(The following story by Dan Daly appeared on the Rapid City Journal website on February 19.)
BOX ELDER, S.D. — Construction is under way on a facility just east of Box Elder where lumber, ethanol, gravel, wood chips and general freight could be transferred between trucks and train cars, according to Lon Hubbard of Black Hills Transload, the firm developing the project.
Hubbard said the Black Hills Transload facility could be completed by mid-April.
The facility is just north of the Dakota, Minnesota & Eastern rail line. Two railroad loops, about 10,000 feet of track in all, will be laid inside the facility.
Train cars would be moved off DM&E’s main line and into the transload facility. Once there, the cars could be loaded with wood chips, lumber and other local products, then readied for shipment out of state. At the same facility, freight from loaded train cars could be transferred to trucks for shipment to its final West River destination.
Hubbard said he has shippers lined up to ship products such as lumber, biodiesel, ethanol, gravel, rock, wood chips and coal. However, he declined to name any of the shippers. “I’m not going to disclose who the companies are just yet,” he said.
Plans also include construction of an industrial park surrounding the transload station.
Eleven lots, ranging in size from 5.7 acres to 14.1 acres, have been laid out along U.S. Highway 14-16 and the railroad tracks. Realtor Ken Kirkeby of Rapid City is marketing the lots.
Hubbard said lots in the industrial park would likely be sold to trucking companies, wholesalers, repair shops and manufacturers that would use the transload facility.
Hubbard touted the cost savings and efficiency of shipping goods by rail, rather than by truck, especially for long distances. He believes more local shippers would use rail if they had access to facilities that load and unload rail cars.
However, railroads in the past 20 years have been geared more toward shipping bulk commodities such as cement, coal and grain — often in 110-car unit trains loaded with a single product.
Hubbard believes that is changing, especially in Rapid City. D&ME’s pending merger with Canadian Pacific Railroad, he said, will bring more resources and better service to DM&E’s freight-hauling capacity.
“Rapid City has kind of been the red-headed stepchild for years, and haven’t had the good quality service there,” he said. “With the acquisition by CP, I think that is changing.”
And with diesel prices soaring, he believes shippers will be looking for alternatives to long-distance trucking. A single rail car will hold four truckloads of freight, he said.
DM&E president Kevin Schieffer agreed that rising energy costs are making railroads a more attractive mode of transportation. “Most definitely it’s a function of energy costs. Rail cars are more efficient and environmentally friendly,” he said. “For the first time in 40 years, the rail industry is gaining market share from trucking.”
Whether smaller shipments, such as a single carload, are more cost effective depends to a degree on the amount of switching and handling required, and the distances traveled, he said.
Schieffer said there are transload facilities on DM&E’s sister railroad, the Iowa, Chicago & Eastern Railroad, but none currently exists on DM&E’s lines.
Officials in Box Elder welcome the new facility, the industrial park and the jobs they hope will be created.
“It’s bigger than just Box Elder. This will be good for western South Dakota and the whole region,” said Glen Kane, president of Box Elder Economic Development. “We can now compete with the Interstate 29 corridor (in eastern South Dakota).”
Kane believes that the facility could help foster a Black Hills manufacturing industry that could reach well beyond the West River region.
It also will be Box Elder’s first industrial park, Kane said. Some areas of the city are zoned light industrial, but this facility will be specifically targeting the kinds of businesses that will boost the employment base of Box Elder.
Box Elder Mayor Al Dial said the city has worked with Hubbard to bring Black Hills Transload to town while making sure the city’s needs are met.
“We welcome Black Hills Transload to our community and believe this facility will prove to play an important role in the coming boom in economic growth in Box Elder,” he said.
The city annexed the land where the industrial park will sit.
The Pennington County Commission, however, has worried that the extra truck traffic would increase the wear and tear on county roads in the area.
There are similar transload facilities doing business in Indiana, Iowa and Wyoming.
Before moving to Rapid City, Hubbard was involved in Mid-Continent USA, a company that developed a similar facility on the Union Pacific rail line in Egbert, Wyo., 30 miles east of Cheyenne. It is called the I-80 Industrial Rail Park.
Scott Sutherland of LEADS, the economic development group in Cheyenne, said the rail transload facility is operating. The adjoining industrial park has been slow to develop, partly because of its isolated location.
Hubbard insisted that his project would be viable with or without DM&E’s expansion into the coal fields of Wyoming’s Powder River Basin. The Sioux Falls-based railroad has been trying for a decade to get started on the multibillion-dollar PRB coal line project.
“The PRB is a coal line. I’m in the freight business,” he said.