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Friday, November 13, 2009

Closed rail spur hurts progress

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A nine-mile spur prevents a key West Feliciana Parish industrial site from linking to the remaining 2,900 railroad miles in Louisiana - and to business beyond the state, industry leaders claim, local media report. The spur runs west from Slaughter in lower East Feliciana Parish, crosses U.S. 61 at Delombre and enters West Feliciana Parish shortly before reaching the Renew Paper mill on the Mississippi River.

Known as the "Zee" Spur for its former service to what was once a Crown-Zellerbach mill, the track saw operations suspended after Renew Paper's predecessor, Tembec, closed in 2007 as the final customer on the line, a spokesman for Canadian National Railway's U.S. operations confirmed.

"It's not abandoned," CN spokesman Patrick Waldron said. However, the track sustained damage from Hurricane Gustav in 2008, and improvements are needed at road and bridge crossings, he said.

Meanwhile, Renew Paper's chief executive, Allen Byrd, said the mill that's now operating at between 40 percent and 50 percent capacity expects to approach full capacity in the next several months. More capacity means Renew Paper must sell more paper and container products to customers farther away, he said.

When Renew Paper begins engaging customers more than 500 miles away, something that could happen by year's end, rail shipments would be more cost-effective than truck shipments, Byrd said. Former operators of the mill divided shipments about evenly between truck and rail, he said.

The state struggled for two years to recruit a new mill operator at a time when forest products plants were closing throughout the country because of pressure from imports, higher operating costs and lower demand in the recession - so curtailing costs is a key to industrial success.

In addition, West Feliciana recently was eliminated, in part because of no rail service, from consideration by a major industrial employer, one that considered locating near Renew Paper, said Steve Jones, who heads the West Feliciana Community Development Foundation. The prospect is still looking at other sites in Louisiana, he said.

Both Jones and Byrd said CN claims the repairs could cost $2.5 million.

"From a business point of view, I can see (CN) saying, ‘If we're going to spend $2 million, we need to get a return on our money,'" Jones said. "That's logical. But at the same time, there doesn't seem to be any haste to do anything."

Waldron wouldn't confirm the $2.5 million figure but didn't dispute it. Asked what it would take to resume service on the Zee Spur - state or local assistance, federal transportation or economic development grants, matching business investments - he didn't offer a remedy.

"That's a difficult question to answer," Waldron said. "I can just tell you what its status is now. We are willing to talk to anybody and talk about future business, but at this point we don't have anything there and there's not a timeline for restoring its service."

An irony, Jones said, is that CN also operates the railroad running south from Slaughter through downtown Baton Rouge, on to New Orleans and connecting with the former Illinois Central line to Chicago, assets it picked up in a 1998 merger. The downtown Baton Rouge rail right-of-way contains disputed development rights the city-parish is attempting to acquire with state help for the Alive project. The development rights have been a point of contention there for years.

"They're just very slow to respond," Jones said. "They have been slow to respond in resolving issues with the city-parish and the state on the park."

About the downtown Baton Rouge project, Waldron said, "We do believe a resolution will be reached, and it won't be an issue."

But he said he could forecast neither a timeline nor a possible outcome on the Zee Spur.

Rail service also helps Renew Paper because it can load railcars for two to three days before shipping, Byrd said, while tractor-trailers arrive at the mill expecting quick turnarounds every 30 minutes to an hour. Renew Paper and CN have been in discussions since June about the costs of reopening the nine-mile track, he said.

"That's what it boils down to: How does the $2.5 million get paid?" Byrd said. "It's a business discussion. ... We envision having rail to this site again. The two parties just have not been able to make a lot of progress on the negotiations."

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