MATC Fall Lecture Series: Dan Sabin
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MATC Fall Lecture Series: Dan Sabin

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MATC Fall 2012 Lecture Series

MATC Fall 2012 Lecture Series
Sponsored in part by Union Pacific
http://matc.unl.edu/education/fall-lecture-series-register.php

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MATC Fall Lecture Series: Dan Sabin MATC Fall Lecture Series: Dan Sabin Presentation Transcript

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  •  Formed from liquidated Rock Island main line, on February 22, 1984 Purchased from on-line elevators and Iowa-Electric Power in November, 1994 IANR covers North Eastern Iowa with 195 route miles 4
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  •  IANR is a unique short line with multiple rail connections providing independent access to North American Rail System. Aggressive in economic growth and development in market area. Averaged 18% annual growth between 2003 and 2011, despite recession and two years of major flood recovery. 6
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  •  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. 8
  •  Grain Ethanol Wind Components Machinery Chemicals Fertilizer Bulk Products Food Products Bio-Mass Distillers Grains Corn Oil Trans-load Commodities 9
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  •  In a normal crop year, nearly 1 billion bushels of corn is grown along the IANR. IANR will handle nearly 22,000 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. 11
  •  IANR will miss about 6,000 carloads of corn in 2012 that would have moved in a normal crop year. This will reduce IANR revenues by about $4 million. 12
  • Iowa Northern has grown from zero carloads of ethanol related products in 2005to 14,000 annual car loads in 2011. 13
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  •  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. 16
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  • Bryant Yard Trans-loading•Two new reload tracks have been built adjacent to IANR’s Bryant Yard inWaterloo to provide the ability to grow the business. Additional commodities:powdered clay, tomato paste, magnesium chloride, lube oil, bentonite clay. 19
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  •  Major bridges at Waterloo and Cedar Rapids destroyed by flooding, cutting IANR into two separate segments. Lost traffic and additional costs of $800K per month. Included 150-300 mile detours. Line was segmented for 18 months. Long term flood mitigation efforts will continue for decades. 23
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  •  Purchased the line from UP and started operations in November, 2011 as a joint venture with the community. Absorbed into base operations. 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 ten months of operation—corn and fertilizer. The line is well suited for industrial growth. A gateway for a new market territory for IANR. 27
  •  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, equivalent of 75,000+ carloads annually. Biomass will provide exceptional new revenue base to farmers. Biomass products could be the next major commodity handled by railroads. 28
  •  Butler Logistics Park Manly Logistics Park Garner-Forest City Logistics Park Palo Logistics Park 29
  •  A major Industrial development expected to exceed 300 acres . Site of future rail yard and locomotive shop. Two new industries breaking ground in Q4 2012 30
  • Manly Logistics Park UP Spine Line UP connection to Manly Yard Manly Terminal 31
  •  A major development adding 162 acre park dedicated to reducing costs to shippers in North Iowa and Southern Minnesota 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 32
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  •  Iowa is the largest egg producing state, as well as high volumes of meat and poultry products, processed foods. Iowa lacks appropriate and efficient access to intermodal, particularly Texas, Mexico and California traffic lanes. High fuel surcharges are hurting competitive access to Northern Iowa-Southern Minnesota producers. New facilities are planned to accommodate the massive volumes of dry and refrigerated-frozen food products on Northern Iowa and Southern Minnesota. 34
  •  Iowa is a small consumption state, so it has a severe imbalance of inbound vs. outbound containers. According to US Census Bureau Data, the 2011 ratio of non-bulk international commerce in Iowa is 1:3 inbound to outbound. This creates a severe shortage of empty containers available to Iowa producers for loading. Empty containers must be shipped or ―drayed‖ into Iowa to meet demand. Minnesota’s international commerce is opposite that of Iowa. The 2011 ratio of non-bulk international commerce in Minnesota is 6:5 inbound to outbound. Taking a regional approach with consolidation of the two states provides an almost even match of 7.2 : 7.6 inbound to outbound. A new, efficient intermodal terminal in North Central Iowa can draw inbound and outbound container loads from a widespread region including the Northern half of Iowa and Southern Third of Minnesota. Minnesota lacks direct intermodal service to/from Texas/Mexico and California which can be provided through a north Iowa facility. 35
