuel, Drunsic said.
And even as new customers have begun to ship by rail, some old customers have moved away. Nashville and Eastern, for example, lost Russell Stover as a customer when the company closed its candy factory in Cookeville last year.
But Louisiana-Pacific’s Chavez said the short line railroads can succeed while serving customers on branch lines that the big railroads sold off years ago.
“Short lines are more aggressive. They tend to offer service packages tailored to what a customer needs,” Chavez said.