Posts Tagged ‘Watco Transportation Services’

Watco Hopes to take Over CSX Routes in Early September

August 14, 2018

Two CSX routes in Indiana and Illinois are expected to begin operation in early September by subsidies of short-line operator Watco.

The Decatur & Eastern Illinois Railroad will take over the Decatur Subdivision in Illinois and the neighboring Danville Secondary in Indiana on or around Sept. 6, pending regulatory approval, Watco said in a filing with the Surface Transportation Board.

Watco recently landed the support of agricultural products company Archer Daniels Midland, which is one of the largest shippers in the territory.

ADM recently told the U.S. Suraface Transportation Board that it supports Watco’s big to buy 126.7 miles of track from CSX.

The sale also includes 3.6 miles of trackage rights on Canadian National (former Illinois Central) in Decatur, Illinois.

The Decatur Sub (nee Baltimore & Ohio) extends between Montezuma, Indiana, and Decatur. The Danville Secondary (nee New York Central) extends between Terre Haute, Indiana, and Olivet, Illinois, and includes the Paris Industrial Track in Paris, Illinois.

Watco projects revenue to top $5 million from the 14 customers currently served by CSX routes.

The STB filings do not disclose the sale price of the routes.

A Watco spokeswoman said the carrier plans to assign six GP38-2s to the routes. The company plans to hire four conductors, five engineers, a locomotive laborer, a track inspector, two track laborers, and two track foremen.

CSX put the routes up for sale last January.

Dispute Leaves Michigan Shippers Without Rail Service; STB Asked to Break the Deadlock

September 21, 2016

A dispute between the Grand Elk Railroad and CSX has left a half-dozen Michigan shippers without rail service for the past six weeks.

STBThe two railroads are arguing over a 3-mile stretch of track in Grand Rapids, Michigan, owned by CSX and over which Norfolk Southern had trackage rights.

CSX last month said that Grand Elk can not use the track because the NS trackage rights were not conveyed to the Grand Elk when it leased an NS line in 2008.

Grand Elk, which is owned by Watco, has asked the U.S. Surface Transportation Board to rule on the matter, asking the board to render a decision as soon as possible.

The short line said the trackage rights were “inadvertently” left out of Watco’s agreement with NS.

For its part, CSX has asked the STB to deny Grand Elk’s petition and argues that the short line has been operating illegally on the track in dispute.

Grand Elk, which began operating the former Conrail line in 2009, contends that it assumed that trackage rights had been assigned to it even if they were not specifically stated in the lease agreement.

In a filing before the STB, Grand Elk said if the trackage rights had been excluded, it would make no sense to sign the lease agreement.

CSX told the STB that Grand Elk had six opportunities to include the disputed trackage, but failed to do so when it negotiated the lease agreement with NS.

“CSX believes that [Grand Elk] has been operating surreptitiously over the line to mislead shippers about the product it is selling,” a CSX filing said.

It said Grand Elk’s failure to obtain STB authorization for more than seven years should not be viewed as an oversight but part of an illegal operation on CSX track.

CSX also contends that all previous trackage rights agreements expired in 2014. Grand Elk has sought to circumvent this by asking the STB to make the trackage rights retroactive to 2009.

The dispute dates to an effort in the 1980s by the city of Grand Rapids and the Michigan Department of Transportation to reduce the number of railroad lines in Grand Rapids in order to improve traffic safety.

The Chesapeake & Ohio gave Conrail trackage rights so it could abandon its right-of-way.

The 122-mile Conrail route in question extends from Grand Rapids to Elkhart, Indiana, and was conveyed to NS as part of the 1999 Conrail breakup.

Supporting the Grand Elk are shippers, city government and state elected officials.

One such shipper is Brink Farms, which in 2015 built a $2 million transload facility in Grand Rapids that has sat idle due to the trackage rights dispute.

Brink, which provides bulk transportation service for farmers, including feed, fertilizer, and grain, has another Grand Rapids facility that is not affected by the dispute.

Filings in the case indicate that CSX has said it will provide switching at the new Brink facility for $300 per car move, whereas Grand Elk would charge $105.

Brink said the CSX charges make it cost-prohibitive to use its new transload site. Brink Farms ships about 1,000 cars per year.

Kanawha River Railroad Begins Operations

August 4, 2016

The Kanawha River Railroad is out and running.

The Watco Companies subsidiary began operating 308 miles, which includes the former West Virginia Secondary of Norfolk Southern, on July 31.

WatcoKRR plans to run trains over former NS track between Columbus and Mullens, West Virginia. Much of that traffic will be chemicals and coal.