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  • Sand Processing Steel Distribution Loop Track Intermodal Facility Trans-Load Tracks Cold Storage Warehouse & Cross Dock  Additional transload tracks, a major steel distribution center, refrigerated-freezer cross dock and warehouse operation planned adjacent to intermodal site, allowing consolidation, stuffing of heavy containers.  Major truck base planned near MLP. 37
  • Nearly 20,000 Revenue Cars Annually 38
  • About 6,000 Revenue Cars Annually 39
  • 100000 90000 80000 70000 60000 50000 Carloads 40000 30000 20000 10000 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 40
  • 3500000030000000250000002000000015000000 Revenues10000000 Opr Expenses EBITDA 5000000 0 41
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  • 35,000,00030,000,00025,000,00020,000,000 Revenue Cash Expenses15,000,000 Net Cost Capital Spending10,000,000 EBITDA 5,000,000 0 43
  • Revenue Cars Per Crew Start25201510 5 0 44
  • 80000 400070000 350060000 300050000 250040000 200030000 1500 Rev Cars20000 1000 Crew Starts10000 500 0 0 45
  • 1,000 2,000 3,000 4,000 5,000 6,000 8,000 9,000 7,000 0 10,000 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Flood 2008 Flood 2009 2010 2011 201246
  • 10 15 20 25 30 0 5 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Gallons Per Revenue Car 2006 2007 Flood 2008 Flood 2009 2010 2011 Proj 201247
  • 100 200 300 400 500 600 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Fuel Burn Per Crew Start 2006 2007 Flood 2008 Flood 2009 2010 2011 Proj 201248
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  •  Slugs placed in service on the North End with 24/7 operations, slow orders and work at every station. Expanding slug fleet from 2 to 6 units. Payback in 10 months in fuel savings. 51
  • Iowa Northern continues to upgrade its line andprovide more capacity for growth. Will have spent over $100 million along the line by 2015. 52
  •  Critical to operations and industrial development. Relocated elevator tracks to eliminate route conflict. Tracks 7-12 in place. Tracks 2-6 under construction. Lights added for night crew safety and security. New car repair facility is open. 53
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  • 80706050 Total Miles40 Slow Orders 12/1030 Slow Orders 9/122010 0 Cedar Rapids Sub Manly Sub 56
  •  Total investment 2008-2012 42.67 miles cwr $12.75 million. Derailment Cost Avoidance  Since 2001, Annual Derailment Costs / Mile  CWR Caused Derailments - $0 / mile  Non-CWR Caused Derailments - $ 1,921 / mile  With 42.6 miles of CWR this equates to an estimated annual cost avoidance of $81,834. Fuel Savings & Speed Improvement  Based on GPS and fuel data before and after installation of 16.5 miles of CWR in 2011 & 2012  67% increase in average speed (From 10.39 – 17.34 mph)  Saved 4.21 gal / mile (From 10.16 – 5.95 gal)  At current diesel price of $3.34 / gal this equates to an estimated annual fuel cost savings of $437,244 for the entire 42.6 miles of CWR IANR operate two trains per day.  Other benefits to quantify-crew starts, increased track capacity, locomotive utilization and costs, rolling stock utilization and costs.
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  • IANR employees are pretty good at building newtrack. 61
  • Train Cost Average Total Cars Miles Pct ofYear Incidents Cost cost/inc Handled Operated Revenue2000 18 461,124 25,618 23,766 79,970 8.42%2001 26 566,424 21,786 24,758 81,587 9.63%2002 28 411,413 14,693 25,531 85,823 6.41%2003 16 39,447 2,465 26,174 91,418 0.62%2004 27 56,906 2,108 28,931 91,218 0.79%2005 21 30,383 1,447 31,608 95,103 0.35%2006 29 482,541 16,639 39,240 105,449 4.15%2007 47 861,907 18,338 43,926 133,913 5.47%2008 53 177,967 3,358 45,416 144,546 0.99%2009 51 313,095 6,139 43,913 143,692 1.87%2010 55 877,160 15,948 57,831 184,385 8.14%2011 45 209,970 4,666 59,074 194,440 0.79% 62
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  • IANR has 26 locomotives on line to absorb short termgrowth. Use of Class I power will increase with run-through trains. 64
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  • IANR Leadership•IANR providesmomentum and directionin logistical solutions thatcannot be matched bylarger, cumbersomeorganizations.•IANR can work closelywith connecting lines,existing and newcustomers to beresponsive to thecustomer’s needs on a realtime basis.•All Departments areresponsible for IANR’ssuccess.•Field authority forservice needs. 67
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  • dsabin@iowanorthern.com 70