(The following story by Dan Piller appeared on the Des Moines Register website on October 30.)
WATERLOO, Iowa — When the Iowa Northern Railway was cut in half by June floods, Iowa Northern President Dan Sabin knew that his push to grow the railroad’s carloads and revenues by 25 percent annually through 2014 had hit more than a normal slowdown.
“We basically have lost a year,” Sabin said as he gazed over the rusted wreckage of its Cedar River bridge in Waterloo. Iowa Northern shares the bridge with Union Pacific.
“A lot of our traffic goes down to Cedar Rapids to interchange with Union Pacific,” he said. “North of Waterloo, we have to reroute on Union Pacific down to Nevada, then over to Cedar Rapids. It can add up to 300 miles to the trip.
“Fortunately, Union Pacific has been great to help us. They saved our railroad.”
Rebuilt by next spring
Iowa Northern and Union Pacific hope to have the 80-year-old railroad span rebuilt by next spring.
The two railroads will divide the $5.6 million cost. Sabin hopes to get federal aid, part of the $20 million flood relief package passed by Congress in August and signed by President Bush, to make up part of Iowa Northern’s share.
“We hope to be working on the bridge through the winter,” said Mark Davis, Union Pacific spokesman. Union Pacific inherited the span when it merged with the Chicago & North Western Railway. Iowa Northern operates on the span through trackage rights.
“It’s funny,” Sabin said. “When the flooding started, I asked my son, Joshua, who works with me in the railroad, ‘What would be the worst thing that could happen to us?’ Joshua replied that the worst case would be if our Waterloo bridge was taken out.”
The next day, Joshua stuck his head into his father’s office in Cedar Rapids. “The look on Joshua’s face told me what had happened,” Sabin said. “He didn’t need to say a word.”
Success takes a detour
The floods seemingly washed out what has been one of railroading’s success stories.
Sabin took over Iowa Northern in 1994, 10 years after grain elevators started the company on abandoned Rock Island Lines tracks. He upgraded the track and attracted shipping from Archer Daniels Midland in Cedar Rapids and John Deere’s tractor works in Waterloo to go along with the grain business.
Since 2006, the opening of ethanol plants at Fairbank and Shell Rock has added another layer of business to Iowa Northern, which shipped 43,000 carloads in 2007.
Sabin said the bridge washout will stall Iowa Northern’s growth this year at about 47,000 carloads. In 2009, with traffic restored after the bridge opens, Sabin said he expects shipments to rise to 66,000.
Ethanol has proved a boon to Iowa Northern. The corn-fed fuel is moved entirely by rail, and this year Sabin has taken the lead in converting an abandoned Rock Island yard in Manly as a staging area for ethanol plants in northern Iowa and southern Minnesota.
The Manly Terminal gathers enough ethanol so that Sabin and the other investors are thinking about establishing their own daily ethanol price trading platform.
Railroad background
While the washout of the Waterloo bridge was a blow, Sabin has seen worse.
Sabin, son of a Rock Island Lines engineer, grew up in the railroad town of Manly, north of Mason City and attended Grand View College in Des Moines. He signed on with the Rock Island in 1968, at age 15, and by 1971 was the elevated to dispatcher, working from Des Moines.
Sabin’s youthful distinctions became dubious later in the 1970s when the Rock Island went into bankruptcy and then liquidation, part of an industrywide contraction that also claimed the Penn Central and Milwaukee Road and caused several big mergers.
Sabin left Iowa for more than a decade to work for other carriers and become a consultant.
“The ’70s were a terrible time for railroads, and everybody asked me, ‘What are you doing in a dying industry?’ ” Sabin said. “It was pretty scary. But I just had faith that the industry would come back. Railroads are so vital to the economy, particularly in a heavy agricultural state like Iowa.”
Since he took over the Iowa Northern from its original investors in 1994, Sabin has applied the lesson learned by the Rock Island and other failed carriers: Bad track and roadbed lead to a slow demise.
Most of the 163 miles of roadbed from Cedar Rapids to Manly have received new rails and ties, or will get them soon. Grants from the Federal Railroad Administration have helped, and Sabin said he is thinking about taking on an equity partner.
“In this business, you need to spend a lot of money up front to get the return later,” Sabin said.