12 April 2010

Community Waits for New Shortline Operator

Sturgeon Falls Ontario - Canadian Pacific Railway expects to have a new shortline operator in place to continue rail service on the Ottawa Valley Railway in northeastern Ontario.
 
But the uncertainty of who, and when, is unsettling to Jay Barbeau, chief administrative officer for the rural municipality of West Nipissing, just west of North Bay.
 
"Our concern is connecting from Northern Ontario to the rest of the world," she said. "It's another nail in the coffin."
 
Two years ago, West Nipissing was successful in attracting U.S. mining supplier Jennmar Corp. to set up shop in Sturgeon Falls, the municipality's largest town.
 
The plant, scheduled to begin operations this spring, makes rock bolts and roof support systems for underground mines. The company, which uses steel in its manufacturing, wants to move material by rail.
 
"One of the conditions is that there was a (rail) spur line going into the property," said Barbeau. "We signed a long-term lease with the OVR. We invested the money to build it, we own it, and we have a real interest in that line continuing."
 
Canadian Pacific (CP) owns the 550-kilometre-long track between Sudbury and Smiths Falls in eastern Ontario. It leases the line to Rail America, a Jacksonville, Florida-based operator of 40 North American regional and shortline railways, including Rail Link, which provides locomotive power for the OVR.
 
Last summer, CP pulled its eastbound cross-Canada freight off of the OVR, and diverted it south at Sudbury, through Toronto. With little traffic left to replace that lost volume, car loads recorded by Rail America on the OVR dropped from 4,307 in December 2008 to only 738 in December 2009.
 
The only local shipper is Tembec which rails forest products from its Temiscaming (Quebec) pulp and paper mill.
 
It caused Rail America to terminate its lease with CP starting with the shutting down of service on the most eastern portion of line between Smiths Falls and Camspur (near Petawawa).
 
In a 18 Dec 2009 release, Rail America said it is continuing to operate the CP-owned track between Sudbury and Mattawa "until dates in 2010 to be determined by CP."
 
Mike LoVecchio, CP's media relations manager said the search is on to find a new operator to take control of the track between Sudbury, Mattawa, and the branch line to Temiscaming.
 
"We do not anticipate any trouble in finding and assigning a shortline operator."
 
LoVecchio said CP will begin advertising for the western stretch of the OVR to find a replacement operator. He emphasized CP has no intentions of a takeover operation of any part of the OVR.
 
CP would not divulge when a new shortline operator will be in place.
 
"I'm not one in my job that I can rely on these verbal assurances when OVR-Rail Link has made it clear they want to pull out," said Barbeau.
 
He met with CP officials in January where they mapped out the ramifications of the Rail America announcement and the possible scenarios, but he has heard nothing since from CP on any possible new operators.
 
"We're not privy to those negotiations with potential suitors to assume that line," said Barbeau. "What surprises me is that it's not promoted and marketed more as a line."
 
Barbeau said while CP simply made a business decision last summer to re-route its freight off the OVR, the same move could happen elsewhere in the region.
 
"There is a risk to all of Northern Ontario by having these rail lines downsized or rationalized."
 
Barbeau said rail access is a great economic development tool for communities to have. It's why the municipality continues to maintain a highway railroad crossing leading into the former Weyerhaeuser containerboard property in the remote chance they could land another major industry.
 
In March, community leaders in eastern Ontario were urging the provincial government to start flowing infrastructure dollars to keep shortline railways maintained and viable.
 
But Queen's Park and Ottawa have been slow to sign a base funding agreement, which would free up $175 million, some of which would go to shortline railroads.
 
A similar situation is unfolding with the Huron Central Railway, operating between Sault Ste. Marie and Sudbury, where the Montreal shortline railroader is waiting on $30 million to upgrade that track.
 
The railroad is continuing to operate under a one-year temporary arrangement, which expires in mid-August, pending the release of infrastructure money.
 
Ian Ross.