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Iowa Interstate Railroad invests millions in fleet


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A poor economic climate and high gasoline prices have kept one segment of the transportation industry on track and moving right along.

“The railroad industry is on very sound economic footing,” said Kelly Donley, vice president of communications for the Association of American Railroads. “The railroad companies are able to capitalize on the cost of shipping goods, because it is so much more efficient by rail. With fuel prices, it has made a lot of shippers look freshly at railroads and how efficiently and effectively they can move goods.”

Iowa Interstate Railroad Ltd. (IAIS) President Dennis Miller echoed Donley, claiming the railroads’ lead in the transportation industry happened just five years ago.

“The rail industry went through some kind of a renaissance about five years ago when the price of oil started to rise,” he said. “When fuel started to rise, we saw more trucking companies come to the rail. More shippers elected to ship products by rail rather than truck. It’s been a very good five years.”

Donley and Miller said one ton of freight can be transported 436 miles on just one gallon of fuel when moved by rail, and Miller noted that an average train from the Quad Cities to Chicago pulls approximately 10,000 to 12,000 tons of freight.

“Railroad is the most efficient means,” Miller said.

Recently, IAIS made a multimillion-dollar investment that Miller said will make hauling freight even more efficient; IAIS purchased 12 brand-new General Electric Evolution Series locomotives. The new GE ES44AC locomotives, which cost $2.5 million each, are 18 percent more fuel efficient than other alternatives that IAIS looked into. Miller said one of the new 4,400-horsepower units will pull a train equivalent to what two or three of its current units can handle.

“The main reason we bought them was because just looking at the volume of business that we currently run, it made sense to go with the higher horsepower, newer locomotive, versus buying 20 to 30 used locomotives that burn more fuel,” he said.

As a result of the purchase, IAIS has upgraded its fleet from secondhand locomotives only to a mix of new and used.

“We just sold five older ones and added 12 new ones, and eventually will go from a fleet of 40 to 26,” Miller said, noting that a brand-new locomotive pulls nearly three times as much freight as a used one and will last a long time.

“They last years and years and years,” he said. “They never die.”

Miller explained that a new locomotive can last more than 50 years before it is torn down to the frame, refurbished and used again, pointing out that the IAIS has never before invested in new locomotives, at least during his tenure.

“For that amount of money, I hope it is not too often,” he joked.

As of last week, IAIS had five GE ES44AC locomotives in service and had just received its sixth. Miller said the locomotives, which are built in Erie, Pa., are sent to Kansas City after they are manufactured to get painted, and from there, are sent to Davenport to be inspected and put into service.

“We hope to have all 12 here within the next three weeks,” Miller said.

However, investing in costly locomotives isn’t just an Iowa thing, Dunley explained.

“All of (the railroads) are rotating them into their networks just as fast as they can,” Dunley said. “There is probably a backlog in locomotive production.”

But when asked whether IAIS had to wait to receive its new locomotives, Miller said it actually received its shipment earlier then planned. He said that because IAIS was requesting such a small number of locomotives, GE Transportation Systems just tacked the order onto a larger CSX Corp. Inc. order.

“(GE Transportation Systems) might have had a couple hundred that they were building (for CSX), so building 12 more wasn’t an issue,” Miller said.

However, Miller said that with the demand for rail transportation increasing, he believes that a backlog of production is not an unlikely scenario.

Donley believes that the heightened demand for rail transportation could lead to an even bigger problem: limited rail capacity.

“On the horizon what’s looming is the demand for freight transportation, which is expected to rise by 88 percent between 2001 and 2035,” she said. “And railroads will soon reach a tipping point in terms of rail capacity. So they will need to invest substantially to expand their infrastructure, and that is a challenge.”

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