SPONSOR: MICHIGAN DEPARTMENT OF AGRICULTURE AND RURAL DEVELOPMENT (MDARD)
PI: Pasi Lautala
Since the purchase of the Wisconsin Central Rail system by Canadian National (CN) operations on the small branch lines throughout the Upper Peninsula of Michigan and Northern Wisconsin have seen reduced business. Starting in 2012, the Northwoods Rail Transit Commission (NRTC), formed by the economic development in the 13 counties of Northern Wisconsin as well as membership of nine of the UP’s 15 counties, has been leading an effort to not only put a spotlight on the decline, but seek solutions in collaboration with the CN. However, the effort has only been successful at keeping a spotlight on the issue.
One of the industries that have been particularly hard hit is the forest products industry. Moving logs by rail from aggregation points to the mills has been a very cost effective and safer method of moving raw material. Unfortunately, most of these movements start or end on branch lines and move below average distances to reach the mills. This doesn’t match well with the current business model for large railroads that is based on moving large blocks of cars (generally anywhere from 20-100) for fairly long distances (500+ miles). As a result, the prices CN considers profitable have been pushing logs off their rails and onto trucks.
Recent discussions by the Michigan Forest Products Council (MFPC), an industry group that includes representatives of the largest mills in the UP and Northern Wisconsin focused on the need to develop a strategy to either convince CN that a business case existed for them to get back into moving logs in the region or make a case for allowing a short line operator to take over service on the branch lines. The NRTC, who participated in the MFPC discussions, has also endorsed this strategy. Two specific steps to advance the strategy are an effort funded by the Wisconsin Department of Transportation to update a previous rail study and a proposal by Michigan Technological University (MTU) to conduct a detailed analysis of the log movements to determine how a better business case can built by improving the operational movements related to where, when and how logs enter the rail system.
MTU’s study will use actual train movement data from CN and log movements data provided by the members of the Michigan Forest Products Council including a number of mills in Wisconsin, to create a spatial simulation model of the region. This model will analyze log movements (from several companies/mills) by rail and truck and look at where and how opportunities may be created to improve the business case for CN or a short line operator to provide cost effective service. One potential example is identifying locations where larger shipment sizes can be concentrated at once.