Business and Industrial Development

Business Development/ Industrial Development for Short Line and Regional Railroads

It has been said that a railroad loses roughly ten percent of their existing traffic base each year. To grow and prosper a railroad must not only replace that traffic lose, but work continually to develop additional sources of new traffic. Ideally, this traffic base would be diversified and therefore more down turn or recession resistance.

There are really two ways to accomplish this task. Increase the traffic from the existing customers and/or develop an entirely new source of traffic, whether it be locating a new industry or reaching out to exiting industries in the railroad’s service area through some type of intermodal/transload operation.

Forward thinking industries are looking at adding to or improving their existing freight infrastructure while others are looking for industrial sites where the rail option is available. In any of the above scenarios, these industries, for the most part have not the knowledge or tools to successfully navigate the process. In other cases, many industries have no clue what rail options are available or what rail could mean to their bottom lines.

It has been my experience; for the most part; many short line and regional railroads are very reactive to requests for new rail service, however, they are not as proactive in aggressively seeking out new sources of traffic. The reasons for this can be very simple. The cost to employ a person who’s work, can be entangle and at times hardly measurable. The marketing and sales people have their hands full with existing customers and there is simply no time other things. Then there is also the ever present challenge of bringing together the engineering, operations and marketing/sales people to focus on new traffic development.

Therein are the opportunities I have been working with. Bring together both industries and railroads into a mutually beneficial relationship.

What it entails is first doing a “Feasibility Study” to give industry the tools and information to evaluate the overall costs associated with reopening a rail siding, construction of a new track or in some cases both. It also will provide the information needed for the industry to pursue internal capital money and outside sources of funding, such as public rail assistance dollars.

In some cases it has been as simple as tie renewal, surfacing and brush removal. In others it has involved a complete removal and reconstruction of the existing track and additional construction to properly serve the industry. All this is done with the input from the serving rail carrier(s), both the engineer and industrial development representatives. Most often this only involves track construction/material specifications and later approval of the proposed work.

Once the industry has decide to move forward, that is when I involve (when necessary) the engineers and designers to provide proper engineered drawings. (A must with the Class-1’s on new construction) There is also the work to acquire public funding if that is the route the industry chooses to take. The next step is putting the work out for bid and overseeing the bid process, followed by the actual work.

The entire premise of doing this feasibility work is the industry “invests” in process and it gives them a knowledgeable representative to guide them through. It also gives the railroad personnel a comfort level that all will be done properly and it also frees them from needless phone calls, numerous site visits, misunderstandings, all those various expenses and the other “hassles” that can, at times get out of hand

The process is basically in two parts.

1 – Feasibility Study:

A. Existing Infrastructure. A track inspection with a detailed write up. The write up includes the existing track conditions, track lengths, etc. and an estimated cost to do the any necessary rehabilitation or new construction work.

B. Proposed Infrastructure. A site inspection with a detailed write up. The write up includes an estimated cost to do new track construction work.

2 – Project Management: Funding work where required, engineering as need, bid preparation, biding and overseeing the work.

The Feasibility Study is handled with a negotiated fee to complete the work and the Project Management portion is also handled with a negotiated fee, plus the engineering work (if necessary/required) and an hourly rate for additions.

Of course, all this work is kept in the strictest confidence.