In the Corn Belt, ethanol plants are served by both Class I main line railroads and smaller Class II and Class III railroads. According to the Midwest Regional University Transportation Center, federal guidelines define Class II regional railroads as those that operate at least 350 miles of track and generate at least $40 million in gross revenue. A Class III short line railroad might be a local carrier that operates on less than 350 miles of track or might be a switching or terminal railroad that transfers cars between Class I connections and local shippers.
The existence of viable short line and regional railroads is due in large part to the Staggers Rail Act of 1980, which helped to rescue a nearly bankrupt railroad industry. According to the Federal Railroad Administration, the Staggers Act de-regulated the industry, allowing railroads to sell unprofitable lines to smaller railroads. The result is many more short line and regional railroads offering services, but also a set of Class I carriers that focus on optimizing their businesses to handle growing global trade volumes. For Class I carriers, optimization means shipping ethanol in 80- to 110-car unit trains instead of smaller train lengths.
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More Horsepower
The demand for unit trains has led one Iowa-based railroad to upgrade its infrastructure and equipment. Iowa Interstate Railroad Ltd. (IAIS), based in Cedar Rapids, a subsidiary of Railroad Development Corp. of Pittsburgh, Pa., recently received a $31 million loan from the FRA’s Railroad Rehabilitation and Improvement Financing program to help with the purchase of 12 new 4,400-horsepower General Electric ES44AC Evolution Series locomotives, which have allowed the railroad to increase train lengths, tonnage and operating speeds in its service to ethanol plants along its line. The new locomotives are 18 percent more fuel efficient than alternatives and comply with all of the latest U.S. EPA requirements. The railroad received the new locomotives in the fourth quarter of 2008.
The IAIS main line runs 552 miles from Council Bluffs, Iowa, to Blue Island, Ill., a suburb of Chicago. IAIS branch lines include 43 miles from Bureau Junction, Ill., to Peoria, Ill.; 14 miles from Altoona, Iowa, to Prairie City, Iowa; 11 miles from Rock Island, Ill., to Milan, Ill.; and six miles from Oakland, Iowa, to Hancock, Iowa. The railroad has connections with the entire Class I railroad system, giving ethanol producers the ability to ship and receive goods to or from anywhere in North America. The railroad provides intermodal facilities at Blue Island and Council Bluffs and also at West Liberty and Newton, Iowa. The IAIS offers access to the Mississippi River and Illinois River terminals for rail-to-barge or barge-to-rail service.
IAIS expects to move approximately 1 billion gallons of ethanol per year from ethanol plants along its line by the end of 2010. The ethanol plants that are currently producing along the IAIS line include the 37 MMgy Penford Products Corp. ethanol plant and the 420 MMgy Archer Daniels Midland Co. ethanol plant in Cedar Rapids; the 110 MMgy Hawkeye Renewables ethanol plant in Menlo, Iowa; the 100 MMgy ADM plant in Peoria; the 160 MMgy Aventine Renewable Energy Inc. plant in Pekin, Ill.; and the 100 MMgy Patriot Renewable Fuels LLC plant in Annawan, Ill. The ethanol plants under construction along the line include a 275 MMgy ADM expansion in Cedar Rapids and a new 110 MMgy Southwest Iowa Renewable Energy LLC ethanol plant in Council Bluffs. IAIS also serves Renewable Energy Group Inc.’s 30 MMgy Central Iowa Energy LLC biodiesel plant in Newton.
There are 3,969 miles of track in Iowa. According to the Iowa Department of Transportation Office of Systems Planning, Class I railroad service in Iowa has declined from nine carriers in 1985 to four. The number of Class III railroads has remained steady at 12 and the number of Class II railroads has increased from one to three. The Class II and III railroads account for 35 percent of track mileage in Iowa, but only 9 percent of ton-miles and 13 percent of freight revenues. The number of cars pulled per locomotive in Iowa increased from an average of 23 cars in 1985 to 32 cars today.
With 20 percent of its traffic hauling ethanol and DDGS from plants along its line, the IAIS is significantly invested in ethanol, according to Dennis Miller, president and chief executive officer for IAIS. “Iowa Interstate has seen a lot of growth in that area over the past three or four years,” Miller says. “We have hauled ethanol here out of Cedar Rapids for over 20 years, but the past three or four saw some new plants being constructed on our line. What we have seen is, rather than these things moving in carload lots, we’re moving more unit trains of ethanol to destination. Those are 80-car, 110-car units going to California, New York and New Jersey. It has been a pretty good traffic boost for us. And
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