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Archive for Thursday, June 4, 1998

GRAIN CAR SHORTAGES FORECAST

June 4, 1998

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The result could be a replay of last year, when grain piled up with no means to transport it.

Wichita (ap) -- Predictions of more grain car shortages this coming harvest, coupled with warnings about the possible abandonment of some Kansas rail lines, offered little hope for grain shippers at a meeting Wednesday with Central Kansas Railway officials.

Mike Ogborn, managing director of OmniTrak, the short-line railroad's parent company, told about 50 grain terminal operators and other agricultural leaders that his company was willing to work with them to find answers to the grain transportation problems.

But if that does not succeed, the company might abandon some unprofitable Kansas lines that carry little grain traffic, he said. He did not specify which lines might be abandoned.

``We are not a charitable organization,'' Ogborn said.

Ogborn told shippers the company agreed to rescind its $750 per car surcharge this year, but he said he wanted the grain shippers to understand the turmoil in running a short-line railroad.

``The bottom line is the bottom line. It has to be economically viable for both of us,'' Ogborn said.

For example, it costs $850,000 per year to run a 30-car train weekly along the Coats to Wichita line. But revenues from that line amount to just $183,000 annually, he said.

The surcharge would not even have brought the railroad to the break-even point along those lines, he said.

Railway officials also outlined their problems purchasing rail cars and getting them from the larger railroads.

``We are at their mercy, as you are,'' Ogborn said.

And he warned shippers that he does not expect to see much improvement in railroad congestion in the next two months: ``I am not certain that the problems we saw last year are going to go away this year.''

Lt. Gov Gary Sherrer, who called the meeting, said he would support state incentives such as tax credits, tax incentives and low interest loans to keep the railroads running in Kansas.

``We clearly have become a state heavily dependent on short-lines,'' Sherrer said.

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