City's effort to keep short line railway beyond 2010
Source:
Northern Ontario Business
Published: October 19th 2009
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 Supporters
of a northeastern Ontario short line railway are laying the
groundwork to keep a vital Sault Ste. Marie-to-Sudbury
transportation link open past next year.
The City of Sault Ste. Marie is spearheading a regional effort to
keep the Huron Central Railway operating beyond August, 2010 or find
another carrier willing to service industry along the 300-kilometre
long track.
A proposal call to select a short line operator will go out at the
end of October with an assessment likely made by late January, said
City of Sault Ste. Marie Chief Administrative Officer Joe Fratesi,
who is chairing a special railroad working group of industry and
community stakeholders.
“We have no guarantee that Huron Central will stay on past August of
next year and we do however have an obligation to let (the railway)
put their best foot forward on a long-term operation before we
entertain other proposals.”
Fratesi said this competitive bid process may be pre-empted if a
good offer comes forward from the Huron Central. “If they come up
with a (good) arrangement, they likely could be seen as a preferred
carrier.”
The city, Essar Steel Algoma, Domtar bought themselves a one-year
reprieve last summer after striking a $15.9 million deal with the
Montreal-based rail company to underwrite their operating costs
until the agreement expires Aug. 15, 2010. The railway came within
hours of dropping freight service to Sault Ste. Marie and Espanola.
The two companies have also committed an undisclosed volume of
freight.
Key to the deal is the flow of $33 million in government
infrastructure money to repair badly deteriorating track that has
slowed transit times for freight and undermines Sault Ste. Marie's
efforts to attract container cargo traffic.
Under government funding rules, Fratesi said there's no way all that
money could be spent by March 2011, the date when these kinds of
infrastructure stimulus projects must be completed. So only $12
million will be parceled out next spring for either the Huron
Central or another railway operator to use.
The rest of $21 million will be spent over the next few years in a
second round of infrastructure funding.
The Northern Ontario Heritage Fund is providing an immediate boost
of $1.5 million to help repair ties, rails and bridges on the track.
FedNor has promised to match that money.
“The stars all lined up for us because of the cooperation of
everyone,” said Fratesi in mentioning the support of federal and
provincial officials, small town mayors and the major shippers
involved.
“We were very fortunate that people got serious about it early and
who took action and some risk. But looking at the big picture, the
risk is going to be seen as well worth it.”
Fratesi said for the rail line to succeed, it's incumbent on North
Shore communities to do their part to generate additional rail
freight business.
“The fact that communities between the Sault and Sudbury realized
the possibility of losing their rail line has woken up a sleeping
giant for them to go out and promote new business (opportunities).”
Fratesi said there are new developments along the North Shore being
talked about and those mayors and economic development officials
must promote the use of rail to ensure its success and keep excess
transport trucks from rumbling through their towns.
Canadian Pacific Railway, the owners of the line, said last summer
they had no intention of taking over operations and were prepared to
file for abandonment.
Fratesi said during a September meeting in the Sault, CP officials
were “impressed with what we were able to do and said that we have
done everything that they could have expected us to do to turn their
thinking around.”
He added CP must be part of the framing of the proposal call because
no carrier is going to come forward without their commitment to be
part of a solution. To help with the proposal call, Fratesi said the
city has also retained two lawyers who are experts in salvaging
short line railroads across Ontario.
The one-year reprieve was a relief to shippers like Boniferro Mill
Works, a Sault Ste. Marie hardwood sawmill, which would have been
adversely impacted if the railroad had pulled out.
Company president Jim Boniferro said the closure of that line would
have been “devastating” to his 50-person operation if they had to
replace rail cars with more expensive transport trucks.
The company harvests pulp wood for Domtar and sends between 1,100
and 1,200 rail cars east to their paper plant in Espanola.
“It was very critical to keep that line open,” said Boniferro in
tabulating his costs to pay woodland contractors for logs and then
passing on a more exorbitant freight bill to Domtar by shifting from
rail to truck. “Domtar has a magic number to pay us for pulp.”
“If that Aug. 15 drop-dead date had come that we couldn't ship pulp,
we would have been in a big pickle here. If you can't move pulp, you
can't move saw logs. We would have had to come up with some sort of
solution and quite frankly there was no Plan B at that point.
“I think the city did a tremendous job getting the stakeholders and
getting Essar and Domtar involved.” |
