Acadian Railway Company - Interview

I conducted a short email interview with the Acadian Railway Company's promoter, Peter Swire.

A: The rail renaissance in the Acadian Peninsula is not a whimsical notion of playing with HO scale trains. Based on 8 trips to the region meeting with 23 businesses, over a dozen Mayors, the representatives of local planning and economic development organizations, it is patently clear that an independent shortline railway can be constructed and operated with sufficient returns justifying the investment.

In essence, the railway development will see new construction using 132# CWR throughout and new locomotives connecting Caraquet, Shippagan and Tracadie. In addition, two spurs will connect two ports to daily rail service. Rail connection to Lameque Island will be handled through a rail barge. Complimenting the rail structure will be a small station (head office) and an inter-modal transloading facility in Caraquet's Industrial Complex.

A: Immediately following the passage of Bill 36, An Act to Amend the Shortline Railways Act, a new provincial railway company under the name "The Acadian Railway Company Inc" and its French equivalent will be incorporated.

A: An undertaking of this magnitude will require a significant capital investment. The financing for the railway will come from a limited number of private equity investors including some of the better known pension funds.

A: As we outlined in our December 6th press release and in our December 7th meeting with several Cabinet Ministers in Fredericton, the Acadian Railway Company did not request any form of capital or operating subsidies from the government. The railway development must be able to stand on its own two feet from the get go.

A: The impact on the trucking industry will be two-fold.

Firstly, we need to acknowledge the natural advantage that trucks are ideally suited for short haul movements. They are also well suited for LTL shipments as well. Rail is better suited for the intermediate movements and those where dimension and weight is a concern. With this in mind, I can see a loss of longer haul freight off Highway 11 and 113 numbering in the thousands of existing and potential truckloads. However, when you consider the efficiency of labour and capital in the Acadian Peninsula, I would expect more commercial activity would require a significant number of shorter haul just in time movements from the planned inter-modal and transloading facility to the shipper.

Secondly, one of the facts of life in the Acadian Peninsula is that it is more remote than the big three southern cities and is only serviced by one principal two lane highway. Between the cost of fuel and the spring thaw conditions, the railway development may be seen as a gracious way for some truckers to redeploy their assets in the south.

I see the relationship with the trucking interests as being mutually supportive.

A: The Railway's marketing strategy is like a three legged stool. The first leg is to provide an outbound daily service to the various peat producers. Outside of the cost of processing and bagging peat moss, freight is the largest S,G & A cost. The second leg is to provide regular service for inbound semi-finished steel products and outbound fabricated goods. The area is well known for its expertise in manufacturing. The third leg is to assist in the attraction of new businesses into the Peninsula by providing scheduled daily freight services. Several businesses were looking to expand in the region only to be turned away due to the absence of rail. I am aware of a number of opportunities which could land very quickly once the railway is being constructed.

A: During construction, my best estimate is about 1400 man years. Once in operation, the direct salaried work force should number about 20 persons. The indirect workforce, those who maintain the signals, clear the snow and brush, etc. will likely number a further 100 persons. One of the things that you need to keep in the back of your mind that for every job employed in rail, you should look at a further 2 other jobs in other sectors.

A: Our timeline calls for the presentation of the definitive business plan to our funders as early as late this spring. This document will contain everything from funding needs, route determination, marketing strategies, projected financials, letters of support from scores of businesses and local governments, environmental impact statements and so forth. Most of this material is already in our possession.

A: The intended route, while still being analyzed, takes a more or less cross country route from Gloucester Junction to Caraquet where it would re-join the former right-of-way. There would be major spurs connecting the yard at Caraquet Industrial Park to nearby port facilities. Service from the Lameque Island will be achieved by using a rail barge to a rail spur at Caraquet.

A: The only way you can make a go of a service business is "to serve". From the onset of operations, there will be five days per week service over the entire system. Where demand warrants, a second turn is possible weekdays.

A: We are presently in discussion with three suppliers for locomotives. Our preference is clearly new units as they will require less maintenance and offer significant fuel savings. Further, in an era of a wider sensitivity to climate change, a Tier 2 emissions standard is mandatory. Given the fact that the assets will be required for a long period of time, it only makes sense to own these units. As for the definitive make and model, I believe that we are about a month away from that decision.

A: As with the locomotives, they too will be both new and owned. Our original compliment should be about 100 cars and there are clear indications that we would need to add about 50 cars per year to the roster.

A: At one presentation, I was asked that exact question. While the system could easily handle a passenger operation, that is not the motivator for the railway. A senior executive with the Tex-Mex Railway was quoted in the 1980's as saying that operators should look at passengers as self loading and unloading freight. With this in mind, your costing perspective changes. It should be noted that the area is not serviced by rail or bus so all transit is by personal automobile. If someone wanted to run a service, I have done some estimates on what a break even would look like using new self-propelled passenger cars.

A: Railways are coming back into vogue with a youthful vengeance. Between the issues of greenhouse gases, highway congestion and high fuel costs, railways make good business sense. Based on the indications of shippers thus far, I have no worries that the project will not succeed!