I’d like to share a story with you about the local shortline-could-be-regional railroad, the Central Oregon & Pacific Railroad (CORP). They’re the same one that had to rebuild a tunnel on the Siskiyou Pass after the timbers inside burned and the bore partially collapsed. The tunnel is reopened and service has been re-established, but RailAmerica, the owning company, was sold to a hedge fund, and that seems to have precipitated some changes.
They’ve announced that they can’t make any money hauling twenty-five car trains over the pass with four diesels on the front anymore, so they are going to discontinue service in the near future, meaning this spring. They plan to offer an alternative service they say won’t cost shippers any more money, but nobody believes this, and here’s why. Going from Medford south to Weed, CA by train is around 110 miles, give or take. If you drive via Interstate-5, Google Maps tells us it’s more like 82 miles.
There are several problems represented here. First, each freight car carries about three to four truckloads of commodity, so each train is the equivalent of sixty to a hundred trucks out on the interstate that both Oregon and California don’t want on that highway. In fact, they’d rather get another 25 freight cars to take another 60 to a 100 trucks daily each way off the Siskiyou Pass of I-5. Then there’s the issue of truck drivers. Local motor freight companies have stated in the local papers that they can’t get enough to cover this additional trucking. So at the bottom of it, trucks really aren’t the answer here.
The next problem is the proposed route change for the freight cars. Instead of hauling them over the Siskiyou Pass, the hedge fund wants RailAmerica to get CORP to haul them north to Eugene and turn the cars over to Union Pacific. They would then ship them south through Oakridge, Klamath Falls, and then down to Weed. This is analogous to shipping stuff from St. Louis to New Orleans via Detroit. Eugene is 167 miles from Medford via I-5 and around 200 miles by rail. It’s about 173 miles from Eugene to Klamath Falls by highway and another 200 by rail, and another 71 miles from there down to Black Butte. So we’ve replaced an 82 mile highway trip with one that takes 411 miles and a 110 mile rail journey with one of over 475 miles.
In the middle of all this, they want everyone out here to believe that they can ship cars this roundabout method more cheaply than by hauling them over the Siskiyou Pass. Oh yes, and don’t forget — Union Pacific will be billing most of that shipping! Either someone at the hedge fund flunked geography or else they’ve been hanging out at Fantasy Land. Personally, I think it’s time they got a sense of responsibility.
When they bought the railroad, they also bought the routes and that includes the responsibility for the folks who live along the way. There are a lot of stakeholders in this process, and simple financial ownership doesn’t obviate responsibility to all of the other people who depend upon the products and services provided. A dairy can’t just decide to stop being sanitary. A tire store can’t just quit inflating the tires it installs. And when a railroad that has always made money with four, five, and six diesels out in front of 25 cars isn’t making as much money as they were hoping they would get, they don’t get to stop doing the job. They can either sell out or find a method to make their service more profitable, but giving up isn’t an option.
If you should happen to peruse the Oregon Department of Transportation 2001 Oregon Rail Plan, you discover that the Siskiyou Pass line accounts for 1 to 5 million gross tons of freight, and so it comes as no surprise that other operators want to take over if RailAmerica doesn’t want to operate this track. As it turns out, the track from Ashland down to the connection with UP in the south is still owned by Union Pacific and is only leased, unlike the rest of CORP’s track, which is wholly owned by RailAmerica.
Of course, the Oregon DOT Rail Plan incidentally points out one of the key problems here. Their maps and information don’t extend down into California because that’s another state. Any move involving eminent domain would get very complicated, involving two states and also Union Pacific, the underlying owner of the property. The problem would exist in having California take action for the benefit of taxpayers in Oregon. As such, the case would almost certainly have to be federal, and that is very unlikely.
And the hedge fund knows this. In fact, it would seem they are betting on it. The probability of any precipitous action by the State of Oregon, the State of California, or Union Pacific is right next to zero. CORP has ceased operations from Eugene over to the Oregon Coast because of unsafe tunnels. This was sudden and drew a backlash from the State of Oregon, but CORP asked FRA to examine the tunnels, and those were found to indeed be unsafe. However, they had apparently been unsafe for some time, so that trump card had only been played when it suited the hedge fund.
I know many good railroaders that work for CORP, men who are proud of their work and would like a safe and solid job right through to retirement. These people are stakeholders, too. They are the ones who hauled the one-to-five million gross tons of freight, and it isn’t their fault someone didn’t make enough profit. It’s hard to imagine how the hedge fund plans to make money by not running trains.
Most shortlines have a very high sense of responsibility to their shippers and receivers. The model railroad industry is filled with manufacturers and service providers who take very good care of their customers. We are fortunate to live in a world of railroads and companies both large and small where people take pride in good quality and great service. And yet they make a profit by taking care of business. It really is almost a shock when we come up against such a cynical disregard for public values. It makes you wonder how these hedge fund people were raised. — John Sipple