Businesses feel left out as railways shift trains toward frac sand, oil madison wisconsin business news host.madison.com chapter 7 electricity

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Max Ericson estimates poor rail service cost his Ericson Logging and Trucking, which is located along a Canadian National Railway line in Minong, about 10 percent of his income last year. “I order probably 30 cars a week, and I’m lucky if I get one-half that many,” Ericson said.

This spring, Ericson said, he lost $15,000 because rail service he requested never arrived to haul a huge load of timber that was cut for him in Bayfield County. “They had to haul it someplace else because we didn’t have the (rail) cars to haul it,” Ericson said.

Brancel said Canadian National and Canadian Pacific, the other Canada-based railway that serves the state, have pulled cars out of Wisconsin and across the international border to avoid fines imposed by their government if they don’t move a required amount of Canadian-grown grain each week.

“Those railroads are moving cars and their locomotives out of the U.S. and into Canada so they don’t get the penalties, and it puts us even shorter,” said Brancel. “It’s a long-term strategy that we in North America must work on. Decisions they make in Canada impact us and our ability to move products.”

A spokesman for Canadian National — one of three major railways that service Wisconsin — said it did move some cars from the United States to Canada this summer to handle its extra workload during its peak season, but those rail cars have all returned to the United States. “CN’s Canadian movement has not affected its ability to handle traffic in the U.S.,” spokesman Patrick Waldron said.

Wisconsin’s sand and North Dakota’s oil have boosted demand for cars in those places so much that rail shipping costs have soared more than 500 percent to around $4,600 per car, according to a grain transportation report issued this month by the U.S. Department of Agriculture.

Mongeau also wrote in his letter to the Surface Transportation Board that Canadian National has invested $2.1 billion this year to improve its rail system to meet customers’ growing demands during the challenging winter months. He said Canadian National will have added 140 locomotives into service by the end of this year, along with a large number of rail cars.

Deliveries of propane for residential and commercial uses in Wisconsin, as well as coal to the state’s power plants, are already behind schedule, and that could cause problems for the upcoming winter if the weather is as cold and snowy as it was last year, said Bill Oemichen, the president and CEO of the Cooperative Network, which represents approximately 600 cooperatives in Wisconsin and Minnesota.

Another propane price spike similar to last year — a gallon of propane jumped from $1.25 to nearly $5 — is possible because a quality remedy hasn’t been found for the pipeline closure that was partly responsible for last winter’s shortages, Oemichen said. The quality or lack of rail service will help determine how much the price jumps, he added.

As the fall harvest continues, Midwestern grain farmers are casting a wary eye on the railways’ promises that they will be able to handle what are expected to be bumper crops of corn and soybeans. A silver lining for Wisconsin is that most of the grain grown here goes to in-state dairy cows and ethanol plants, so its farmers aren’t as dependent on rail as states like Minnesota and South Dakota.

“We’re moving cheese to the West Coast to go to Asia. We’re moving wood products from northern Wisconsin to Asia. We’re moving micro-nutrients that are being created and processed in Milwaukee to the East Coast for Europe,” he said. “They all move by rail, and they are challenges that need to be met.”