For HCRY, C$21MM in Infrastructure Improvement Funding

“Today’s investment for Huron Central Railway in Northern Ontario will improve railway infrastructure by increasing the fluidity and reliability of rail service, reducing travel time of railcar traffic and relieving supply chain congestion,” Canada Minister of Transport Omar Alghabra reported on Twitter. (Photograph Courtesy of Alghabra via Twitter)

Genesee & Wyoming Canada’s Huron Central Railway Inc. (HCRY) will receive a total of C$21 million for infrastructure rehabilitation from the governments of Canada and Ontario, which announced their investment on Jan. 10. The 173-mile short line in Northern Ontario will contribute C$10.5 million to the work.

The governments of Canada and Ontario will each contribute C$10.5 million to the C$31.5 million project that they reported will “improve the usable life of the track and support HCRY in sustaining operations as a viable freight service between Sault Ste. Marie and Sudbury. Improving railway infrastructure will increase the fluidity and reliability of rail service for Northern Ontario while reducing the travel time of railcar traffic.” The governments added that their investments “will have important benefits for the region, such as increasing carload volumes in commodity sectors, relieving ongoing supply chain congestion, and improving the reliability of rail service in Northern Ontario.”

The government of Canada’s investment will come from the National Trade Corridors Fund, a competitive, merit-based program, delivered through Transport Canada, that is “designed to help infrastructure owners and users invest in the transportation assets that support economic activity in Canada.”

“The collaboration developed between the government of Canada, the province of Ontario and HCRY to upgrade the railway is a positive example of how we can come together to build fluid and reliable internal trade corridors,” Canada Minister of Transport Omar Alghabra said.

“The Ontario government recognizes the value of the Sault. Ste. Marie to Sudbury rail corridor to Northern Ontario and the regional economy,” said Greg Rickford, Ontario Minister of Northern Development. “We will continue to work with Huron Central Railway and all our partners to ensure the continued vitality of this crucial rail system. Today’s investment demonstrates how, together, we are building a competitive, strong and vibrant Northern Ontario.”

“Genesee & Wyoming is proud of the critical role that HCRY plays in supporting the Northern Ontario economy,” Genesee & Wyoming Canada President Rick McLellan said. “These essential infrastructure investments from the government of Canada and the government of Ontario will ensure that HCRY can continue to serve our communities, securing our customers’ access to vital supply chains.”

Genesee & Wyoming in 1997 acquired HCRY, whose top commodities include lumber and forest products, metals, minerals and stone, and pulp and paper. The short line interchanges with CN (at Sault Ste. Marie) and Canadian Pacific (at Sudbury).

BACKGROUND

Genesee & Wyoming Canada has warned many times that it might end service on HCRY. In 2009, the company gave a 30-day notice, with a series of extensions, until the city of Sault Ste. Marie came up with a $C33 million package to subsidize track and bridge repairs.

In fall 2018, the provincial government provided $C980,000 in stop-gap funding to keep the service running for another year after Genesee & Wyoming Canada threatened to close the line earlier that year while negotiations continued with the province on a long-term deal.

In October 2019, Genesee & Wyoming Canada announced it would cease HCRY operations in early 2020 after failing to secure sufficient capital investment from the Ontario provincial and Canadian federal governments to keep the line open; freight volumes on the line were insufficient to maintain commercial operations without support.

According to Railway Age’s October 2019 report, earlier funding had supported emergency repairs, but Genesee & Wyoming Canada estimated that $C40 million of capital investment would be required over the next five years to maintain safe operation on the line. Genesee & Wyoming Canada reported at that time it would continue to work with the provincial and federal governments should they be prepared to fulfill commitments to preserve the railway.

In December 2020, HCRY was again expected to close, but Genesee & Wyoming Canada announced that it would keep the doors open until June 30, 2021, due to progress working with the provincial and federal governments to share the cost of the line’s rehabilitation.

The railroad company in May 2021 suspended plans for a June 2021 closure, following work with the Ontario and federal governments as well as “expected commitments from customers.”

At that time, the federal budget included the renewal of the National Trade Corridors Fund. Genesee & Wyoming Canada reported receiving confirmation “that the intention for the renewed program criteria would remove barriers that had previously prevented short line railways from eligibility.”

“We applaud the government of Canada for listening to the concerns of stakeholders, in particular the short line rail sector and the natural resources and other industries that depend on Canada’s regional transportation corridors,” Rick McLellan said in May 2021. “Renewing the National Trade Corridors Fund with more inclusive program eligibility will be critical for our sector and the communities we support. The large employers served by HCRY across Northern Ontario can be encouraged that this federal funding program will soon be available for project application.”