Rail Upgrades Key For Rural Economic Growth

This week’s Courier Herald column:

The effort to fix metro Atlanta’s transit governance issue received a lot of public and press attention during this legislative session. When a problem almost a half century in the making is solved across party lines and with support of urban and rural state leaders, it’s a success that is worth noting.

The transportation issues of rural Georgia were not ignored during this session of the Georgia General Assembly, even if they received a bit less fanfare. The challenges are different, and the problems that leaders must solve are unique in rural Georgia and metro Atlanta. Because of how we move our people and goods through the state, however, the two remain inextricably linked.

In metro Atlanta, the transportation problem is congestion. In rural Georgia, the issue is one of access and economic development.

The transit governance bill for metro Atlanta wasn’t the only major bill to improve Georgia’s transportation infrastructure this year. House Bill 735, sponsored by Representative Patty Bentley (D-Butler) provides a 50% tax credit for maintenance and upgrades of Georgia’s short line railroads.

Let’s be honest. That description doesn’t lend itself to sensational headlines. Some perspective is in order.

The success and growth of Georgia’s ports has long been documented. The Port of Savannah is the largest container facility on the East Coast and is expected to double in size again over the next decade. The containers that move through the port arrive one of two ways: by truck or by train.

The Ports Authority has been investing heavily in upgrading their rail capacity to move more of their goods via rail. It helps them to extend their reach well beyond Georgia, but also helps to keep the additional truck traffic on Georgia’s roads to a minimum.

Port officials broke ground on a new rail terminal at the end of March that will increase the efficiency of rail operations. They’ll have the capability to simultaneously load trains of 10,000 feet in length – almost two miles. They estimate this will take over 200,000 trucks off of Georgia’s roads every year.

They are also adding to the number of “inland ports” that are multi-modal transfer stations from rail to truck, to allow more of Georgia to be connected to the ports via direct freight rail. The first of these stations is in Cordele Georgia, with the second opening in Murray County late summer or early fall.

What does this have to do with incentivizing the investment of short line rail operations? Short line railroads are the small rail operators that serve local communities. We’re not talking about CSX or Norfolk Southern here – the national carriers that operate long haul freight corridors.

Short line rail roads are the last mile of service. They’re the ones that often determine if a rural community has access to rail – and if that rail service is effective and competitive.

Georgia’s short line rail system has not kept pace with upgrades at the ports nor of the larger rail network. Some operate at speeds as little as 10 to 15 miles per hour, based on track layout and conditions. For shipping some raw materials this speed of operation makes sense, but to make communities served by these rail systems more competitive for a wider range of industries, upgrades are demanded.

The need for improvements was one of the main recommendations from the House Rural Development Council, a two-year study committee project chaired by Appropriations Committee Chairman Terry England and Ways and Means Chairman Jay Powell. It should be noted that the committee is bi-partisan in practice. Representative Bentley, the short line bill sponsor, is a Democrat.

The tax credit allows the smaller rail operators to receive half of their investment for upgrades back, but is capped at $3,500 per mile. Thus, the state is providing an incentive while ensuring that the operators put their own skin in the game.

The desired result is that more of Georgia will be able to tie directly in to the success of Georgia’s ports in Savannah and Brunswick, as well as the network of inland ports planned around the state. The faster these “last mile” rail networks reach the standards of the main line carriers, the sooner all of Georgia has the same access and opportunity to leverage the investments made at the ports.

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FreeDuck
FreeDuck

Looks like progress.

Ellynn
Ellynn

Could this apply to the ‘last mile’ to private warehouses, agro usage, factories, ect?

Mr. Bear
Mr. Bear

The Bill First Reader Summary includes this phrase: “so as to create an income tax credit for expenditures on the maintenance of railroad track owned or leased by a Class III railroad.” The Surf Board rates various railroads in terms of revenue, with Class III being the lowest revenue at lower than $20 million per year. Typically, these are lines that were originally branches of larger railroads. I suppose that you could make a “last mile” line into a Class III, perhaps by having rolling stock that is in interchange service with other railroads, thus giving you the necessary revenue.

Ellynn
Ellynn

I ask, because companies in Wisconsin have off shoot lines to places like paper mills, plywood yards, large grainers, dairies, Kolher, Quad/Graphics – that were originally owned by Soo Line, Wisconsin Central or CN that were sold back to the companies in the 1980’s. A lot of these lines connect or go directly through interior warehouse space, so they can load in the winter. Some still own private cars the can be hooked up to CN engines out of the 5 yards still connect to the lines. SO as this reads, the company would have to have at least a… Read more »

Mr. Bear
Mr. Bear

This kind of a cross-reference thing. To qualify for funding under HB735, you have to be a Class III railroad, but to be a Class III means that you have also passed other regulatory hurdles. A lot of plants have local switchers to move cars around the company facility but they don’t go out of the plant area. It doesn’t even have to be a locomotive doing the switching; it could be a tractor or front loader, even elephants. I’m sure that there are other criteria to become an operational railroad working in interchange service. Granted, there are people out… Read more »

Dave Bearse
Dave Bearse

There are about 1,300 shortline railroad route miles in Georgia. GDOT owns about 500 route miles that it leases to shortlines (though I think some of the track is out of service). Shortlines own and operate about 500 miles, and shortlines lease and operate about 300 miles from Class I RRs CSXT or NS. GDOT map of Georgia Railroads here: http://www.dot.ga.gov/InvestSmart/rail/Documents/Freight/GeorgiaRailroadMap-2013-14.pdf (The map is a few years old. There have been a few changes mainly involving shortlines—for instance “mom and pop” RRs, HOG RR and Georgia Northeastern RR, have become subsidiaries of shortline RR holding companies. I think GDOT is… Read more »

Mr. Bear
Mr. Bear

Railroads, by their nature, are conservative institutions, regardless if they are Class I, Class III, government operations, private enterprise. Railroads don’t pick up their routes and move someplace else. Railroads pay taxes on their rights of way and equipment. The right of way is EVERYTHING; if the tracks are bad, even the most modern locomotive cannot operate properly. HB 735 recognizes that. But another issue is at play here also. After over 100 years of Federal oversight by the Interstate Commerce Commission, the railroads are freer to explore business models and options. It has taken years for railroad executives who… Read more »

augusta52
augusta52

We might actually be talking about CSX here—sort of. CSX has downgraded its Atlanta-Augusta line (which I believe was the first rail entry into Atlanta, in 1845—the old Georgia Railroad), not a top speed line like their line through Athens or their routes in southeast Georgia. Going back and forth between the two cities occasionally on the old 278 (that parallels I-20), I have almost never seen any train on that line. CSX is in a downgrading mood for some of its lines (lighter-used stretches such as Dothan-Montgomery or Jacksonville-Mobile), which CSX late CEO Hunter Harrison was looking into before… Read more »

Mr. Bear
Mr. Bear

Supposedly, the Atlanta – Augusta line, the former Georgia Road, was maintained to improve speeds after Hunter Harrison came in. What may be happening is that you are seeing fewer trains, but those trains are considerably longer than before. Harrison was all about keeping trains on the move and out of terminals. One part of this philosophy has been that Tilford Yard, the major CSX yard in Atlanta, has been decommissioned, with most structures being demolished. Much of the Florida to Midwest traffic has been rerouted through Birmingham, but the Atlanta to Chattanooga line still sees trains, just fewer and… Read more »