Maine Trails, June-July '11
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Confidence Builder

Maine Northern Railway’s Ian Simpson looks to improved track speeds, reliability and shipper options to return Aroostook rail line to profitability

By Kathryn Buxton
 
Ian Simpson has been a railroad man for only seven years, but his grasp of the forces bearing down the newest acquisition in Irving Transportation Services’ rail empire is comprehensive. Aging rail infrastructure, tough winters, high fuel costs and customers facing oppressively tight profit margins come with the territory. Simpson, who is general manager of Irving’s other rail holdings, New Brunswick Southern Railroad and Eastern Maine Railway, is nothing if not pragmatic about the challenges ahead. Still, after just two months of service on the newly dubbed Maine Northern Railway, he is cautiously optimistic.
 
“Volumes are about what we expected,” said Simpson, speaking via phone from Saint John. “Some of the shippers have been slow coming back on line because of the economy. But on the positive side, some new shippers have jumped on board faster than we expected. It’s not all out but, if anything, the trend looks good.”
 
The state has estimated that the 233-mile line, purchased from Montreal, Maine & Atlantic Railway for $20.1 million earlier this year, serves an estimated 25 businesses and supports approximately 1,000 jobs in the region. On April 5, MaineDOT announced Eastern Maine Railway had beat out five potential operators with its proposal to operate the line. Just 10 weeks later on June 15, Maine Northern officially launched with the first train, including a freshly painted Maine Northern locomotive.  
 
Eastern Maine’s winning proposal to MaineDOT stressed what Simpson believes are the operator’s chief strengths. “We have a strong presence in the region and good geographic connections. Winters are tough in the region, and we are experienced moving freight through winter conditions,” said Simpson.
 
He added that Irving’s interest in the fiber and wood industry, as well as the transportation division’s working relationships with other rail carriers in the region – Canadian National, MMA, Pan Am Railways and, of course, New Brunswick Southern and Eastern Maine – were also strong selling points for the Eastern Maine proposal.
 
Denis Berube director of planning and transportation services for the Northern Maine Development Commission participated in the panel that reviewed operator proposals. He noted that it was not only Irving/Eastern Maine’s familiarity with the region and relationships with other carriers that won them the job. “They knew about frost heaves on the line and how to work plowing into the schedule,” said Berube. “They also had a much more detailed operations and maintenance plan. It was obvious they were ready to go on the spot.”
 
What shippers want
 
Simpson’s initial goal is getting freight moving on the line again. The region has been hit hard by the recession that has seen demand for its primary products – lumber, fiber and other wood products– decrease significantly. That decline and a subsequent decrease in freight moving on the line was a deciding factor in MMA’s 2009 announcement that it wanted to abandon the line.
 
First and foremost on Simpson’s to-do list is rebuilding confidence in the service. “The key thing shippers want to see – they want to see consistency,” said Simpson.
 
Consistency, he believes, will come with increased track speeds and improved coordination with connecting freight lines, including MMA, Pan Am Railways and Eastern Maine Railway. “We want shippers to have the options that each of those railways provide, whether it’s ultimately price, transit time or equipment. We’ll let the customer choose who they want to hand off to from our line. We work with all three, and each brings a benefit.”
 
NMR’s primary objective is to “create more options and open up some new markets for its shippers, said Simpson.
 
“At the end of the day, the customer can only afford so much transportation cost. If you are able to open up new markets, you help make transportation more competitive.”
 
 “A shipper that only has one option can be in a tough spot,” continued Simpson. “When there are two railroads to choose from, there’s an advantage to the shipper. When there are three, that really helps the customer. It’s good for the shipper, it’s good for the other railroads and it’s good for us when we see a growth in carloads.”
 
Another important element in Maine Northern’s strategy is to improve track speeds on the line. To achieve that, the new company is relying on track upgrades funded by a $10.5 million federal TIGER grant (Transportation Investments Generating Economic Recovery). The funding will upgrade the line that has fallen into disrepair during recent years. Maine Maine Northern will be responsible for operating and providing maintenance on the line.
 
Work to upgrade the line began on July 11. Nate Moulton, who heads the MaineDOT rail program, said that the goal is to have the work completed as soon as possible – by the end of the next construction season – because “with completion of each portion of work track speeds are raised and the lines become more efficient.”
 
The first section of line to be upgraded will be the mainline between Grindstone and Frenchville. “We’re focusing on the areas with slow orders,” said Moulton. The goal is for the main line to support track speeds between 30 and 40 miles per hour and 25 miles per hour on the branch lines. Simpson said that would be consistent with track speeds on his employer’s other Maine line. 
 
“Track speeds are critical because our track crews are allowed to operate only 12 hours a day. If a crew goes out on a run five-and-a-half hours to the end point and five-and-a-half hours back, then they can make that trip in one shift and that is efficient. But if track speeds are reduced, we have to stop and send a fresh crew,” said Simpson. And slow track speeds have “a snowball effect” on service, creating added cost to the shippers and negatively impacting the operator’s profitability.
 
“Think about it. We have to order taxis to go get them, and some of these locations are quite remote. That’s wasted time and wasted effort.”
 
