Short Line Railroad Exceeds ExpectationsPosted in: Business By Bill Strautman June 1 2009
Never in his wildest dreams did Carson Shymanski think he’d be driving a locomotive, pulling grain cars across a bridge over the Saskatchewan River to Nipawin.
Shymanski started farming with his father Ron, grandmother Stella and brother Tyler, when he was 13 years old. Now, at the ripe old age of 22, he’s one of seven locals from the Choiceland, Sask., area qualified to operate the locomotive that runs on the 28 miles of track owned by Torch River Rail Inc.
One of the newest short line railways in western Canada, Torch River Rail took nearly a decade to arrive on the scene.
“For me it started in 1999 when I loaded three carloads in Prince Albert, when they wouldn’t take delivery of grain here. I said that if I’m going to haul 60 miles, I’m going to make it pay. So I ordered cars in Prince Albert, loaded three cars there and did very well,” says Ron Shymanski, currently chairman of Torch River Rail.
“In 2000, Sask Pool announced the Choiceland elevator would be closed. In June 2001, the last grain moved out of the Sask Pool elevator. CP wouldn’t come with less than 25 cars, so we connected with that train run and loaded six or eight producer cars at that time, just to get people going.”
Through that year, a core of farmers shipped about 135 producer cars of wheat from the area. Ergot in 2002 meant no cars were shipped that year.
“In 2003 when we ordered cars, CP refused service. We went through a level of service complaint and it was April 1, 2004 when we shipped the first grain from the 2003 crop. That’s when we were told the line was being put up for discontinuance. That’s when we started talking about purchasing the line,” says Shymanski.
When a line is put up for discontinuance it has to be offered for sale first to a competitive railway, then the provincial government, then the local government. At that point it can be sold for salvage, or to private individuals.
“We tried to get the RM to buy it, but that didn’t fly. So with 46 shareholders, we ended up doing it privately. Right now it’s a limited liability company, with friends and close associates,” he says.
“We’re limited to 50 subscriptions and we’ve used up 46 of the 50. We’re saving the rest in case we need a major investment sometime in the future. If we’re over 50, we’re out of that category and into another one, where we have to file a prospectus and it becomes quite a bit more complex.”
Members are shareholders of Torch River Rail, but Shymanski says they’re not treated any different than non-shareholders.
“The majority of the shippers are shareholders, but you can ship a producer car without being a shareholder. We’re getting oats coming from 40 or 50 miles away, from people who aren’t
shareholders,” he says.
“As far as the price for shipping, everybody is treated the same. If we start to make money, the shareholders will receive a dividend, while the nonshareholders
Farmers are charged a regular freight rate by CP for board grains. For oats shipped to Quaker, Quaker pays the freight.
“While everyone’s numbers are different, we feel we make at least $1,000 per car on wheat. With oats, it’s even better.”“The board grains we’re shipping through Mission Terminal, there’s $2.80 per tonne deducted from their cheque, Mission deducts that and sends it back to us. Quaker deducts five cents per bushel off their cheque and sends that back to us. It works out to about $250 a car that Torch River Rail gets, above the freight rate. The reason for that is our low volume, to make it economical for us,” says Shymanski.
The group purchased a used 1,200-hp GM D1 locomotive that used to work the CN lines. They had it dropped off at a shop in Chicago to have some service work done before it came out.
“It’s a sound locomotive and everything works 100 percent on it. It pulls great, you can pull both directions and have good visibility both ways. It’s a perfect fit for our operation,” says Shymanski.
“We paid $125,000 for it, then spent $20,000 on it before we brought it home. For the work it does for us, that’s cheap!”
Carson Shymanski and his brother Tyler are two of the seven local farmers qualified to operate the locomotive. An ex-CN engineer qualified to train locomotive engineers and conductors came up to Choiceland and trained them to the qualifications required to operate on their line. Carson says it took about a week of training to get up to speed.
“It wasn’t a huge obstacle, but there was a big learning curve to learn how to run a locomotive. I thought it would be similar to a tractor or Cat, but there’s quite a bit to learn on the brake side of things,” he says.
Carson says his grandparents started farming in the 50s and he can’t imagine what it’s like for his grandma.
“I’m sure she never expected to own the local rail line. But it’s excellent and I wouldn’t have it any other way,” says Carson.
“It’s quite the feeling when you’re rolling down the track at 20 miles an hour, pulling 30 loaded cars, knowing that you have 60 super Bs worth of grain and you’re doing it all in one trip. You look back and you’ve got just about half a mile of cars – it’s pretty neat. And it opens up a world of possibilities that wouldn’t otherwise be there. The more open doors
you have the better.”
Torch River Rail starts at Nipawin and ends at Choiceland, a 28 mile run through the towns of White Fox, Love, Garrick and Choiceland. Cars are spotted in White Fox, Garrick and Choiceland.
