At least 10 groups in Saskatchewan are considering buying their local rail lines and setting up short-line companies to maintain grain movement in their areas.
The renewed interest in short lines has been triggered by the hundreds of kilometres of branch lines that the two national railways have added to their abandonment lists.
Some of the groups are well along in the process, with offers on the table, while others are still in the preliminary stages.
They all say they don’t particularly want to own a railway, but they see it as the only way to retain rail service.
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Uncertainty about the future of the Canadian Wheat Board and the ongoing consolidation in the grain handling industry have added a sense of urgency.
The groups add they’ve been forced to take action because neither the railways nor federal and provincial governments seem concerned about their situation.
“As farmers, nobody else is looking out for us,” said Rodney Jackstreit, a farmer from Maple Creek, Sask., who is facing the possible abandonment of his local line.
“We have to look out for ourselves.”
Jackstreit is part of a group in the early stages of looking at buying Canadian Pacific Railway’s Hatton subdivision in southwestern Saskatchewan.
The 29 km line, which connects to the CPR main line just east of the Alberta border, is home to a successful producer car loading group called RGV Loaders.
Ed Zsomber, director of rail services for the Saskatchewan government, said there’s no question the national railways seem intent on accelerating the pace of abandonment of grain dependent branch lines and focusing on main or secondary line service.
“This last couple of years is probably the largest batch of lines I’ve ever seen go on their three-year abandonment plans,” he said.
CPR has 18 branch lines totalling 1,211.5 km on its discontinuance list. Canadian National Railway has 11 branch lines totalling 453.2 km on its list.
It’s mainly a Saskatchewan issue, with 19 of the 29 lines, representing two-thirds of the mileage, in that province.
Zsomber said few branch lines are left that the railways are interested in keeping.
“I think for the majority of these lines, it’s either short line or nothing.”
He said he thinks CN and CPR want to end up with two lines each running east and west and one each running roughly north and south in the province, totalling about 3,500 km.
“I’m hoping when all this settles down we’ll have a collection and distribution system of branch lines in Saskatchewan in the range of 2,400 km,” said Zsomber, with much of that being locally owned short lines. The province now has about 1,300 km of short lines.
CN spokesperson Kevin Franchuk wouldn’t comment on the railway’s long-term plans, but said it’s had good success working with short-line groups over the years. He noted that since 1996 about 4,800 km of CN track has been turned over to short line operators.
“We are willing to look at any valid proposals from interested parties,” he said, adding those proposals must include a valid business plan and make both economic and operational sense.
Calls seeking comment from CPR were not returned by deadline.
After a line has been listed for discontinuance, the railway can advertise it for sale. If there are no expressions of interest, it’s then offered to all levels of government. If they’re not interested, it can be abandoned, with cash compensation to local municipalities.
Rob Lobdell, president of West Central Road and Rail, which ships producer cars off a CN line running through Elrose, Sask., said groups that want to run a short line have to do their homework.
“If it makes sense, and you have a strong case, then by all means go for it,” he said, adding his company is in the preliminary stages of looking at the nearby White Bear and Matador subdivisions, both of which are on CN’s discontinuance list.
“We’ve been inundated with calls from farmers since it went on the list,” he said.
The Saskatchewan government will provide funds for a feasibility study and a 15-year interest free loan for up to 32 percent of the purchase price of a line, or net salvage value, whichever is less.
Glenn Pederson, a member of South East Farmer Rail, which wants to buy CPR’s Bromhead line running out of Estevan, said the goal isn’t to make money.
“On any grain dependent line you’re not likely to make money,” he said. “The idea is to provide service and if you can break even, that’s the goal.”
