Slump in Oil-by-Rail Shipments Boosts Car Storage Business

New tank car safety standards coupled with a slump in oil-by-rail shipments are causing headaches for many in the railroad business, but for a struggling scenic railroad in the Adirondacks and other short-line operators, they may bring salvation.
Slump in Oil-by-Rail Shipments Boosts Car Storage Business
In this August 8, 2015 photo, seldom-used railroad tracks owned by Iowa Pacific Holdings vanish into the Adirondack forest in Newcomb, NY. AP Photo/Mary Esch
|Updated:

TAHAWUS, N.Y. — New tank car safety standards coupled with a slump in oil-by-rail shipments are causing headaches for many in the railroad business, but for a struggling scenic railroad in the Adirondacks and other short-line operators, they may bring salvation.

Ed Ellis, president of Saratoga and North Creek Railway, said he plans to store up to 500 empty tank cars for a year or more on seldom-used tracks near the High Peaks Wilderness region of the Adirondacks. He estimated storage fees could add up to “seven figures,” ensuring the future of the cash-strapped tourist train.

“Developing the revenue stream from the storage is very helpful for making the railroad viable,” Ellis said of the Saratoga line, which he noted several months ago was operating in the red.

With crashing oil prices and new pipeline capacity coming online, oil-by-rail shipments were down 16 percent, or 21,189 carloads, in the second quarter of 2015 compared to the third quarter of 2014 when shipments were at their peak, according to the Association of American Railroads.

We have a 10-mile stretch that no longer has a customer on it, so it's a great place to store strings of cars.
George Betke, CEO of Farmrail