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Thinking Outside the Box
 

Thinking Outside the Box

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Presented by Dan Sabin, Iowa Northern Railway

Presented by Dan Sabin, Iowa Northern Railway

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    Thinking Outside the Box Thinking Outside the Box Presentation Transcript

    • Iowa Northern Railway Company Presentation to Iowa DOT-DED’s Moving Iowa Forward April 24, 2012 1
    • Moving Iowa Forward April 24, 2012 2
    • Iowa Northern Philosophy• Run the Company like a business, not like a railroad.• Encourage customers to grow their business with great service and fair, competitive freight rates.• Create new business.• Be the solution.• Tap the strengths of each rail connection.• Empower employees to do their best in safe and creative ways.• Support the State and Communities served.• Take some risk.• Facilitate new industries and growth.• Be easy to do business with.• Repeat, don’t act like a railroad. 3
    • Iowa Northern Railway Company• IANR covers North Eastern Iowa with 195 route miles• Sabin Group acquired the line in 1994 with about 15,000 revenue cars handled• Should hit nearly 65,000 carloads in 2012 4
    • Iowa Northern Railway • IANR is a unique short line with multiple rail connections providing independent access to North American Rail System. • Nearly 1 billion bushels of corn within its market area. • Cedar Rapids processors need 350 million bushels of corn annually, about 1 million per day. • Aggressive in economic growth and development in market area. • Averaged 18% annual growth between 2003 and 2011, despite two years of major flood recovery. 5
    • IANR has multiple railroad connections with BNSF, CN, CP, IAIS (through CIC) and UP 6
    • The Company’s Current Markets• Grain• Ethanol• Wind Components• Machinery• Chemicals• Fertilizer• Bulk Products• Food Products• Bio-Mass• Distillers Grains• Corn Oil• Trans-load Commodities 7
    • Originally just a grain hauler, IANR elevators haveincreased volumes of grain from 230 cars per month in 1994 to nearly 2,000 per month today. 8
    • Grain Traffic• IANR will handle nearly 27,000 carloads of corn, soybeans and oats in calendar year 2012 compared to 10,500 carloads in 2001. Most of the traffic moves to Cedar Rapids, providing high utilization of hopper cars.• If Cedar Rapids was an independent nation, it would rank third in the world in the importation of corn, behind only Japan and Mexico. 9
    • IANR’s Grain Market 10
    • Ethanol Related ProductsIowa Northern has grown from zero carloads of ethanol related products in 2005 to16,000 annual car loads in 2011. 11
    • Three large fertilizer terminals have beenestablished along the line with more planned 12
    • Iowa Northern Wind Energy Business• IANR wind component distribution center at Manly is the largest in North America.• Future wind business is contingent on extension of tax credits for wind energy. 13
    • IANR handles Wind, Ethanol, Corn Oil, feedadditives and Chemicals at Manly Terminal 14
    • IANR provides rail to truck transload service at severallocations, with new infrastructure at Waterloo and Manly 15
    • Bryant Yard Trans-loading•Base customer trans-loading food grade and industrial starch.We are also handling other food grade traffic.•Two new reload spurs have been built adjacent to IANR’s BryantYard in Waterloo to provide the ability to grow the business.Additional commodities: Powdered clay, tomato paste,magnesium chloride, lube oil, bentonite clay. 16
    • IANR provides container handling service for inbound wind components at Manly 17
    • IANR delivers John Deere Tractors fromWaterloo to UP at Cedar Rapids and Manly 18
    • What’s new at IANR? 19
    • Continued upgrading of the Railroad 20
    • Acquisition of Non-Powered Slugs to reduce emissions and fuel burn 21
    • Forest City-Belmond Line Saved the line from abandonment 22
    • Iowa Northern is pleased with initial traffic volumes of the 30 mile Garner Subdivision Acquisition• Purchased the line from UP and started operations in November, 2011 as a joint venture with the community.• IANR expected losses for the first year of operations—modestly profitable from the start.• More traffic handled in first month than the line handled in the past five years.• Averaging nearly 100 loads per month in first five months of operation—corn and fertilizer.• The line is well suited for industrial growth.• A gateway for a new market territory for IANR. 23
