Railway Age’s 2019 Short Line and Regional Railroads of the Year: LIRC, RCPE

Written by William C. Vantuono, Editor-in-Chief
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Railway Age honors the Louisville & Indiana Railroad Company and the Rapid City, Pierre & Eastern Railroad as its 2019 Short Line (Class III) and Regional (Class II) Railroads of the Year. Both carriers will be recognized at the American Short Line & Regional Railroad Association Connections Convention in Orlando, Fla., on Tuesday, April 9.

SHORT LINE OF THE YEAR: Louisville & Indiana Railroad Company

Railway Age’s 2019 Short Line of the Year, the 106-mile Louisville & Indiana Railroad Company (LIRC), a subsidiary of Anacostia Rail Holdings Company (ARH), is celebrating the 25th anniversary of its formation in 1994. 2018 “marked the culmination of a significant physical transformation for LIRC, as the direct result of a creative partnership with CSX Transportation that began more than five years ago.”

Here’s how LIRC describes its remarkable story of vision, patience, transformation and execution.

A brief recap of LIRC’s history sets the stage for the developments that spurred its growth. The Indianapolis to Louisville route was originally part of the Pennsylvania Railroad network in the Midwest. At the time, business flourished, as southern Indiana became a focal point for a significant military buildup, including Camp Atterbury, the Jeffersonville Proving grounds, the Army Quartermaster complex, and Freeman Field. LIRC honored the Pennsylvania legacy by adopting the PRR Tuscan Red livery and keystone during a locomotive upgrade program that began in 2014.

By the time Conrail was formed, the track was worn out, the Vietnam War had ended and the military traffic disappeared. A one-mile bridge across the Ohio River was enough to convince Conrail headquarters that this route was fraught with more liabilities than potential benefits. However, the visionary leadership of LIRC and ARH saw a route with significant opportunity, including a corridor that paralleled Interstate 65 and US 31 through key industrial markets that were aggressively positioning themselves to accommodate the automotive and manufacturing industries. Additionally, what became the LIRC boasted enough yard capacity and developable land to attract new customers.

For nearly two decades, the LIRC has relied on a commitment to customer service to keep the railroad viable through hardships including slow orders, derailments and rising costs. LIRC focused every dollar that could be allocated on capital projects, to maintain the infrastructure at a usable level. Patience and diligence were the strategy, while ARH and LIRC persuaded CSX to consider a strategic partnership.

After several years of negotiations, CSX agreed to a significant financial investment in which LIRC would oversee the upgrade of the entire line from the ground up. The upgrade began in 2015, and consisted of replacing the entire 106-mile main line rail infrastructure with 136-pound CWR, tie replacement, embankment work, construction of two 10,000-plus-foot sidings and replacing the 119-year-old Flat Rock River Bridge in Columbus, Ind. The bridge is now a modernized structure that will support rail traffic well into the future. As of early 2019, all the upgrade objectives have been met except for one siding that will be constructed this year. The LIRC main line now handles 286,000-pound cars for its entire length.

It is undeniable that the upgrade has created a more-efficient railroad that supports both a significant increase in CSX traffic across its route and a monumental commercial opportunity for LIRC, which continues to dispatch the improved railroad for both CSX and its own trains in a new dispatch building created as part of the upgrade. The dispatch building contains state-of-the-art computerized dispatching and communications equipment that replaced the century-old practice of using train sheets to move traffic.

This 106-mile franchise is now a critical link in the CSX network bolstered by the industrial giants of Kentucky and Tennessee to the South and the distribution markets of Chicago and points East on the North. CSX has solidified overhead rights allowing automotive, merchandise and intermodal trains to move over the dramatically improved LIRC line. This provides LIRC a direct, straight and level north-south route between Louisville and Indianapolis. The completion of the upgrade and associated improvements permits CSX to better utilize its assets while allowing LIRC to maximize its local franchise. LIRC has utilized the upgraded infrastructure to aggressively grow the freight traffic in Southern Indiana and Louisville.

The upgrade and resulting grade crossing renewals required an extensive outreach campaign by LIRC to its neighboring communities. Many communities expressed concern to LIRC regarding future increases in train frequency, speed and length. LIRC forged strong bonds with local and state agencies to promote grade crossing safety while always maintaining the goal of keeping them informed on various project phases. LIRC’s efforts included three permanent grade crossing closures, with two more identified for 2019; enhancements to grade crossing warning devices at 38 crossings; and state support of a pending grade crossing separation in Columbus.

