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Railway agreement yielding new business

The City of Prineville Railway has benefitted from a marketing lease with American Railroad Group


by: CENTRAL OREGONIAN FILE PHOTO - The City of Prineville Railway has gained some new lumber shipping business since joining forces with Tom Foster of American Railroad Group.

When the City of Prineville Railway began 2014, it possessed an upgraded state-of-the-art facility complete with a new freight depot and remodeled junction.

The next step railway staff wanted to take was marketing the facilities, which drew rave reviews from customers, to businesses throughout the nation and not just the region.

To take that step, they entered a marketing lease agreement with Tom Foster, or American Railroad Group, who possesses decades of railway experience and business contacts. Six months since that relationship began, Foster attended a Prineville City Council meeting to update officials on the progress of the new agreement.

One strategy involving an Arizona lumber company, empty railcars from Texas, and local wood manufacturing plants has resulted in five new cars per month on the railway, an approximately $3,000 boost in monthly income.

Foster explained that he and city railway operations manager Matt Wiederholt initially tried to ship wood from a lumber company in White River, Ariz., but the deal fell through. So they worked with another company in Arizona to see if they would be interested in a transloading agreement in which they would bring the wood into the Prineville facility, and then warehouse it until it was shipped to the next destination. Such an agreement required COPR to convince Union Pacific to provide the Arizona company a reduced shipping rate.

“I knew for a while that coming up from Texas up into Oregon was a lot of empty center beam cars,” Foster said of the rate reducing strategy. “As a result, we talked with UP (Union Pacific), Matt built a relationship, and we talked about backhauling loads from Arizona up to here and either using the cars here or repositioning them into the lumber business on Coos Bay rail line or the COR (Central Oregon Pacific Railroad).”

While the deal benefitted the local railway in adding $3,000 of new business, Wiederholt highlighted another gain from it. Since the railway was bringing in wood from Arizona that would be purchased by local wood products companies, they were able to ship to those local companies by rail for the first time in at least a decade.

“We brought the track up to local businesses on service three weeks ago,” he said. “The significance for me is we are hitting the old new customers, getting the guys on our railroad some new market shares.”

Although Foster has utilized his experience and connections to bring new business to the railway, he said he has spent most of his time mentoring Wiederholt so he can do more of marketing work on his own.

“I think it is so important to small railroads to be able to understand how marketing fits operations,” Foster said. “My overall goal to start with was mentor Matt and come up with some projects or issues where we could talk together and make something work.”

Going forward, Foster and Wiederholt hope to lure business from a plywood mill in Sheldon, Wash., that is looking to change locations, and perhaps secure a warehousing deal with a Wisconsin-based company.

“We are going to look at car repair facilities,” Foster added. “We have great shops that can be used for that ... There is going to be a gigantic amount of car repair business in the next five years.”



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Prineville

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  • 20 Nov 2014

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  • 21 Nov 2014

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