SHERWIN, Kan. — An aging General Electric locomotive, its gray nose flecked with rust, pulls slowly out of the Butterball feed mill in Kansas’ rural Cherokee County, a wire service reports.
Engineer John Horton eases his string of railcars, 33 empty and nine loaded with poultry mash, down weed-choked track. Motorists have to wait on Highway 96 as the South Kansas & Oklahoma pulls out at 10 mph — all the old track will bear.
The world of shortline railroads like the South Kansas & Oklahoma is not one of gleaming rails and new locomotives. Two men in a pickup truck have to chase Horton’s locomotive on back roads to manually open switches for it.
But the shortline business is growing all the same as big railroads abandon track they see as too short, old or remote to be profitable. The shortlines can offer local shippers such as grain elevators advantages they sometimes can’t get from truckers
The number of shortline railroads has grown from 200 in 1980 to 550 today, according to the American Short Line and Regional Railroad Association in Washington, D.C.
Among them are South Kansas & Oklahoma and seven others owned by Watco Cos. of Pittsburg, Kan., which after 19 years of accumulating track the big guys didn’t want is one of the nation’s largest privately owned shortline operators, with 675 employees and more than 2,700 miles of track.
Rick Webb, Watco’s chief executive officer, credits his father’s vision for the company’s growth. Webb is a third-generation railroader but didn’t see the business as a good career move — especially in the late 1970s.
“All I saw were railroad bankruptcies, railroad deterioration and railroad abandonment,” he said.
With federal deregulation in 1980, what are known as Class 1 railroads — those with revenues of $250 million or more — began consolidating and shedding less-profitable track. Class 1s include giants Union Pacific, Burlington Northern Santa Fe and CSX, which typically carry just one commodity or type of car over hundreds of miles. Examples would be 100-car trains of coal, grain or freight containers.
Shortlines are just what the name implies — shorter trains hauling over short distances, carrying mixed freight from numerous customers, often to and from Class 1 lines.
Webb’s father saw the opportunities. Watco started in DeRidder, La., with the Timber Rock Railroad. The privately held company doesn’t disclose revenues, but said none of its eight railroads topped $25 million annually.
Webb said Watco has had 20 percent annual growth in recent years, and expects double-digit growth to continue.
The eight Class 1 railroads posted revenues of $33 billion in 2001, compared to the shortliners’ $3.2 billion, according to the Association of American Railroads.
Shortliners like Watco find a niche as the local face of railroads, said Adam Nordstrom, a lobbyist for the American Short Line and Regional Railroad Association.
“The trend is for larger railroads to spin their track off that doesn’t fit their objectives,” Nordstrom said. “If the shortlines don’t operate it, the track would be abandoned.”
As Watco grows, the track it acquires often is deteriorated, permitting trains to move only at 10 mph or less. “Ten miles an hour and beyond is the make or break for railroads,” Nordstrom said, noting that slower speed reduces any advantage railroads may have over trucks.
Watco has convinced Kansas legislators that its business is important enough to rural communities to deserve a tax credit of up to $500,000 annually for 20 years for improvements made to track it owns in Kansas. Gov. Bill Graves signed the bill into law on May 13.
Fixing crumbling ties and sagging rails isn’t cheap. It will cost between $800,000 and $1 million, for instance, to improve the 40 miles between the towns of Kingman and Coats to permit 10 mph travel.
Said Webb: “We make improvements one tie, one locomotive or one switch at a time.”
Watco’s focus is customers like Gary Beachner of Beachner Grain in St. Paul. Watco services six of Beachner’s 16 elevators, while the other 10 move grain by trucks.
In two years, Watco has moved 15,000 truckloads of grain to market, Beachner said, with about 3.75 truck loads at 26.5 tons filling one rail car. “It’s been real important to our grain shipments, particularly wheat, milo and soybeans,” Beachner said.
Watco gives Beachner’s elevators a direct link to the Arkansas River port of Catoosa in Tulsa, Okla., and from there to the Mississippi and on down to New Orleans. That’s one of Watco’s advantages; it’s one of the few shortlines that can reach a major port without touching at least some portion of Class 1 track.
In southeast Kansas, engineer Horton and his load of poultry feed halt near Cherokee to unhitch cars and take on new ones. He has to pull his 1963-vintage engine through a crossing, across a switch and back it down onto the tracks to head toward Pittsburg, his destination.
The process can take an hour because of the age of the engines and track conditions. This day goes rather smoothly — the switch taking only about 30 minutes.
The trip that began at the Cherokee County feed mill at 10:30 a.m. ends in Pittsburg, 22 miles away, a bit after 1 p.m., where freight is handed off to a Class 1 line.
“Such is life on the shortlines,” Norton said. “You never do this on Class 1s.”