Martin Harder doesn’t need statistics to tell him that short-line railways have been on the decline in the last couple of years.
He has first-hand experience.
The short-line rail company that owned the track on which his company, Delmar Commodities, operated two grain elevators and a soybean processing facility received approval in January to abandon the line.
The 129 kilometres of track running from Morris to Mariopolis in Manitoba is expected to be torn up for salvage in the next few months.
Southern Manitoba Railway, the U.S. owned short-line company that abandoned the track, went into business after buying two Canadian National Railway lines in 1999.
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However, Harder doesn’t blame the short-line company as much as he does the nature of the Canadian rail system.
“Two companies control all the rail and divide the country into north and south, so there is zero competition,” he said.
“Unless that’s fixed, short lines will not survive.”
Statistics recently released by the federal grain monitor indicate Harder’s concerns have merit.
The 2005-06 crop year report from Quorum Corp., the Edmonton-based grain monitor, shows that the total mileage operated by short-line companies has steadily declined.
As of July 31, 2006, short-line operations in Western Canada covered 3,936 km, down 21 percent from the previous year and down 27 percent from 2003.
The big drop in 2005-06 is misleading because most of it was accounted for by a single transaction, RailAmerica’s sale of three Alberta-based short lines totalling 1,131 km to CN, which had previously owned the lines.
That was balanced off to a small degree by the establishment of Fife Lake Railway, which took over 97 km of track slated for abandonment by Canadian Pacific Railway in southern Saskatchewan.
Southern Manitoba Railway also initiated its abandonment application during 2005-06.
Seven years ago short line and regional carriers accounted for 24 percent of the western rail network. Today, with the abandonment of the SMR line in Manitoba, they account for less than 15 percent.
Declining grain volumes were part of the problem for some short lines, due to either weather related production problems in their areas or poor service from the main line carrier.
The total amount of grain hauled on short lines in 2005-06 was 1.7 million tonnes, down from a high of 2.3 million tonnes five years earlier.
Quorum Corp. president Mark Hemmes said there’s no question some short lines are hurting financially.
“The deteriorating financial position of those that remain suggests that further declines are likely,” he said.
“Some will have to either sell back to the main line companies or abandon the track themselves.”
The monitor’s report says that despite their best efforts, most short lines have been unable to “reshape the economics” that gave rise to elevator and rail rationalization in the first place.
“As a result, few of these smaller carriers have actually been able to avoid the need to abandon parts of their own networks,” it said.
As for Harder, a victim of those railway economics, he’ll be trucking grain now, moving feed grain and milling oats directly to the United States and shipping Canadian Wheat Board grain to nearby inland terminals.
He expressed disappointment that the Manitoba government declined to buy the rail line when it was offered for sale, but said the company plans to stay in business.
“We are not quitters,” he said. “We will survive.”
Ironically, while short-line mileage has been shrinking, a number of local prairie groups are negotiating with both national carriers to buy stretches of track slated for abandonment.
That has been triggered in large part by a decision by both railways in the last couple of years to add significant amounts of trackage to their three-year abandonment plans.
Here is a list of short-line railway companies in Western Canada now shipping grain:
- Manitoba – Central Manitoba Railway, Hudson Bay Railway.
- Saskatchewan – Great Western Railway, Fife Lake Railway, Southern Rails Co-operative, Red Coat Road and Rail, Carlton Trail Railway, Wheatland Railway and HBR Arborfield.
- Alberta – Athabasca Northern Railway.
- British Columbia- Okanagan Railway, Southern Railway of B.C.