“At one time we had more than 20 cars in White Fox. Garrick is probably okay with 12 and Choiceland – 15 to 20,” says Ron.
“With the oat cars right now, we’re doing 25 cars to a run and that’s not a problem. Last year, we did two 30 car runs. We don’t want to run with less than 15 to make it viable. It doesn’t cost us any more to pull 20 cars than it does to pull three.”
So far, every car has been loaded through grain augers. But a trackside facility, in the final stage of construction, will soon provide a second option.
“At the Choiceland site, we built four bins that will hold two cars each. They’ll handle about 7,500 bushels of wheat or 10,000 bushels of oats each. There’s a 5,000-bushel per hour leg that can be used to fill the bins or fill the rail cars. We’re hoping to do a car an hour with it,” says Shymanski.
“An axle scale is available at the site and the farmers will be able to load the bins before the cars arrive. If they’re expecting bad weather or soft roads, they can fill the bins ahead of time. Or somebody a longer distance away might be interested.”
“If they only have a day and a half to load, they might be cramped for time. So they could haul several days ahead of time to fill their bins, then transfer it when the train comes. We’re tentatively looking at charging four dollars a tonne to use the bin and leg system.”
They’re looking at setting up a similar facility in White Fox, as well. But Shymanski says they’re not discouraging people who still want to use a grain auger to fill their cars, and save the cost of the trackside facility.
Shymanski says when CP was running the line, their best year was 135 producer cars. He felt the Torch River group could bring that number up a bit with the short line, but that was only moving wheat. When the group made a connection with Quaker (see sidebar), their numbers more than doubled.
The group shipped 51 cars in the last two weeks of July 2008, to get started. From September 1, 2008 to August 31, 2009, Shymanski expects Torch River Rail will handle 500 cars.
At that level, Shymanski says it’s not a license to print money, but it is doing well and is substantially better than first projections.
“While everyone’s numbers are different, we feel we make at least $1,000 per car on wheat. With oats, it’s even better,” he says.
“Most of these shareholders did not invest in this railroad thinking they were going to make money with the railroad. It was to enhance their farms – to give them an opportunity to load cars close to home. They were making money on the farm this way. If the railroad breaks even, that’s a bonus. But with the way it has gone, the railroad is even doing quite well.”
Shymanski says Torch River Rail has to pay back loans before it can make any dividend payments. But he feels that most shareholders have already got their investment back, just from loading the cars.
“Much of the work is still on a volunteer basis. Building the bin facility was hired out. Any service work on the locomotive will be paid. But most of the work up to now has been on a volunteer basis,” he says.
“We want to do that for the first year, to get a feel for what has to be done. Then we will start to look at paying for some contract work.”
Shymanski says while grain is top priority for Torch River Rail, there may be opportunities to handle other products in the future. Shore Gold has a mine nearby, there’s frac sand in the area and the possibility of forest products.
“If you have a railroad, there’s all kinds of possibilities. If you don’t there’s no possibilities.”
Quaker buys Torch River oats
While shipping producer cars of wheat was the initial reason for setting up Torch River Rail, moving other commodities on it also made sense. A local crushing plant within easy trucking distance ruled out any advantage for producer cars of canola. But Carson Shymanski thought he might be able to move some of the oats he grew.
“My dad and I each had a quarter section of oats and I was looking at a way to save on trucking. Oats is a high volume crop, so rather than truck it, if we could ship that on a rail car it would help us out,” says Carson.
“But because oats isn’t a board grain, you have to have an end user. I went on websites for General Mills, Quaker, Can-Oat and anyone I could think of who uses oats. I sent them all an email.”
“About six weeks after I sent it, I got a call from a guy that buys oats for Quaker. He said they were looking at getting more involved directly with farmers. I told him who I was and where we were coming from. It seemed like it was good timing, because they were looking for the same thing we were – a more direct relationship with each other.”
Carson says local farmers ended up shipping 60 cars of milling oats to Quaker in the fall of 2008, did another 100 in March of 2009 and have another 100 going out in June.
“We’re discussing pricing, volumes and delivery dates for next year, so things are rolling along quite well,” he says.
“I was looking to ship a few of my own cars and maybe some of the neighbors. If we could have got 20 or 30 cars I would have been quite happy. We ended up doing 260 this first year and it looks like next year we'll deliver even more.
He says Quaker wants cars delivered throughout the year, but they’ll be able to take a fair bit at harvest time.
“If we can move quite a bit off the combine, that will help everyone here with storage and cash flow.” While there’s some added paperwork and customs work involved, he says it’s easy to do. It’s an extra marketing option for farmers in the area and it’s going to save them lots of trucking.
“Now that we’re growing oats with the specific intention of selling them to Quaker, we’re a little more educated on what the miller and consumer wants on quality and farming practices,” says Carson.
“When we do our seeding, spraying and combining, we’re a lot more conscious about how to produce a better quality product, compared to just selling them to whoever gave us the best price.”
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