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Coronavirus outbreak results in reduced rail shipping traffic, but uptick in railcar and warehouse storage

JASON CHANEY - Railcar storage has picked up considerably since the COVID-19 outbreak and has provided a steady source of revenue for the City of Prineville Railway. The railcars are stored on abandoned rail lines.

At first things didn't look so good for the City of Prineville Railway.

The COVID-19 pandemic had forced numerous closures or dramatic changes to businesses in Oregon and across the country and it looked like the local facility would feel the change.

"I was really nervous when this first started and people started staying home to protect themselves," Railway General Manager Matt Wiederholt admits. "The first week and a half, we saw a huge decline. Nobody was doing anything through our facilities. Rail traffic just came to a crawl."

But it turns out, the business activity decline was only temporary and new forms of business were about to pick up momentum as different clients adjusted their plans in the face of the pandemic.

"I think everybody kind of settled in. Things have changed," Wiederholt said. "Before, we were doing a lot of cross-docking – from one mode of transportation to another (such as rail to truck). Now, they are utilizing more long-term storage. They are loading up our storage in the warehouses because of the uncertainty of when (the outbreak) will end."

Wiederholt added that overseas suppliers may see a longer downturn than those in the U.S., so those companies in particular are stocking up on inventory.

"We have become very busy through the warehouses and inbound inventory, especially inventory that came from overseas."

Not only are the railway's warehouses filling up, their abandoned rail lines where they offer railcar storage are as well. Wiederholt they are seeing "a very large and aggressive increase in railcar storage." They have brought in 250 additional cars with room for more.

"We have about 27,000 lineal feet available for storing cars."

Both forms of storage are providing the railway a steady source of income, which has helped offset some significant declines in other forms of business. Wiederholt notes that three businesses along the railway have postponed expansion plans that would have increased revenue. In addition, the railway was going to transport 79 pieces of military equipment on 47 flat railcars to a large-scale training event in California and bring them back to Central Oregon at the end of May.

"Of course, when social distancing hit, that was quickly canceled," he said.

The expansions and the military training transports were big deals, Wiederholt said, and were expected to provide the railway revenue through the summer. Now, because of the changes brought about by the COVID-19 pandemic, he expects railcar counts to be depressed.

"But we will make up that difference with the railcar storage," he said, adding that revenue streams for cross-docking and warehouse storage are essentially the same.

"It has just shifted," Wiederholt said. "It has just been a change of business."


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