Freight service on the Northwestern Pacific Railroad is off to a slow start, with cargo business mostly limited to three feed mills in Petaluma.
It's another sign of the stagnant economy, as wood products manufacturers and other rail customers continue to struggle.
But the railroad's new operator isn't discouraged by its early results. NWP Co. is in business for the long haul, company president John Williams said.
"We're still in startup mode," said Williams, who began running cargo trains on the historic railroad last July. "I think we're coming along just fine."
Freight traffic on the 62-mile rail segment between Napa County and Windsor resumed this year after a 10-year absence. The railroad north of Windsor remains closed, and there's no timeline to reopen it.
The return of rail service was hailed as an economic shot in the arm, giving North Bay shippers a cheaper way to reach distant markets.
It also promises to help the environment by taking trucks off Highway 101, according to the North Coast Railroad Authority, the public agency that controls the freight line.
Each railcar carries as much cargo as four trucks, according to the rail industry.
It's a big advantage for his business, said Arnie Riebli, general manager at Dairyman's Feed and Supply in Petaluma, a cooperative that supplies animal feed to poultry and dairy farmers.
Dairyman's has been getting two or three train shipments each week from its grain suppliers in the midwest and Canada, he said. Before NWP began service, the grain was shipped to railheads in Stockton or Napa, then loaded on trucks for the trip to Petaluma.
The new rail service saves time and is half the cost of trucking, Riebli said. "It's working out great," he said.
Dairyman's gets seven to 10 carloads a week from NWP, with each car carrying about 100 tons of grain.
Hunt & Behrens, another Petaluma feed mill, has received nearly 100 carloads of grain from NWP Co. since rail service resumed, said Bob Falco, a partner in the business. "They do an excellent job," he said.
Rail delivery saves $15 a ton over trucking, Falco said. Hunt & Behrens plans to increase rail deliveries as its trucking contracts expire, he said.
So far, the train shipments have replaced 380 truck trips, Falco said. "It really saves on the highways," he said.
Petaluma Poultry, which produces Rocky, Rosie and Rocky Jr. free-range chicken, also gets grain delivered to its feed mill by NWP's trains.
The railroad company also has made some lumber shipments, but that business has struggled. NWP's biggest wood products shipper, Windsor's Standard Structures, shut down in August after selling most of its business to an Idaho company, RedBuilt.
The 64-year-old Windsor company was hit hard by declining construction activity. RedBuilt leased the Windsor location with plans to reopen it, but hasn't announced a date.
"Everybody in that business seems to be hunkered down waiting for construction to start up," Williams said.
The aggregate industry, another potential rail customer, also has been hurt by the construction slowdown, he said.
NWP and Union Pacific have agreed to reduce freight tariffs for lumber in an effort to attract business, he said. There's also interest in using the Standard Structures rail spur as a loading spot for lumber shippers north of Windsor, Williams said.
Meanwhile, some companies in Airport Business Center want rail service.
"We'd love to see a spur come in here," said Meritt Dahlgren, co-owner of Alexander Valley Cellars, a wine storage and shipping company that handles about 1.5 million cases a year for 250 wineries.
The company now ships wine by truck to railheads in Napa and Solano counties, he said. "This would be one less step for us and a cost savings to our clients," Dahlgren said.
NWP has been running two or three round-trip trains every week, averaging 7 or 8 cars, Williams said. The railroad has had few operational problems, he said, although it has been plagued by malfunctioning signals at railroad crossings.
Most of those incidents are caused by thieves stealing copper wire from signal installations, Williams said.
NWP projected it would turn a profit after six to nine months, he said. But the slow economy could delay that outcome.
"It's always difficult to convert customers from truck to rail," said Williams, a 45-year railroad veteran who has worked for Southern Pacific and Conrail. "It's been 10 years since there was rail service. It takes time for people to change their logistics."
NWP leases the tracks from the railroad authority for $25,000 a month. The authority spent $68 million to repair 62 miles of track from Napa County to Windsor.
It's too soon to say when NWP might expand service north to Healdsburg, Cloverdale, Ukiah and Willits, Williams said. So far, there's no funding to repair the rails on that stretch.
"I'm insisting we get the first 62 miles on firm financial footing before we go north," he said.
Still, the railroad is here to stay, Williams said.
"I expect us to be in business six months, two years and five years from now," he said.
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