A sagging northeastern Ontario short-line railway operation with deteriorating infrastructure hopes to tap into government stimulus funds to stay on track.
The Huron Central Railway is out to secure $33 million in public and private dollars to upgrade their line between Sault Ste. Marie and Sudbury.
"It's old infrastructure and it's been beaten up pretty badly," said president Mario Brault, whose Montreal-headquartered railway, and its Connecticut parent company Genesee & Wyoming, lease the 305-kilometre long track from the Canadian Pacific Railway (CP).
Short-lines railways are usually small low-cost carriers that operate over a short distance, providing service on lines considered marginally profitable by large railways. Huron Central provides the locomotive power, operations management and track maintenance for CP's customers along the Sault-Sudbury line.
Though Huron Central track gangs are a common sight doing basic upkeep, new rails, ties, ballast and bridge reinforcement work are in order, said Brault.
"We do our best to maintain it, but for the long run we need to invest in infrastructure otherwise the maintenance costs go up year after year, and we can't afford it with the small volumes of traffic we're handling right now."
The top-end running speed is 25-miles-per hour, but because of the line's condition, at several points it's reduced to 10. The railway wants a more consistent 25 to 30-miles-per hour to move freight to its customers on time.
Brault and other short-line operators met with provincial Transportation Minister Jim Bradley March 5, under the auspices of the Ontario Railway Advisory Panel.
They're out to convince Queen's Park of the advantages of investing in short lines. "I think we're getting positive messages from the government of Ontario, (but) we do not feel we're getting a strong commitment to invest in short line infrastructure," said Brault.
The company is also working the federal side through a Building Canada application in looking for a public and private sector cost-sharing arrangement.
"We're part of the grand scale of the economy in regional development," said Brault, by creating local jobs, using area suppliers, and reducing highway congestion and exhaust emissions from trucks.
Before the Huron Central and Genesee & Wyoming invest millions, freight volumes need to pick up.
Sault Ste. Marie's Essar Steel Algoma accounts for more than 60 per cent of the railway's business. Toward the east, Domtar's pulp and paper mill in Espanola adds another 20 per cent. In between, there's not much new business to be found. Maybe some old mine shafts will come back into production along the North Shore, but it's a struggle, said Brault.
Last year, the railway handled slightly more than 16,000-car loads annually, down from a 18,000 to 22,000 range in previous years. The slowdown in global steel markets has affected Essar's steel shipments on the railway.
Essar had been railing between 1 million to 1.4 million tonnes of steel coils each year headed for Southern Ontario. But last year, it dipped below the 1 million tonne mark, said Brault. While sympathetic to the struggling steelmaker, Brault said with the railway "conservatively" posting more than $1 million in losses last year, "I'm sure we can't stand another year (like this)."
The Huron Central is half-way through a 20-year lease with Canadian Pacific. Brault declined comment if there is an escape clause in the contract. Heading into the spring, Essar and CP were still negotiating a new freight deal, after the previous five-year agreement expired at the end of 2008.
Brault said those discussions are strictly between CP and Essar, but they continue to provide service, but with "modifications to the contract."
Inquiries made by Northern Ontario Business through CP communications on the status of negotiations were not returned, and an Essar Steel Algoma spokeswoman declined comment.
Brault said the Huron Central is "open" to the idea of passenger traffic, that would tack on an additional $50 to $60 million in track upgrades, something they can't afford. Sault Ste. Marie is fortunate to be serviced by two Class I railways; Canadian Pacific through the Huron Central, and the Canadian National Railway, which runs north 474 kilometres to Hearst.
The municipality would like to keep them both. In a city-commissioned transportation study, $154 million worth of infrastructure upgrades were identified, including $50 to $70 million to the Huron Central line.
The Sault wants to promote itself as a multi-modal hub and is lobbying government for funding for rail, bridge and port improvements. Ultimately they want to handle intermodal container freight across the border into the U.S. Brault, who sits on the city's Global Gateway Transportation Committee, said the line would be a "perfect fit" for containers.
"There's nothing magic about moving containers in rail cars it's about having the right infrastructure."
The Sault's transportation committee chairman Bill Therriault said upgrading the railway is a "number one priority" though container freight idea is likely on the back burner because of the economy.
"The climate has changed so much that multi-modal is not as strong as this time last year," said Therriault. "My firm belief is that it's going to come in the future but it's not going to come in the next year."
www.gwrr.com
