Railroad companies profit from ethanol

By Hope Deutscher | May 04, 2009
While the ethanol industry relies heavily on rail transport to ship its product to various destinations, ethanol has traditionally accounted for a very small portion of the commodities shipped by rail throughout the United States. However, 2008 proved to be a lucrative year for several railroad companies as related to ethanol, and producers are being recognized for adding to their bottom line as well as for their safety standards.

In 2008, Norfolk Southern Corp., which operates approximately 21,000 route miles in 22 states and the District of Columbia, assisted in the location of 19 ethanol and biodiesel production and distribution facilities across 10 states. "Renewable energy projects led the way across our service area in 2008," said Newell Baker, assistant vice president for the company's industrial development. In total, Norfolk Southern helped locate 80 new industries and assisted in the expansion of 35 existing industries along its rail lines.

Also in 2008, Providence and Worcester Railroad Co. reported a profit of $166,000, compared to a net loss of $652,000 in 2007. P&W said chemicals and plastics, including ethanol, as well as construction aggregates, were the two largest commodity groups transported constituting 36 and 13 percent, respectively, of conventional carload freight revenues in 2008. P&W customers last year included Aventine Renewable Energy Inc., Cargill Inc., The Dow Chemical Co., and Exxon Mobil Corp. The railroad company is a class II regional freight railroad that operates 516 miles of track in Massachusetts, Rhode Island, Connecticut and New York.

Ethanol producers and refiners were among the 40 companies recently recognized by Union Pacific Railroad for their safe-loading techniques, securement of the shipments and non-accident releases. According to the company, since 1994 non-accident releases of hazardous material have declined 57 percent on Union Pacific. Reductions can be credited in part to increased inspections by the railroad's chemical transportation safety field personnel as well as to the Pinnacle Award criteria established by the rail company. The 2009 Union Pacific Railroad Pinnacle Award winners included: Valero Marketing & Supply Co. and Poet LLC biorefining facilities in Jewell, Ashton, and Emmetsburg, Iowa, and Hudson, S.D. Non-accident releases make up the largest portion of Union Pacific hazardous materials incidents. The award program is open to all chemical shippers.

CSX Transportation, a subsidiary of Jacksonville, Fla.-based CSX Corp., recently announced the winners of its annual Chemical Safety Excellence Award that reflects a winning company's commitment to rail car maintenance and safety, as well as continuous safe tank car loading. Sixty-four companies that shipped 600 or more railcars on CSXT rails without any accidental releases were recognized by CSXT.

"Throughout the challenging economic environment, these CSEA winners have remained focused on the safe loading and unloading of their fleet, and maintaining their fleet in safe working condition.

Among the shippers honored were: Abengoa Bioenergy Operations, CHS Inc. Renewable Fuels Marketing, Hawkeye Renewables and Hawkeye Growth, Lansing Ethanol Services LLC, Methanex Methanol Co., Valero Marketing and Supply, Inc., and VeraSun Marketing LLC.

CSX provides rail, intermodal and rail-to-truck transload services through an approximately 21,000 mile rail network that serves 23 eastern states and the District of Columbia.