21 June 2009
New Operator Needed to Revive Freight-Train Service
Sault Ste. Marie Ontario - Don't include Canadian
Pacific Railway in any 11th-hour rescue scenario for the threatened rail link between Sault Ste. Marie and Sudbury - a
new operator is necessary to avoid derailment.
Huron Central Railway Inc., a Quebec-based short-line rail provider which has been operating the
300-kilometre line under a lease ar rangement with CP for over a decade, announced this week the branch line was no
longer economically viable and it would be discontinuing service this summer.
"We will commence abandonment procedures as mandated under the Canada Transport Act if no new operator steps forward," said
Mike LoVeccchio, a media relations spokesperson with CP.
Huron Central, which began leasing the rail line in 1997, has announced it will discontinue freight service from the Sault to
McKerrow (near Espanola) on 15 Aug 2009 and then from Espanola to Sudbury on 31 Oct 2009.
Under Canadian Transportation Agency guidelines, upon Huron Central wrapping up (15 Aug 2009), CP must either pick up the
service itself, for which it has indicated it has no interest, or offer the branch line to anyone else interested in continuing
operations.
If no operator steps forward within 60 days then CP will offer the line's right-of-way to the three levels of government,
federal, provincial, and municipal, for 30 days at net salvage value.
At the conclusion of 90 days, if still nobody steps forward, the feeder line would be presumed "disand disposal would be
discretionary but must include removal of the track itself.
"I don't know if a solution can be found... At present, I am not aware of talks with any potential new operators," said the
media spokesman of the branch line which has been in operation for 122 years, since 1887.
Mario Brault, president of Huron Central, a subsidiary of Connecticut-based Genesee & Wyoming Inc., claims the
shortline operator has lost money each of the past four years, including $2.1 million in 2008. "We made money the first few years
then we started losing traffic volume and never recovered," said Brault, whose firm lost $2.1 million on $7.4 million in revenue.
Huron Central, which used to run a train a day, seven days a week, out of the Sault to the Sudbury intermodal yard, typically three
locomotives and a minimum 40 freight cars, now only dispatches two or three trains a week, he said.
The railway, which shuttled 24,000 rail cars between the Sault and Sudbury in 2004, with each freight car handling about 100 tonnes,
only handled 16,000 cars in 2008, and projections are even slimmer for 2009.
Essar Steel Algoma Inc., Huron Central's primary client, accounting for more than 50 percent of its annual freight, its only shipping
out about half the product of a year ago, he said.
"In our best year we moved about 1.3 million tonnes of steel... today, because of the economy, we are moving only 53,000 tonnes a
month," said Brault.
Dwindling freight volume, a reflection of the state of the overall economy, and no immediate prospects for volume growth are a deadly
combination for survival. "We have been pretty aggressive in our cost cutting yet we continue to lose money," he said.
"It's going to be difficult to justify a significant infrastructure investment if there is no volume, or prospect of increased
volumes, to support it."
Huron Central has been urging both Ottawa and Queen's Park to commit to rail bed investments along the line, $33 million to be
specific, but its appeal has gone unanswered.
Rather than picking up one third of the overall cost of the investment, which should cut the freight run from the Sault to Sudbury
from 11 hours to seven hours, he said, the company would need to put up half the cost, "an extremely challenging amount to
justify under current circumstances."
CP, because of its designation as a Class One Railway, not a shortline operator, is not eligible for any form of government subsidy,
said LoVecchio.
The western leg of the line will be the first to go out of service, "because the Sault has other transportation options...
Espanola (site of Domtar, Huron Central's No. 2 freight client) doesn't have as many options."
Dan Bellerose.
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