Operations are based at Dickinson Yard near Charleston, West Virginia.

Trains magazine reported that on the first day of operation three crews reported to work at Dickinson, two of which worked in the yard while a third took a loaded coal train to Elmore Yard on the former Virginian mainline.

Light power moved north to Point Pleasant, Ohio, to pick up interchange cars from CSX and a local switched customers along the Kanawha River north of Charleston.

The magazine noted that traffic on the former NS territory was unusually busy for a Sunday and that might become a regular occurrence.

KRR officials have said their objective is to “bring life back to the railroad industry” in the West Virginia-Ohio region by building up freight business and increasing carloads.

The West Virginia Secondary within Ohio is expected to reopen in the coming weeks after NS idled it last Friday and shifted traffic to other routes.

For now, KRR will be operating six days a week with most trains originating and terminating in Dickinson Yard.

The last NS train from Dickinson Yard left on July 30. It had 50 cars and a caboose that had been used for work train service.

NS continues to run trains south and east of Elmore Yard and handles local mine runs on the Winding Gulf Branch near Mullens and all trains operating toward Gilbert Yard.

Watco has assigned to the KRR four and six-axle EMD GP and SD-type locomotives while leasing seven EMD SD60s from NS for coal train service.

Watco to Acquire W.Va. Secondary From NS

May 21, 2016

Watco will acquire more than 300 miles of the West Virginia Secondary from Norfolk Southern and expects to begin operating it by late July.

The short line operator said it will hire 29 employees, including 25 positions in train service, mechanical, and track.

The track in question extends from milepost RR 7.0 in Refugee, Ohio, to milepost RR 116.5 at Hobson Yard near Middleport, Ohio, and from milepost WV 125.6 at Conco, Ohio, to milepost WV 253.4 in Cornelia, West Virginia.

The transaction does not include a 9-mile segment owned by CSX in southeast Ohio.

WatcoAs part of the acquisition, Watco will acquire a portion of the Princeton-Deepwater District on the former Virginian Railway between milepost V435 in Alloy, West Virginia, and milepost V382 in Maban, West Virginia.

The newly acquired properties will operate as the Kanawha River Railroad. Watco will have the use of supporting facilities owned by NS.

Watco plans to focus initially on re-opening the West Virginia Secondary to Columbus.

Until NS idled the route in February, it had handled chemical traffic and served some local industries.

Watco will assign nine of its own locomotives to the West Virginia Secondary.

The operating plan calls for a scheduled Monday, Wednesday, and Friday manifest freight to operate between Columbus and Dickinson Yard, south of Charleston, West Virginia. That train will operate northward the following day.

Two local jobs will operate out of Dickinson Yard on Tuesday, Thursday, and Saturday to serve nearby industries.
Under an agreement with NS, Watco will forward coal from mines near Charleston over the former Virginian to NS, which will then take the trains to customers in Virginia and the Carolinas.

These trains will have Watco crews and NS run-through equipment.

Watco is eyeing returning coal traffic to the north end of the West Virginia Secondary via Columbus, but expects that 70 percent of the outbound coal that it handles will move via the former Virginia route.

U.S. Railroads Are Also Losing Grain Traffic

February 25, 2016

Add grain to the list of commodities that railroads aren’t hauling as much of anymore. But unlike coal the falloff in grain traffic is due to increasing levels of grain being hauled by trucks or coming from foreign lands.

Grain traffic is still a substantial market for railroads and in 2014 U.S. railroads carried 140 tons of grain.

train image2But bulk grain shipments to Gulf of Mexico and Pacific Northwest ports are falling as U.S. wheat continue to lose world market share.

The railroad share of grain hauling has declined by about 50 percent since 1980.

Last year U.S. railroads hauled 1.1 million carloads of grain, which the Association of American Railroads said is an increase of 3.4 percent over 2014. Nonetheless, grain traffic thus far in 2016 has fallen more than 4 percent.

“Our export volume is really taking a dip with the strong dollar and especially with the Argentine peso being devalued,” Randy Gordon, president of the National Grain and Feed Association, told Trains magazine. “These markets all basically trade in U.S. dollars.”

Argentina President Mauricio Macri ended export taxes on corn and wheat and let the peso float free from the official rate of fewer than 10 pesos to the U.S. dollar.

With the exchange rate of the peso now more than 15-1, Argentine products are now a better deal and buyers have taken notice.

Truckers, though, are not necessarily hauling grain to the Gulf or the Pacific Northwest for export.