LIRC is also very active in the Operation Lifesaver program. In 2018, LIRC targeted community events reaching more than 10,000 people. LIRC conducted 10 presentations at seven schools that reached approximately 260 children and provided training to more than 250 emergency responders from various agencies. LIRC also worked with National and Indiana Operation Lifesaver to pioneer a targeted social media campaign along its entire route. The social media campaign allowed LIRC to leverage technology to raise train safety awareness. The campaign ultimately reached 3.7 million viewers and created new volunteer and presentation opportunities. Additional LIRC community outreach included billboard and movie theater advertisements promoting the Operation Lifesaver tagline, “See Tracks, Think Trains.”

Throughout the upgrade, LIRC has maintained the highest level of reliable service for its customer base, with greater than 95% on-time performance. Traffic has grown by double digits over consecutive years, with 12% growth in 2018. 2019 is projected to be another record year.

LIRC has successfully secured several new customers in each of the past three years. Camp Atterbury brought a state-of-the-art rail loading facility on line, and LIRC has now moved several brigade-size National Guard units through the facility, supporting both training and deployment.

In 18 months, LIRC cleared a previously shuttered WWII-era support yard in Jeffersonville, Ind., that had been constructed to support some of the nation’s first Quartermaster activities. This improvement resulted in the ultimate creation of a 150-car spot transload terminal that continues to grow today. Further, this facility has room for at least two additional expansion phases.

LIRC, a proud supporter of veterans, has been awarded the American Short Line and Regional Railroad Association General Timmons Award for two consecutive years because of its efforts in hiring and aiding veterans, both at work and in the community. LIRC has again been nominated for this award for its efforts in 2018. LIRC’s support for veterans goes beyond hiring, as it includes efforts by its employees outside of work. Several LIRC employees provide aid to the Kentucky & Indiana Paralyzed Veterans Association (KIPVA). Our employees have donated their time through two partnership projects to build a handicapped-accessible deck at KIPVA headquarters and provided much-needed assistance to a newly paralyzed veteran, in repairing his home to make it more accessible.

As 2019 began, LIRC rail has been completely upgraded, the new bridges are in place, and work continues on the second of two passing sidings to allow for bi-directional running by CSX. LIRC is looking forward to working with its strategic partners, customers and the surrounding communities for another record-breaking year.

View a video of the LIRC, produced by James Street Associates, at this link.

REGIONAL OF THE YEAR: Rapid City, Pierre & Eastern Railroad

Genesee & Wyoming’s Rapid City, Pierre & Eastern Railroad (RCPE), Railway Age’s 2019 Regional Railroad of the Year, represents a successful public-private partnership involving customers and government.

The 670-mile RCPE, which began operations June 1, 2014, had zero FRA-reportable injuries for 2016, 2017 and 2018; invested more than $80 million into its infrastructure; grew revenues by more than 20%; lowered its operating ratio from 73% to 61%; and attracted more than $300 million in new customer investments generating 20,000 projected new carloads.

Here’s the RCPE success story, as told to Railway Age:

On May 30, 2014, the newly created Rapid City, Pierre & Eastern Railroad (RCPE) completed its purchase of the west end of the Dakota, Minnesota & Eastern (DM&E West) rail line. That evening, the 670-mile line, which runs from western Minnesota across South Dakota and into northern Nebraska and western Wyoming, shut down. On June 1, following 24 hours of safety training and orientation, the 177 newly hired employees commenced freight service on the RCPE.

Immediately facing a pre-existing backlog of grain from the 2013 harvest, along with the expected typical challenges of starting a new railroad company from scratch, RCPE employees were simultaneously tasked with expanding their already aggressive operating plan to handle a record-breaking 2014 South Dakota wheat harvest—150% above normal yields in some areas.

Fast-forward four years, and that initial competency test has helped to transform RCPE into a regional railroad that is synonymous with safety and service.

The transition is a result of a comprehensive strategic plan that saw RCPE working more closely with existing customers and attracting new businesses along its entire line by communicating that customers could reach broader markets through three connecting Class I carriers.

“The real success story at RCPE has been the true public-private partnership among the railroad, the customers and government to invest and grow together,” says Michael Miller, President of North American operations at G&W, parent of RCPE. “We committed to investing and improving service levels, and customers committed to growing their business with us. State and federal grants helped the railroad increase its capacity and upgrade the line.”

