DENVER — OmniTRAX recently announced the Winchester & Western Railroad will be the latest short line railroad to join the OmniTRAX roster, giving the Colorado-based railroad company access to industrial markets in Virginia’s Shenandoah Valley and throughout the Northeast. Combined, the Winchester & Western adds 100 miles and approximately 26,000 carloads to OmniTRAX’ portfolio, including 53 miles on its Virginia Division and 47 miles on its New Jersey Division.
OmniTRAX’ $105 million acquisition of the Winchester & Western is expected to close during the third quarter of 2019 and is subject to federal review. The WW operates in Maryland, New Jersey, West Virginia, and Virginia.
Trains News Wire spoke with OmniTRAX CEO Kevin Shuba on the acquisition and what it means for the shortline railroad business.
Q. What are some of the first priorities OmniTRAX will implement with the WW acquisition?
A. The customers are always our first priority when we make an acquisition, and that’s certainly the case with the WW acquisition. We will work hard to enhance service to existing WW shippers and will aggressively seek out new partners that can benefit from WW’s expansive reach. We will also work to quickly and effectively integrate the local teams into the OmniTRAX family in a way that only a national rail operator can do. By that I mean we have completed about 10 acquisitions in the last six years, so we know what works and what doesn’t when bringing a new line onboard.
Q. Where does the new leadership team see the greatest avenue of growth for this short line property? Is there a specific commodity or industry that stands out to the OmniTRAX team?
A. The Winchester & Western is located in one of the strongest logistics hubs in the world and already services several great shippers like Covia, which is a long-time partner, so we feel we have a running start at helping the line to achieve its full potential. There are great opportunities with world class companies like Procter & Gamble, which is building a state-of-the-art mega factory on the rail line in Martinsburg, W.Va., that will service the Northeast and beyond. Cementos Argos, one of the largest cement distributors in the hemisphere, has a strategic US facility on the line.
Plus, there are dozens of other consumer packaged goods, glass, industrial sand and other manufacturers and logistics companies looking to locate on one rail line or the other. When you add the fact [that] these are business friendly states, it really is an exciting opportunity.
Q. Will there be any major changes to the current operating structure of the railroad?
A. When OmniTRAX acquires a new property, we combine our national logistics and operating best practices with local expertise, experience and engagement. We don’t have a cookie-cutter approach that could leave the railroad short on institutional knowledge but rather customize the operational upgrades that we know will add efficiencies. Following our takeover of the Brownsville & Rio Grande International Railway five years ago, for instance, the senior management stayed on and continues to both incorporate learnings from our other lines on activities like strategic supply chain solutions and industrial development, while sharing their successes on international trade and port-driven operations.
Q. How is this railroad property different from other short line railroads in the OmniTRAX portfolio?
A. First and perhaps foremost, the WW is very complimentary to our existing network, giving us access to a new geographic area that is one of the most densely populated markets in North America, with 40 percent of the U.S. population within a one-day rail trip. Like many of our other lines, WW is served by two Class I railroads, Norfolk Southern and CSX, which is very important because it gives our shippers options. Options increase efficiency and that’s a benefit to everyone.
WW does have a different and more diversified commodity mix than many of our current lines. The shippers on the WW, both current and potential, will be very interested in our comprehensive first mile/last mile supply chain solutions that were developed in transportation hubs like Chicago and perfected for optimal customer engagement.
Q. Any major changes planned to the WW brand, such as personnel changes, or repainting or re-branding of equipment?
A. The WW is a storied brand with more than a century of history. Our approach is to retain institutional knowledge where possible and use the local colors and the local branding to maintain the well-earned community connections. While some of our locomotives do have OmniTRAX logos, the railroads we operate still run with their traditional colors.
Q. Can you tell us a little more about OmniTRAX’ precision scheduled short line railroading? Precisely, how are you applying the Class I PSR methods to the short line model?
A. At OmniTRAX, we aren’t implementing what is popularly known as Class I Precision Scheduled Railroading. Instead, we are the first in the short line industry to develop and implement what we call Precision Short Line Railroading or PSLR. While both PSR and OmniTRAX’s PSLR drive value for the customers we jointly service, PSLR goes a step further and enhances performance for the Class I railroads we connect with.
At the base of PSLR is asset utilization and optimizing throughput at interchanges, most often with Class I railroads, every single day. PSLR also recognizes that achieving Class I levels of traffic density at most shortline railroads is not possible due to carload volumes, and takes into account each specific customer’s facility capacity, turnaround time per railcar, and carload volume to determine their specific requirements. Each customer’s information is then layered together to form a PSLR Operating Plan that maximizes asset utilization through consistent volumes. This results in optimized locomotive utilization, a crew scheduling plan that ensures a balanced workload and customers receiving predictable and consistent service.
The OmniTRAX team believes that service is our product and that customer experience is of the utmost importance. We consider every minute important when it comes to a customer’s products on our railroads. With OmniTRAX’s PSLR, shippers get the best service experience they have ever had, while we ensure the safety of their products and on-time delivery of their cars each and every day.
A couple of good questions were missing in this interview.
– Why did Canada not support OMNITrax on the Churchill line? After they refused to provide funding and you walked away, they immediately came up with $4M CAD to a new owner to fix it.
– Did OMNITrax look at the Iowa Pacific property in upper New York (Tawanus) for the rare earth extraction from the mines? What were the drivers that made it unsupportable? Lack of public support, lack of consistent ownership (public and private?)
– Why was the sand and gravel company in Texas so delayed in getting OMNITrax spooled up for unit sand trains? The hoppers & engines sat waiting and then you walked and abandoned.
– Are there anymore short line opportunities left in the US? Did OMNITrax pursue any of the CSX properties “for sale”