Doug Story, vice president of agricultural marketing for regional rail operator Watco Companies, said the increase in the trucking of grains has been in local hauls.

The U.S. Department of Agriculture in 2013 reported trucks had captured market share away from railroads in corn grown for ethanol and soybeans hauled to biodiesel manufacturers.

USDA said that those industries usually are located close to farms with 90 percent of ethanol production situated within 50 miles of corn-producing areas.

Trains reported that although the ongoing concentration of animal feeding operations tends to favor railroads, an increasing portion of that market has gone to “dried distiller grain with solubles,” a by-product of ethanol production that can be hauled by truck.

However, Watco’s Story said there is “nothing crazy or outlandish with what’s going on here. It’s just market conditions, the value of our commodities relative to the rest of the world, and the strength of the dollar.”

When the market does turn, Story said, “the positive thing is we’re coming off a good harvest, and so we’re sitting on a tremendous supply for when the market is going to turn and allow product to move.”

Although not good news for railroad revenues, the downturn in coal and crude oil traffic has benefited the movement of grain by rail because track capacity is not as jammed as it was following the harvests of 2013 and 2014.

Add that to a brutal winter and moving grain by rail became a major challenge during those years.

“Virtually across the board they reported very few if any shipper issues,” Gordon said of last fall’s harvest and haul.

“Car availability is fine,” Story says. “If you look today at the Class 1s and how they’re moving [unit train grain] shuttles, they’re probably moving as fast as ever.”

Ann Arbor GP38 Gets Heritage Treatment

July 4, 2015

The heritage locomotive practice has spread to short-line operator Watco, which recently painted two locomotives to help two of its properties celebrate their heritage, including the Ann Arbor Railroad.

Ann Arbor EMD GP38 No. 3879 was given an orange livery with “Ann Arbor Railroad” on the long hood.

The modern Ann Arbor operates between Toledo and Ann Arbor, Michigan.

Some former Ann Arbor tracks are operated by the Great Lakes Central, which painted the 3879 for Watco under contract.

The 3879 was built in October 1969 as Penn Central 7208 and it carried that number onto the Ann Arbor roster.

Also featuring a heritage livery is Wisconsin & Southern GP39-2 No. 3928, which sports its regular red-and-gray paint scheme along with 35thanniversary lettering.

Watco operates 33 short line railroads and its normal locomotive livery is yellow and black with the logo of the particular railroad on the side.

Ann Arbor Route May be Reunited

November 20, 2013
An Ann Arbor locomotive switches at a Jeep plant in Toledo in March 2013. (Photograph by Craig Sanders)

An Ann Arbor locomotive switches at a Jeep plant in Toledo in March 2013. (Photograph by Craig Sanders)

Disparate routes of the former Ann Arbor Railroad may be reunited under the “Annie” name after Watco Transportation Services acquired a stake in the Great Lakes Railroad.

Watco agreed to execute a “preferred equity investment” in Federated Capital Holdings, which owns the Great Lakes Central.

GLC extends from Ann Arbor to Cadillac on the former Ann Arbor main line with branches to Thompsonville, Traverse City and Petoskey.

Its primary freight business includes grain, sand and plastics. GLC interchanges with Canadian National and Huron Eastern in Durand, CSX at Anne Pere and Howell, the Watco-owned Ann Arbor Railroad at Ann Arbor, and the Mid-Michigan Railroad at Alma.

The Ann Arbor Railroad has not operated as a single railroad in more than 30 years. It also includes Federated Railcars, owner of a fleet of refurbished passenger cars.

“This partnership between two entrepreneurial companies will help insure the long-term success of local rail service in Michigan and also provides a mechanism for the continual growth and improvement of our transportation assets to help grow Michigan’s manufacturing and agricultural interests,” Federated Capital President Louis Ferris said in a news release. “We also believe that this partnership provides significant benefits to the Michigan Department of Transportation’s passenger efforts.”

Federated Railcars, which is based in Owosso, has been rebuilding passenger cars expected to be used in the Michigan Department of Transportation’s proposed Ann Arbor commuter service.

Watco acquired the Ann Arbor Railroad in late 2012. In 1977, the state of Michigan contracted with the newly formed Michigan Interstate Railway to operate the Ann Arbor, which had entered into bankruptcy proceedings.

Michigan Interstate ceased operation north of Ann Arbor in 1982, forcing the state to split the lease of the line with the Tuscola & Saginaw Bay, which later became Great Lakes Central. Michigan Interstate filed for bankruptcy in 1983 emerged under the Ann Arbor Railroad name in in 1987.