Prior to RCPE’s acquisition of the DM&E West line, trains ran relatively unscheduled, essentially picking up what cars they could with the available power and crews. RCPE management successfully instituted a scheduled railroad that today runs 25 trains per week. Each crew knows where and when they come on and off duty and which customers to serve. Each customer, in turn, knows which days to expect service, and they receive that service within a 90-minute window.

More than $80 million of investment in infrastructure and equipment since 2014, including internal capital and federal and state grants, has contributed to RCPE’s success. Replacing 100-year-old rail allowed for longer trains and increased speeds from Wall, S.Dak., east as well as fuel and labor savings. Building three additional sidings along the line doubled capacity; customer cars no longer get left behind during crucial peak harvest or construction seasons. Five “heavy bad-order” six-axle locomotives were repaired, and 2,000 railcars were purchased to meet customer demand.

Customers have responded to these efforts—including planning two new plants along the line, one re-opening a facility and another expanding an existing operation—with a total of $300 million in investment and a potential 20,000 new carloads for RCPE.

The changes have benefited RCPE operations as well. The railroad completed 2016-2018 without a single FRA-reportable employee injury. Revenues have grown more than 20% from 2015 to date, with a 27% reduction in the locomotive fleet. And in biennial satisfaction surveys in 2015 and 2017, customers rated RCPE above 8.0 out of 10, which is the benchmark for truly
loyal customers.

“For 2019 and beyond, we are committed to providing a safe work environment for employees so that they can, in turn, provide first-class service to our customers,” says Daniel Dalton, RCPE General Manager. “We have a tremendous team of dedicated, professional and safe employees striving every day to meet customer expectations and grow our business.”

CLASS I PARTNERSHIPS

Part of RCPE’s success is the solid relationships that parent Genesee & Wyoming has forged over the years with Class I connecting railroads. G&W chief executive Jack Hellmann, Railway Age’s 2018 Railroader of the Year, spoke with Editor-in-Chief William C. Vantuono about that, and other topics, in the January 2018 issue:

“In general terms, our relationships with the Class I’s are very strong. Our philosophy as short lines is pretty simple. Number one, we try to run the safest railroads in the world, so our Class I partners aren’t having to worry about the condition of our track, whether any of our people are getting hurt and whether we’re running a world-class operation. We like to be low-profile, under the radar screen, with no one worrying about us.

“Second, we spend all of our time in the commercial function hustling new traffic. That’s our job. We view ourselves as the retail part of the network. The fact that we even exist today, if you look back to Staggers and deregulation to where we are now, is a deeply reinvigorated industry overall, including the short line component. One of the key elements of that success has been derivative of our ability to attract new carloads to our railroads. We’ve got guys that are out hustling the last carload on every single one of our railroads. Even as we’ve gotten to be a global company, we’ve never lost track of our roots, taking care of the customer first and foremost.

“With those two components with the Class I’s, hustling carloads for customers—and most Class I’s will tell you that short lines can drive a higher internal growth rate across their networks—it’s just a question of providing seamless service to interchange. And I think as we’ve gotten bigger, the relationship with Class I’s has progressively gotten better, every single year.”

Belle Fourche, Black Hills NC, Rapid City

On working with government to establish a P3, Hellmann said public dollars have played an important role in growing a sustainable business:

“Government policy overall, whether it’s federal or state, has been an important ingredient of the story of taking short line railroads that were never supposed to make it, if you look back 30 years, and breathing capital into them. Although the vast proportion of the investment has been private-sector dollars, in certain instances, state funds, state programs married to federal programs, have helped elevate our rail infrastructure.

“What we operate over today at G&W—and I couldn’t have said this 20 years ago—is going to be there for the next 50 years, for the next generation to come, because of the success of the industry, the investment in the plant. By virtue of our own efforts as well as those of local and federal governments, we’ve simply elevated the caliber of our infrastructure in a meaningful way. Our plant has never been in better condition than it is today. It’s very gratifying.”

Finally, there’s the 45G investment tax credit, which the small-road industry has been struggling to make permanent:

“45G is one of the component parts of the public-private partnership that’s led us to tackle some of the longer lead-time projects—the big bridges, the big tunnel projects, the ones that you can defer for a while that are eventually going to have to come. With the support of things like 45G, our confidence and our ability to invest in those projects now rather than later has been accelerated, and you can see that in the condition of our plant today. It remains a priority. A lot of G&W now is 286-compliant. But we continue to have lines that require upgrades. 45G will be an important part of that prospectively. So we do spend a lot of time in Washington, D.C., talking about the merits of what has happened up until now, as well as what we see that can happen going forward, as we continue to upgrade track.”

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