Canada's Short-Line Rails Fight for Survival

GLIDING in from the west on the train tracks to Truax, Saskatchewan, the big blue beast is at first just a large spot on the horizon.

A horn blast rolls across the fields. Only when it draws closer is it clear that this is no ordinary train. A gush of pressurized air hisses as it brakes to a stop by the grain elevator.

The cab door opens and out swings a smiling Paul Beingessner, president of the Southern Railways Cooperative, one of just two short-line railroads in Western Canada, and the only one in Saskatchewan. And this, he says, is the ideal vehicle for a tiny railroad like his.

With its front tires raised high on hydraulic arms, and the rear tires that propel it squatting on the tracks, this truck-locomotive hybrid can haul 14 20-ton grain cars to a main line. When the front tires are lowered, the locomotive becomes a truck that can be driven onto the highway. This is perfect for hauling a few dozen grain cars each week, says Mr. Beingessner, who operates two 25-mile sections of track separated by 100 miles of highway using the same locomotive.

Tiny short-line railroads are slowly popping up where the giant Canadian Pacific and Canadian National railways have long reigned. With clever technology and local farmers hired to help with track maintenance, Beingessner's railroad can operate at less than one-half of what it costs the two big railroads annually. He estimates that the same 50 miles of track his co-op now operates would have cost Canadian Pacific and Canadian National $1 million (Canadian; US$765,500) annually. His own costs? About $500,000.

There are eight Canadian short lines, compared with 500 in the United States. More are on the way, mostly in eastern Canada where economic pressures, including trucking competition, are greatest, forcing big railroads to prune thousands of miles of unprofitable track.

Operating from his Truax home, Beingessner does it all: He pays bills, lobbies government, works on the track, and hauls grain cars to the main line. There are two full-time employees. ``Nobody but the farmers want us to continue providing this service,'' Beingessner says. ``The railroads would like to see this track abandoned. So would the grain cooperatives. But without us, farmers would ... have to haul their crops for miles and some wouldn't make it [financially].''

Given their eastern focus, executives at Canada's big railroads probably never dreamed of the sort of short-line railroad that appeared in 1989 in Truax (population 35). Local farmers were stunned when, in the early 1980s, Canadian National announced it would abandon the 25 miles of track between the towns of Parry and Avonlea, which runs through Truax. Canadian Pacific also said it would cut service on another nearby 25-mile section of track.

Farmers from both areas fought to keep the rail lines. By 1989, about 120 farmers had paid $50 each to join the co-op and had agreed to take out a $600,000 loan to buy the two 25-mile sections of track at scrap value to start Southern Railways.

Yet with government budgets tight, Ottawa is weighing legislation to cut $590 million in railroad grain carriage subsidies. The majority of funds used by the short-line railroads as well as the larger ones come from the federal government. Cutting the subsidy might pinch the big railroads, but would likely shut down the highly subsidized Southern Railways, Beingessner says. For the government to do so would be penny wise and pound foolish, he says.

``We're costing the taxpayers far less than what the government was paying when the big railroads ran these lines,'' he says. ``Who will pay for the destruction of the roads ... once these heavy grain trucks destroy them? The farmers will pay with higher taxes.''

Thomas Payne agrees. Hundreds of miles northwest of Truax in Stettler, Alberta, Mr. Payne runs the Central Western Railway. It was Canada's first short line, formed in 1986 with 104 miles of track, two locomotives, and seven employees. Today, it has four locomotives, 245 miles of track, and 20 employees. It, too, depends on government subsidy for survival.

``We are making the nation's system more efficient,'' Payne says. ``We have customers coming back to us by the hundreds. There can be no doubt that we've dramatically lowered costs.''

Not everyone is a believer in short lines, however. Railroads are dragging their heels in selling more track to short lines in the West because they want them only when they serve their own purposes and don't compete directly, Bein-gessner says.

But B. C. Scott, a Canadian Pacific spokes-man, denies that. ``We are a firm believer in the value of short-lining,'' Mr. Scott says. Large grain companies also scoff at the notion that short lines are money-savers, saying taxpayers would save money if farmers trucked grain directly to large elevators on main rail lines.

``Those two short lines exist on government handouts,'' says a spokesman for United Grain Growers cooperative, one of Canada's largest grain elevator operators. ``They have a lot of local support.... But they're not adding efficiency to the system.''

Grain elevator companies, the short-line executives say, want to eliminate small-volume elevators to boost their economies of scale at big new elevators.

``Certain people are anti-short line,'' Payne says. ``But I believe there's a good future in short lines because ... railroads and the government are going to be forced by economics into changing to short lines.''

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