Capital Metro and Watco Companies sign great new deal for freight rail

Just before Christmas, Capital Metro and Watco Companies Austin Western Railroad LLC (AWRR) finalized a new agreement for freight service along the Giddings to Llano rail line owned by Capital Metro. The Giddings to Llano line is a total of 163 miles long and includes the 32 mile MetroRail Red Line.

Allan Roach and Linda S. Watson shake hands after signing the five-year agreement.

The Capital Metro board approved the agreement on Dec. 21, and Freight Rail Manager Charlie DeWeese, CEO Linda S. Watson and Watco Companies Senior Vice President of Business Development Allan Roach spent the remainder of the afternoon finalizing the details so they could ink the deal. Both parties had a considerable incentive to finalize the agreement before the end of 2010 so that AWRR can file for federal 45G tax credits as part of the new tax deal worked out between Congress and President Obama. By agreement, Capital Metro could receive an estimated $600,000 of the total tax credits AWRR qualifies to receive. Happy Holidays, indeed.

Aside from the potential tax credits, the agreement itself is a great deal for both parties, and it was all smiles when Allan Roach and Linda Watson signed the contract. The five-year deal is good for Capital Metro because it ensures that the freight operation makes money for Capital Metro, and that during the life of the contract, all direct expenses  and a significant contribution to capital and allocated overhead costs are covered by the freight operation and AWRR. In essence, we are leasing our freight line to AWRR, and they are assuming the risks of securing freight business, buying fuel, etc.

The deal is good for AWRR because they have an opportunity to make money also, by growing the freight business. The agreement gives them more latitude to apply their own business model and bring in considerable expertise from throughout the country to increase business. As Allan mentioned, “This new agreement further encourages AWRR to provide maximum value to AWRR, Capital Metro and the city of Austin and surrounding area.”

The agreement is also a great deal for Central Texas, as the AWRR takes about 100,000 big rig trucks off the highways in our area each year. That means safer and less congested highways. With an anticipated increase in freight business over the life of this five-year deal, even more trucks will be removed from our roads.

Finally, there’s one other reason we can all celebrate the good partnership we’ve developed with Watco Companies, Herzog, and the freight shippers in the area: together we’ve created and implemented a plan that has allowed for freight rail operations and MetroRail service to successfully coexist on the same tracks. The AWRR has moved the same amount of freight in half the time, and they’ll have to get even more efficient as MetroRail service expands in the future. The whole country is interested in the model we implemented because shared tracks is a much more affordable option than building a separate commuter rail line.

Here’s to five more years of success!

5 thoughts on “Capital Metro and Watco Companies sign great new deal for freight rail

  1. chrysrobyn

    Is it fair to say that “100,000 big rig trucks off the highways in our area each year” means to say “100,000 big rig trips off the highways in our area each year”? Each truck could take multiple trips, so the difference is tangible. If I’m correct, Watco uses trains to replace an average of 274 trucks every day. If we assume they have 8 hours to run — 8pm to 4am for example — that’s less than 35 trucks per hour but that’s not exactly fair since most trucks don’t run during that time frame. Averaged out over 24 hours, that’s less than 12 trucks per hour.

    I don’t think 12 trucks per hour is going to make a big impact on the amount of surface streets we won’t need to expand because the trains are helping out so much. I hope we can make some conclusions about the amount of pollution or even CO2 we’ve saved but when you factor in loading and unloading, I’m not sure. I truly expect the trains are safer than the trucks.

    This quantity of freight doesn’t seem to be an effective way to attack slowing road expansion, reducing MoPac and I-35 traffic, or our growing air pollution problems. Something tells me “the remainder of the afternoon” wouldn’t fix the problems the Red Line has, let alone other more far reaching issues CapMetro has, but I’d be far more interested in a CEO who can delegate the “small stuff” so she can concentrate on the bigger issues.

    1. yes, it should have read “100,000 big rig truck trips”–that is what is being referred to here.

      And you are right, expansion of the whole transportation network to accommodate growth is the reality. Increasing freight train activity is one piece of it, and studies have consistently shown that movement by rail is much safer than trucks and better for the environment (even considering loading and unloading).

    1. Erik

      I’d wager not much. More freight runs and extra “commuter” trips equates to an ever-growing cost of maintenance moving forward. The added federal cash plus the increased profits from freight usage will undoubtedly go towards repairing the bridges named in the Sunset report, among other cost-intensive realities facing CM.

  2. RWILL

    If they want to make money then they need to expand the schedule for all stops and add feeder lines not add more freight on possible commuter lines. That is the only way Cap Metro Rail and maybe CapMetro will survive.

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