Irving investments
 
In addition to the TIGER grant investments in track infrastructure, Simpson said Maine Northern’s parent company Irving is committed to making its own investments in the service. Irving has hadded six locomotives to service its new operation and will rotate locomotives between Eastern Maine and New Brunswick Southern as required to service all of its customers.
 
“Clearly our biggest investment is in people, and we’re very pleased with the quality and experience level of the individuals we’ve hired,” said Simpson. The company has taken on 30 new employees, most of them based in Maine, to run the line. With 25 employees on the Eastern Maine line and 100 on New Brunswick Southern, Irving now employees approximately 155 in its rail division.
 
Simpson noted the company also plans to purchase snow removal equipment and will add rail cars as needed.
The company plans to establish what he calls “low tech” reload operations and will help increase the size and condition of customer sidings. These reload sites, he said, may have just a loader to facilitate truck-to-rail transfers for shippers not directly located on the line, but who could reduce their shipping costs significantly by connecting to rail.
 
“We know that about 25 percent of our customers’ freight touches a truck at one end or another,” said Simpson. With 18 years in the trucking industry before he joined New Brunswick Southern, Simpson understands Maine Northern’s ability to tap into new markets with short-haul connections to rail as perhaps the best way to attract new shippers to the line, particularly as fuel prices continue to rise.
 
NMDC’s Berube has long been working to develop truck-to-trail transfer sites to “rail in” materials such as road salt, sand, gravel and culverts that would be purchased in bulk for the region’s municipalities. He is helping to establish transfer sites in Presque Isle, Fort Kent and Houlton and thinks that, once municipalities start shipping material using these sites, other customers will be interested in using them as well. “I’ve been pushing this for some time now,” said Berube.
 
Berube expects that, as transportation costs increase, more northern Maine businesses will move to rail – including fertilizer, chemicals, wood pellet and biomass producers and agricultural and frozen food manufacturers. “There are certain things that are well-suited to rail and, with gas at $4 per gallon, it makes sense. That’s not to say that 100 percent will ship by rail. It may be closer to 25 or 30 percent.”
 
Thinking bigger
 
Simpson said that another strategy will be to encourage shippers to ship in bigger increments to help keep transportation costs down. He talked about working with low-volume shippers to help reduce their shipping costs.
 
“Maybe a shipper that’s moving two cars a day can move two blocks of five or one of 10 instead.” He said that Maine Northern wants to work with shippers to perhaps expand a siding and enable them keep their transportation costs at a minimum. He noted the most important thing will be improving the reliability of the schedule. That will lead to increased business on the line. “We want to keep the pie growing by 10. . .20. . .50 percent. We need to see the region strong. So clearly, we need to find ways to help the shippers.”
 
One investment that does not appear to be on Maine Northern’s whiteboard currently is reviving the line between Limestone and Caribou.
 
“That track is certainly in poor condition. We would need significant incentive to make that investment. That doesn’t mean it can’t or won’t be done,” said Simpson. The state owns that track, and MaineDOT has stated that its primary interest in the rail line has been one of economic development. 
 
Ports calling
 
Since it was chosen to run the Aroostook County line, there has been speculation whether Maine Northern plans to connect its freight customers with a Canadian port or a Maine port. Looking at the map, the most obvious connection is with the port of Saint John, New Brunswick, served by Maine Northern’s sister railway, New Brunswick Southern. Searsport is another option, with connections via MMA. That Saint John connection has some in Maine wary. In a June 7 Bangor Daily News editorial, Searsport-based harbor pilot David Gelinas expressed concern and urged the state to closely monitor the new rail service’s operations to make sure Maine ports are not negatively impacted.
 
Gelinas wrote: “Legislators, taxpayers and the many transportation workers who rely on the port of Searsport for their livelihood should be concerned about the implications of the proposed operating agreement. The new arrangement may fundamentally change the rail corridor away from its historic terminus in the port of Searsport, shifting it instead eastward into Canada and the port of Saint John.”
 
Simpson said that a port connection – whether in Canada or Maine – “is not something we’ve even thought about.” As for moving more freight via New Brunswick Southern to Saint John, that does not seem likely at the current time. Currently one of New Brunswick Southern/Eastern Maine’s biggest shippers is based in Saint John and connects with MMA at Brownville Junction to ship out of Searsport. “Ultimately the shipper will make the decision on their port of choice for imports or exports, and we will help facilitate this,” said Simpson.
 
Providing a rail connection for Eastport would be more problematic. The nearest rail line to the port is the state-owned Calais Branch line, and that line hasn’t seen freight service since 1984. Still, Simpson is open to the possibility of establishing an intermodal link – if the business is there.
 
“My hunch is that the business isn’t there right now. But if Eastport wanted to establish a short haul link, we could get it all the way to Calais or St. Stephen,” said Simpson. “It would be a terrific opportunity to pursue, and we would work with Eastport to put a package together.”
 
In the end, it is Simpson’s personal mix of pragmatism and willingness to collaborate on creative, workable solutions for shippers that is likely to inspire the confidence – and that bodes well for the new rail service.
 
Already, Maine Northern is getting good word-of-mouth from shippers, according to Berube who said, “They’ve had a good start, but those tracks need to be brought up to standard. We need better tracks.”

 

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