July 14, 2013

Maine economy tied to rail line's fate

Manufacturers depend on the Montreal, Maine and Atlantic Railway and fear higher costs.

By Tom Bell tbell@pressherald.com
Staff Writer

The train disaster in Lac-Megantic, Quebec, last weekend may end up hurting Maine manufacturers that depend on the Montreal, Maine and Atlantic Railway to move their goods and supplies, according to state officials and some mill operators.

"The railroads are in many ways the lifelines to a lot of industries," said Everett Deschenses, manager of fiber and logistics at Old Town Fuel & Fiber. "There is a concern that MM&A is not going to survive this."

Rail is critical for moving heavy, low-value industrial commodities long distances, such as chemicals, pulp and paper. The collapse of MM&A could have implications for Maine businesses, said Rob Elder, director of the freight and business services at the Department of Transportation.

"Beyond the immediate concerns, there is a big infrastructure concern for the Maine economy," he said.

Even if MM&A goes bankrupt, federal law would requires a trustee to continue to operate the railroad, due to the railroad's status as a monopoly, until a new buyer is found, said Nate Moulton, director of the state's industrial rail access program for the Maine Department of Transportation.

Indeed, that's how MM&A bought the line in 2003 after the prior owner, Iron Road Railways, went bankrupt.

In a last resort, the state could step in.

In 2010, when the MM&A said it planned to abandon 233 miles of rail in the northern part of Maine, the state bought the line for $20.1 million to keep the trains running under a different operator.

The move saved 2,200 jobs in mills dependent on rail transportation, Elder said.

The railway provided Maine with a direct east-west link to railroads that span the continent.

The MM&A is also the only railroad serving the port of Searsport. Clay slurry, a material used in paper and pulp mills, is brought to Searsport on ships and transported by rail to mills throughout much of the state.

Keeping trains operating on the MM&A line is critical because the loss of the railroad would reduce competition, which would lead to higher shipping costs, said Deschenses, the manger at Old Town Fuel & Fiber.

Deschenses is also worried that the disaster will cause Congress to create more regulations, which would also raise shipping costs.

The company receives wood fiber shipments by rail from northern Maine. It uses rail to ship its pulp to customers in the Midwest and South. It uses trucks for shorter distances.

While MM&A has stopped operations west of Jackman due to the destruction in Lac-Megantic, it continues to operate east of Jackman, and other railroads are now cooperating with MM&A to help it serve its customers, Elder said.

So far, no problems have surfaced, perhaps because manufacturers still have an inventory of supplies, Moulton said.

"The longer it goes on, the tougher it gets," he said.

Tom Bell can be contacted at 791-6369 or at

tbell@pressherald.com

 

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