Alaska’s Port Mac rail extension 75% complete

The Port MacKenzie Rail Extension has reached 75% completion, but officials say the 32-mile roadbed embankment is closed to travel due to increased rates of vandalism.

Officials with the Matanuska-Susitna (Mat-Su) Borough said the last segment of the Alaskan rail project was cleared in spring 2017, and surveyors continue to install monuments along the entire route. Funding is the chief hurdle to reaching completion of the project, which is 10 years in the making. Mat-Su Borough notes that the project has been funded with voter-approved state general obligation bonds and state appropriations.

The Mat-Su Borough and the Alaska Railroad Corp. (ARRC) jointly proposed construction and operation of the new rail line to connect the Borough’s Port MacKenzie to ARRC’s rail system. The Port Mackenzie Rail Extension involves 32 miles of new rail line from Port MacKenzie to the ARRC main line just south of Houston, Alaska. The line will ultimately provide improved rail transportation between the Port and the Alaskan interior, expanding the regional transportation network, officials say.

Highlights of the project:

• With the exception of Segment 2, all other segments have a completed embankment. Little Susitna bridge is complete, and Segment 6’s north communication tower has been installed.
• Funding is still required to procure and place crossties, ballast and rail on all segments except Segment 6.
• The Reddane Road Extension on Segment 2 is scheduled for construction in spring 2018.

Mat-Su officials had to close the project’s embankment to travel, citing increased numbers of vandalism and thefts during the past month. The incidents include the rail embankment gates being rammed, stolen and damaged signs, ruts in the embankment, and a break-in at the port lessee facility.

In addition to closing the embankment to travel, the borough recently increased patrols along the corridor by borough employees and a security company. Officials say the patrols have been effective at reducing trespassing and criminal activity.

In a statement regarding the embankment closure, Mat-Su Borough wrote, “Responsible residents do not trespass. Please stay out of the 200-foot-wide right-of-way for the rail embankment. Check in with landowners before you go out and recreate or hunt on their lands.”

Once completed, the Port Mac rail extension will shorten the distance between the interior of Alaska and the water, “roughly 32 rail miles shorter than the port of Anchorage and 140 rail miles shorter than the port of Seward.”

Rail industry economist and Railway Age Contributing Editor Jim Blaze comments:

“I worked briefly on a review of Alaska’s rail economics two years ago. My conclusions back then served as limited and unpublished strategic market alerts. They were based on published documents I discovered; I used no private or privileged data sources. The evidence I discovered directly addresses what I believe to be the critical sentence in the current Port Mac news release:

Once completed, the Port Mac rail extension will shorten the distance between the interior of Alaska and the water, roughly 32 rail miles shorter than the port of Anchorage and 140 rail miles shorter than the port of Seward.

“The critical meaning? State and local Port Mac supporters lack about $70 million in capital funding to complete construction. Further, they also lack a commercial confirmation or take-or-pay contract that the cargo they hope for will actually move over the rail line. In other words, there is no supporting feasibility analysis to support a payback of the Port Mac rail investment.

“At the same time, the Port of Seward has lost its coal export cargo—with which Port Mac would in the future try to compete. The Seward branch line needs a reported $70 million to $100 million for correction of long-deferred maintenance, which means an uncertain future for  Seward rail service. The line to Seward requires rail, ties, ballast replacement, track surfacing and bridge work. That route also is not cleared for doublestack container service.

“Both the proposed Port Mac and the Seward branch compete with Port Anchorage—which also requires port capital modification—but not rail capital. Logistics sources report that more than 75% of Alaska’s general cargo maritime trade depends upon Port Anchorage. How Port Mac might change that supply chain pattern has never been addressed by the state agencies or by the federal government as part of integrated systems or intermodal planning. All three rail-served ports compete in part with the port at Whittier and with the Seward branch.

“The Alaska State Rail Plan has no competitive pros/cons analysis identifying which of these ports should get prioritization during the current shortage of rail capital funding—and continued uncertainty in state financials of its general budget for all needs.

“The current Railport/Seward study has projected cruise ship passenger volume—but no rail freight projection as required under the existing federal grant study released late in September 2017. The Alaska Railroad has been operating at a growing pro forma annual operating loss for a number of years when federal subsidies are excluded as reported revenues. Its freight traffic continues to shrink. Passenger revenues remain relatively constant; however, the passenger business overall operates at a loss.

“The long-term strategic growth of coal and other northern Alaska resources to be exported to Asia—a fixed strategic assumption since the railroad was first being built—has stalled economically. The long-sought economic development of export trade remains elusive. That is particularly important to recognize within Alaskan planning if previous assumptions of Asian coal-fueled power stations growth shifts to alternative fuels like natural gas and renewables.

“All this is not a good commerce story. There needs to be a balance in strategic thinking, and an additional push for second opinions for Alaskan investors. Tough choices will be required for Alaska’s leaders.”