INSIGHT ON: Transportation – Working on a railroad

Posted on May 1, 2015 :: Insight On , Transportation
Sean P. Johnson
Posted by , Insight on Business Staff Writer


It’s a site that hasn’t been seen in Sheboygan County for nearly a decade: trains hauling cargo between Plymouth and Kohler.

Watch for it this fall.

The Wisconsin & Southern Railroad began principal construction to restore the 11-mile line in late March. The rail line has been out of service since 2006. The $19.1 million project will restore rail service to Bemis Manufacturing, Kettle Lakes Co-op and several other businesses along the corridor.

“We had several businesses along that corridor that wanted to use rail cars,” says Dane Checolinski, director of the Sheboygan County Economic Development Corporation. “We were able to put together a coalition of state, local and private resources to make it happen.”

Not that it was an easy venture.

The line, an east-west connector in the county, had been operated by Union Pacific Railroad, which determined that shippers along the line did not generate enough volume to make operating the line cost effective. As a smaller, regional rail service, WSOR can make the economics work on much lower volume, Checolinski says.

Without rail service, companies along the line have had to rely on trucks, which are considered less efficient for large-volume shippers.
“There is a lot of anticipation for this,” Checolinski says. “It’s been a long effort.”

Rail service can transport a ton of freight an average of 480 miles, on one gallon of fuel. The same ton of freight shipped by truck, over the same distance, would require at least three times as much fuel. An additional benefit is the reduced negative effect on the environment, according to the Wisconsin Department of Transportation. The level of greenhouse gas emissions produced by freight trains is less than one-eighth of what is created by trucks, per ton of freight moved one mile.

The Wisconsin Department of Transportation will finance the bulk of the restoration, providing grants of more than $17 million. The remaining costs are being picked up by WSOR, Kettle Lakes, Morrelle Transfer, Inc., Bemis, Sheboygan County and the cities of Plymouth and Sheboygan Falls.

Rail service has become a key objective for other communities in the New North region as well. For the northern counties of the region, the restoration of service is seen as a critical issue to help improve the efficiency and competitiveness of its timber and related industries.

But first things first. The limited service the area does have is in jeopardy as the fleet of cars for hauling logs is about to reach the end of its operational life. Under federal standards, the current fleet of log cars must be retired in 2017.

Without the cars, restored service would not matter.

The Northwoods Rail Transit Commission, which represents 19 Wisconsin and Michigan counties, is working with the Canadian National Railroad to secure grant funding that would create a fleet of 150 publicly-owned log cars.

“Without a replacement fleet, that’s all traffic that will get put onto the roads,” says Wendy Gehlhoff, director of the Florence County Economic Development Corporation and chairwoman of the rail commission.

An initial grant for a 150-car fleet under the U.S. Department of Transportation’s TIGER program (Transportation Investment Generating Economic Recovery) was recommended, but not funded. For 2015, the commission and the state of Wisconsin are applying for a Freight Rail Preservation Program grant to fund the construction of 50 new cars. CN has agreed to provide a 20 percent match.

If this grant is funded, it will also be used to bolster the group’s application in the next round of federal TIGER grants. Construction of the cars themselves may also provide some additional economic development for Northwoods counties, as the Escanaba & Lake Superior Railroad has applied for certification to become a manufacturer of new rail cars. It could build cars both in Escanaba, Mich., and at an expanded facility in Crivitz, producing 50 to 100 cars a year using both facilities.

“That we have a company in the region as the likely contractor is a real positive,” Gehlhoff says.

While the short-term focus has been on upgrading the rail car fleet, the region has also been trying to make the case for restoring service to shut portions of a major east-west line. Parts of the line have been out of service for more than seven years.

Though the DOT issued a rail market study for the region in late 2013, Gehlhoff says they have not been able to achieve any traction for restoring service to the entire route. Unlike the case in Sheboygan, there is not an option to bring in a regional operator to provide the service.

“They (CN) do not want to sell the line, but they don’t want to bring it into service,” Gehlhoff says. “We’re trying to convince them there is business there.”

Opportunities for new business along rail lines has already become a hot topic in Sheboygan County, even though trains won’t be running again until this fall. WSOR representatives have already noted sites along the route suitable for industrial and warehouse development.

Railroad officials have even discussed options for adding multi-modal capabilities. Multi-modal facilities are based on shipping containers that can be used for truck, rail or ship. Regional companies using multi-modal often have to truck the containers to the Chicago area before they can load them on the rails.

“This could be an opportunity to add that service to all of Northeast Wisconsin,” Checolinski says.