Shutdown of Maine's north-south track a 'concern'
Published Tuesday October 27th, 2009
Transport: Provincial companies will need to find a freight shipping solution if the Montreal, Maine and Atlantic Railway abandons its Madawaska-to-Millinocket railway
A Maine railway company has plans to shut down a long stretch of track in the state in a move industrial firms are decrying as a loss of key transportation service.
Both Fraser Papers Inc. and J.D. Irving, Limited, are among larger customers of the Montreal, Maine and Atlantic Railway, which says it is losing millions of dollars on service between Madawaska and Millinocket - the 387-kilometre track segment it is proposing to sell or abandon.
According to CEO Peter Gordon of Fraser Papers, the route loss would mean "significant" added costs for the company, which is undergoing restructuring.
"Obviously, it's a concern for us, as a vast majority of our paper is shipped by rail down on that line into the northeast," Gordon said.
Since the railway is the only one to run north and south through Maine, if it were to shut down the Madawaska-to-Millinocket service, Fraser Papers would likely have to ship most of its products through CN Rail, which heads west to Montreal before sending products south to key markets.
"We obviously have alternatives but the alternatives can be more expensive," he said.
Montreal, Maine and Atlantic Railway Ltd. (MMA) said in August it would be applying to the federal Surface Transportation Board to sell or abandon low-revenue track.
The railway filed a system diagram map and is preparing a lengthy abandonment report - after which the board would have just over three-and-a-half months to respond.
Bob Grindrod, president and CEO, said the money-losing segment of track is not economical for his private organization to service.
"The portion of the railroad we're considering for abandonment, our traffic there is down 35 to 40 per cent as compared to what it was in 2008, which wasn't good to start with," Grindrod said, painting a picture of approximate losses.
"In 2007 it was $2 million, in 2008 it was $7.5 million and thus far this year, it is about $3.5 million in losses."
He said a decline in forestry activity since 2006 - when the U.S. housing market took a crash - is partly to blame for the fewer number of cars travelling the track from Madawaska to Millinocket.
In good times mills producing oriented strand board filled 25 to 30 rail cars per week on the line; now, they only account for about two to three weekly cars, Grindrod said.
The company has cut its workforce by about 35 per cent and reduced pay for the remaining employees by 15 per cent to curb costs, he said.
Grindrod is proposing that the state buys and maintains the segment of track, while his company or another private carrier could operate the trains on contract.
"Essentially it's an economic development project and everyone acknowledges that the economy of the area will be adversely affected if the railroad goes away," he said.
The Maine Department of Transportation has applied for $23 million in funding through Transportation Investment Generating Economic Recovery (TIGER) - a $1.5-billion program under Washington's Recovery Act meant to stimulate the economy.
"That would be to purchase the line and upgrade it and put it in a good state of repair," said Rob Elder, the director of the department's office of freight and business services.
The Northern Maine Development Council is trying to drum up more business for the railway, which has cut back on frequency of service in recent years to save cash.
Mary Keith, spokeswoman for J.D. Irving, Limited, said her company is concerned about the track abandonment plans as a supplier of wood fibre to mills south of Maine's Aroostook County.
"On an annualized basis we would move the equivalent of 10,000 truckloads on the MMA," Keith said in a statement.
"The economics of deploying trucks to move this freight over more cost-efficient rail is a concern, as are the added CO2 (carbon dioxide) emissions associated with trucking."
Jeff Dutton, the president of Fraser Papers and executive most active in discussions over the railway, said his company is trying to nail down a freight shipping solution if the MMA stops operating the 387 kilometres of low-revenue track.
"With our situation and being under creditor protection, we have to get some certainty," he said. "We're talking to CN. We're talking to other rail lines."
MMA began operating in 2003 and owns about 1,200 route kilometres of track in Maine, Vermont, Quebec and New Brunswick.
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