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IN THE NEWS

The following article appeared in the Chicago Tribune on January 5, 2001, about the Illinois Railnet.

Riding the rails
January 5, 2001

BY MAURA WEBBER

Children aren't the only ones running pint-sized railroads these days.

Ted Bissen, vice president of Ottawa-based Illinois RailNet, does everything from lowering the bridge over the Illinois River to dusting snow off the rails of the company's 57-mile link between Montgomery and Streator.

"My wife says it's my second childhood," Bissen said. "My favorite time is about four o'clock in the afternoon on a perfectly sunny day when you've got a lot of cars behind you, and you can feel the power of the engine and the beauty of the day."

Bissen's RailNet line is one of an estimated 500 or so short and regional rail routes that crisscross the country. Even as the industry has undergone consolidation, smaller lines have broken off from major carriers after deregulation in the 1980s made it easier for larger companies to sell off less-trafficked track segments.

While the romance and history of the short lines might appeal to rail buffs, these lines are by no means toys. With estimated sales of about $3.2 billion annually, U.S. short lines play a vital role offering alternative transportation along which businesses can send products and ultimately link up with major carriers.

Some believe the smaller rails are doing their job so well that larger companies probably will feel comfortable selling off more segments to cut costs without fear of losing access.

"We've had pretty good success with the short lines out there," said Frank Turner, president of the American Short Line and Regional Railroad Association. "Eventually the [larger railroads] will spin off more of their secondary main lines."

While there is no precise definition of a short line, for accounting purposes short lines are considered to be those lines with revenue under $20 million, while regional lines have revenue between $20 million and $250 million, according to the association. The largest railroads, known as Class 1, have revenue above $250 million.

In part, because short lines have lower overhead costs and fewer unions, they can provide service at lower cost. However, Turner said their revenue is also lower. Short and regional rail lines earned about $60,000 in revenue for each mile of their track in 1999 while the industry's biggest made $269,000, Turner said.

To offset the lower sales, many short lines are reaching out to develop new customers for rails and capitalizing on their existing local connections by providing better service. The short lines are equivalent to the retailers of the industry, often providing the last stretch of track needed to reach a warehouse or industry door.

"Without the little guys to hand stuff off to, customers really don't have much," said Karl McDermott, vice president of National Economic Research Associates, a White Plains, N.Y., consulting company.

The Shortlines of the Chicago Historical Society Web site counts about 21 short lines and small industrial lines in the region. Illinois' smaller and regional lines take a wide range of forms.

Some are only a few hundred feet long, owned by a single company and used infrequently. Others like the Belt Railway Company of Chicago are heavily used and co-owned by six railroad holding companies that share the cost. Still others are owned by larger companies like Peoria-based Pioneer Railcorp, which has acquired more than a dozen lines since the company was formed in the 1980s.

A. Finkl & Sons, a steel manufacturer on Chicago's North Side, owns one of the tinier tracks. The company has two approximately 350-foot-long strips of rail that connect its property to the Canadian Pacific Railway, said Robert Ladevich, A. Finkl's director of energy and planning. The company uses its rails once or twice a week to bring scrap metal into the plant or to ship out heavy moldings, he said.

By contrast, Chicago's Belt Railway is one of the grandest of all short lines. It runs on 28 miles of mainline route and more than 300 miles of switching tracks. Its switching terminal, known as the Clearing Yards and located just south of Midway Airport, was built in the late 1800s, and is the busiest in the nation, said Tim Coffey, the Belt Railway's general counsel. Each year, Coffey said, the Belt Railway switches more than 1 million train cars onto different lines, and another million cars go over its tracks.

"Everything meets here," Coffey said.

But Illinois Railnet might be the romantic image that most rail buffs think of when they dream of short lines. It was formed in 1997 when its parent company, Bedford, Texas-based North American RailNet Inc., purchased the Montgomery-Streator line from what is now Burlington Northern Sante Fe Corp. A second 23-mile stretch between Rochelle and Rockford was added later.

Ted Bissen, now 56, a former manager at Burlington Northern, came out of retirement to seize the opportunity to run Illinois Railnet for North American RailNet, which owns five other short line railroads.

Now Bissen oversees a railroad with 14 other employees from his Ottawa office in a renovated brick railroad depot built in 1917.

On Mondays and Thursdays, Bissen leaves his office and walks two blocks to the Illinois River, where he lowers the bridge so a train can pass over the river to deliver lumber and an ingredient for manufacturing glass to businesses in Streator.

The RailNet short line is appreciated by such companies as U.S. Silica Co., a Berkeley Springs, W.Va.-based company that operates one of the world's largest sand mines in Ottawa.

Rail transport is crucial to U.S. Silica's business because trucks can cost as much as four times as much to carry the sand to some locations, said Jerry Calkins, a customer service manager at U.S. Silica. Without RailNet's link to Burlington Northern, U.S. Silica might not be able to reach its customers in California and Mexico economically, he said.

Above and beyond the logistics, customers say good short lines are impressive for the accessibility and personal passion demonstrated by the people who run them.

"When you're dealing with a short line, they're your right hand," said Tom Mitropoulos, vice president of transportation for the Wedron Silica Co., based in Wedron, which ships about 5,000 train cars of silica sand along Illinois RailNet a year. "If nobody's around, Ted will jump on a locomotive and take care of business."

Maura Webber is a Chicago-based business writer.

***

TRACKS OF HISTORY

The O'Hare of trains. In 1882 John B. Brown, a real estate magnate, recognized the need for a terminal railroad in Chicago. In four years, a series of connecting railroads formed a belt line linking every major railroad in the city. Today the Belt Railway Co. of Chicago claims to be the busiest switching terminal in the country.

Disaster strikes. In 1887, a train wreck on the Toledo, Peoria & Western killed 81 and injured more than 300 people in Chatsworth, Ill. That line is now owned by Boca Raton, Fla.-based RailAmerica Inc., one of the largest owners of short lines.

A presidential run. The normally freight-toting Elgin, Joliet & Eastern short line dispatched a special passenger train on June 3, 1903, to carry President Theodore Roosevelt from Aurora to Joliet, for a school dedication. Metra is now considering running passenger service along the line.


2000 JGKirchner
Revised January 05, 2006