    • Bio-Mass Material• Regulators will require at least 10-20% biomass fuel for coal burning power plants and a whole new industry is developing to convert crop waste into all types of fuels.• Iowa Northern has approximately 12 million tons of excess crop waste within 30 miles of the line, providing an opportunity to generate up to 75,000+ carloads annually.• Biomass will provide exceptional new revenue base to farmers.• Biomass products could be the next major commodity handled by railroads. 24
    • Future Plans • Butler Logistics Park • Manly Logistics Park • Garner-Forest City Logistics Park • Palo Logistics Park 25
    • Manly Logistics Park will be the major logistics campus in the State of IowaManly Logistics Park UP Spine Line UP connection to Manly Yard Manly Terminal 26
    • Manly Logistics Park• A major development adding 162 acre park dedicated to reducing costs to shippers in North Iowa and Southern Minnesota• Breaking ground this summer• Sand drying and transfer station• Trans loading facility for misc. commodities including lumber, machinery, distillers grains, edible beans, stuffing containers• Steel Distribution Center-Steel coils and plates inbound by rail, outbound by truck to Midwestern markets• Cold storage and freezer warehouse of major size with rail cross dock• Substantial intermodal facility for Northern Iowa-Southern Minnesota 27
    • Base case issues• IANR receives regular inquiries for rail service to supplement or replace current moves of freight by truck, particularly to Texas, Mexico and California.• Northern Iowa-Southern Minnesota is major origination area of agricultural, food and manufactured goods with heavy daily volumes to California, Texas and Mexico, both for domestic consumption and export.• Dray access to existing intermodal terminals is very expensive to Northern Iowa-Southern Minnesota shippers with outbound- inbound imbalance of 10 to 1, requiring higher dray costs for one- way loaded moves. The Twin Cities, however is a larger consumption area to create inbound-outbound load balances for the region as a whole.• The Upper Midwest does not have efficient access to good intermodal service to many desired markets.• Existing intermodal service in the region is not geared for Texas- Mexico-California, so rail is not an option for most shippers. 28
    • A new intermodal terminal for Northern Iowa and Southern Minnesota• Manly is an excellent location for a new intermodal facility in an untapped market territory. The Upper Midwest area is truck oriented without suitable direct intermodal service to Texas, Mexico and California.• Upper Midwestern dray costs are too expensive to existing intermodal facilities, so trucks retain almost all of the market to California, Texas and Mexico.• MLP is close enough to the markets to be the immediate solution for significant intermodal business with a high consumption point in the Twin Cities Metropolitan area and high product origination in Northern Iowa and Southern Minnesota.• With the lack of intermodal facilities in the region, Manly could become a favorable railhead funnel from a large gathering area.• IANR can work closely with connecting lines to develop a strong feeder volume into their existing intermodal networks. 29
    • Manly is a strategic location for a new Intermodal Terminal 30
    • TWIN CITIES Highway Miles Manly To: WINONA Waterloo 94 ROCHESTER LA CROSSESIOUX FALLS Rochester 95 Minneapolis 124 Winona 125 MANLY Des Moines 130 MASON CITY La Crosse 145 Cedar Rapids 148 Dubuque 177 WATERLOO DUBUQUE SIOUX CITY Sioux Falls 214 Sioux City 223 Davenport 229 CEDAR RAPIDS Omaha 265 DAVENPORT DES MOINES OMAHA 31
    • High dray costs from the area currently preventsshippers from conversion of their freight to rail Manly based trucking support would lower dray costs between MLP and the Twin Cities providing greater volume Mason City, IA to: Highway Miles Est. Cost Per Mile Est. Dray Cost Minneapolis 138 1.75-2.50+FS 250-550 Rochelle, IL 305 2.50+FS 1,048 Kansas City 462 2.25+FS 1,430 Chicago 350 2.50+FS 1,203 Joliet 358 2.50+FS 1,230 Council Bluffs 247 2.50+FS 850 MLP 12 Hourly 75 32
    • Property currently available and under IANR control UP Spine Line 33
    • MLP layout design with intermodal facility includedSand Processing Steel Distribution Loop Track Intermodal Facility Trans-Load Tracks Cold Storage Warehouse & Cross Dock • Major cross dock and warehouse operation planned adjacent to potential intermodal site, allowing consolidation, stuffing and heavy containers. Steel distribution facility adjacent to cross dock. • Major truck base planned near MLP. 34
    • Where do we go from here? www.iowanorthern.com 35
    • Hawkeye Express, LLC was founded to handle 5,000 footballfans to Kinnick Stadium on each game day.30,000 fans handled during the 2011 Football Season. 36