The other pretty red trains

While MetroRail seems to get all the attention, Capital Metro’s freight rail operation is in line for some national recognition. The partnership between our freight line, known as the Austin Western Railroad, and freight customer Capitol Aggregates is a nominee for Argus Rail Business’ 13th annual Win-Win Award. More on the award in a moment.

First, here’s how our freight system works. When the MetroRail trains are tucked safely away at our rail maintenance facility, our freight contractor operates along the 162-mile line between Giddings and Llano. We deliver and receive rail cars to and from our freight customers and connect with the UP and BNSF railroads. Our freight line carries aggregate for concrete and road building, lumber, granite, paper and more.

Historically, our freight direct operating expenses have exceeded the revenue generated. But not anymore. Capital Metro, Austin Western Railroad and Capitol Aggregates collaborated to come up with creative solutions that allow rail growth, reduce highway congestion and generate revenue.

In March of last year, we signed a four-year “take-or-pay” agreement to ensure a guaranteed amount of freight car shipments and a guaranteed amount of revenue. Basically, we promise we can move 40,000 freight cars for Capitol Aggregates per year, and they pay a guaranteed minimum amount whether they end up needing 40,000 cars moved.

What does this mean for you? First, you can rest a little easier knowing that the freight revenue covers the operating costs and has the potential to exceed operating costs. Second, if we move at least 40,000 freight cars per year, that’s the equivalent of 160,000 trucks that would be sharing the highways with you and polluting the air if we weren’t carrying the freight.

Now back to the award. Argus Rail Business’ 13th annual Win-Win Award recognizes, “railroads, shippers and organizations that develop innovative partnerships leading to improved service, efficiency and other mutually beneficial service advancements.”

The sounds like the perfect description of our deal. The winner will be announced at the North American Rail Shippers Association’s annual meeting in Washington, DC on May 27.

3 thoughts on “The other pretty red trains

  1. Matt

    Were you historically operating freight rail at a loss in the first place? Not only does it take trucks off roads, but I assume it would cost far less for businesses to use freight vs truck.

  2. Pingback: The fate of freight « Capital MetroBlog

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