Persistence pays off: this railroad constantly seeks business opportunities through communication with customers, Class I's, and communities

Railway Age, April, 2008 by Douglas John Bowen

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Solicit opinion from Class I railroad partners, farm cooperatives, intermodal operators, and local municipalities in Minnesota, and the praise for Twin Cities & Western Railroad Co. is robust, almost unstinting. "You won't make the wrong choice in selecting them as [Short Line] Railroad of the Year. They are well deserving of it," said Craig Hebrink, CEO of Renville, Minn.-based Co-op Country Farmers Elevator, in a testimonial submitted to Railway Age.

Adds Jim Curtiss, mayor of the city of Montivideo, Minn., "The TC&W has quickly become an important part of our community," stressing "what once was an almost dead railroad has now blossomed into an active and important part of the region's economy."

Said another business familiar with TC&W, requesting anonymity, "It's one of the least bureaucratic railroads we've ever dealt with."

Such testimonials make a powerful collective argument for the choice of the innovative short line as Railway Age's 2008 Short Line Railroad of the Year.

Cliched shorthand would simply say the TC&W "is open for business." President Mark Wegner doesn't select that phrase while interviewed, but he does make it clear that TC&W will examine any and all opportunities, and do what it can to capture them.

Backhauls are one such opportunity. North America's Class I's, along with international shipping lines, have been plagued by the need to backhaul empty containers, due to the growing U.S. appetite for consumer goods and the relative lack of manufactured goods, or other products, destined for export. Coal traffic aside, conventional wisdom often holds that the U.S. is still No. 1 in exporting "wheat and waste"--but not much else.)

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TC&W has ignored such "wisdom." Given the chance to fill containers for export, CP, TC&W, and RailRunner worked "to establish marketing for products to Asia and a supply of empty containers at Shoreham Yard for loading," says Cythia L. Pratt, CP's manager-regional carriers. "Almost all of our container traffic to the Twin Cites are loads inbound from Vancouver [British Columbia], resulting in empties outbound. This idea offered a natural backhaul for the container shipping companies and CP."

In 2007, TC&W dispatched its first all-rail container movement, carrying soybeans, from Montivideo, Minn., to Vietnam, via CP's Shoreham Yard. Volume now is three or four 18-car container trains per week; daily operation could occur sometime this year, Wegner says. He also notes that Asia isn't the only destination; TC&W hands off agricultural product containers to CP bound for Montreal and, eventually, European markets.

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Nor is CP the only TC&W Class I connection. The short line also connects with UP in the Minneapolis-St. Paul area, and "has worked extensively" with CP, UP, and BNSF "to set up unit trains of coal, ethanol, and DDGs, enabling the Class I's to pass along those economics to TC&W customers.

Commencing operations on July 27, 1991 on the former "Ortenville Line" operated by Soo Line (now Canadian Pacific), TC&W today owns 146 route-miles of track, and operates over 229 route-miles canvassing agricultural counties in Minnesota and South Dakota. Reflecting its territory, the railroad's traffic base includes fertilizer, grain, soybeans, sugar, beat pulp pellets, beans, and canned vegetables--and, by extension and of recent note, a surge in ethanol moves tied to the U.S. energy picture.

But TC&W isn't solely an agri-carrier; other traffic includes lumber and forest byproducts, crushed rock, and coal. And, Wegner notes, TC&W remains open to the idea of hosting commuter rail service to Minneapolis and St. Paul, both as a potential business venture and as another way of demonstrating its commitment to surrounding communities. "We encourage it, because we think it's a good use of an asset that exists," Wegner says. "If communities want it, we want to work with them."

For now, TC&W is a freight-only railroad, and freight is where the growth is. In 2007 the short line handled roughly 19,100 carloads, about double its 1991 freight volume, and up 1,000 carloads, or 5%, from year-earlier levels.

TC&W's value to Class I's comes in large measure from its ability to generate backhaul movements, filling containers originating from overseas. In concert with North Star Rail Intermodal, LLC, the TC&W claims to oversee "the only independent, all-rail service in the agricultural center of America." A transload site, leased by TC&W to North Star, handles various grain products, including soybeans and distillers dried grains (DDG), a byproduct of ethanol manufacture. North Star utilizes 89-foot container fiat cars, along with technology from Lexington, Mass.--based RailRunner, to move product 130 miles to CP's Shoreham Intermodal Terminal in Minneapolis.

TC&W works with three Class I partners, though Wegner allows that, to date, CP "has been our primary partner since day one. We work closely with them to develop opportunities. They've been very proactive." With CP handling routes to Chicago and throughout Canada, "there are opportunities elsewhere that, obviously, we can't get to." CP facilitates TC&W's input through what Wegner describes as "excellent liaisons. A person can get lost real easily in the Class I building."