Posts Tagged “McKay TransCold”
Nearly three months ago Haulproduce.com reported that refrigerated rail service McKay TransCold LLC of Eden, MN had closed its doors. Now it has been learned TransCold Logistics LLC, parent company McKay TransCold LLC has filed for Chapter 7 bankruptcy liquidation with debts of about $7 million.
The refrigerated rail service was launched in May 2014.
McKay TransCold worked with BNSF Railway to operate the TransCold Logistics hub-to-hub, dedicated refrigerated boxcar train between Selma, CA and Wilmington, IL. The operation began with two trains pulling 50 refrigerated boxcars in each direction, making the trip in four days.
It offered cold storage in California and as of September 2014 was still planning to add cold storage services in Illinois.
The company posted $2.47 million in gross revenue for 2012, according to court documents. In 2013 gross revenue dropped to about $533,000. In 2014 they climbed back to $5.23 million.
The company has a total of secured claims of $865,533, all owed to Marquette Transportation Finance, Minneapolis. Its total unsecured debt is about $5.9 million.
The top five unsecured debts are:
**** BNSF Railway Co., Chicago, $3.37 million;
**** KLLM Transport Services LLC, Birmingham, Ala., $735,486;
**** National Carriers Inc., Kansas City, Mo., $519,918;
**** Werner Enterprises Inc., Chicago, $384,830;
****NLCS-Wilmington, Ill., $235,945.
The first produce train service to fold in 2014 was Cold Train Express Intermodal service that suspended service last summer. Cold Train saw its on time service on BNSF’s Northern Corridor plummet from 90 percent in November 2013 to only 5% percent last April. Cold Train said the reason relates to soaring oil and coal shipments by rail.
In sort of a flashback to the ’70s it seems history is repeating itself as a lot of hoopla is taking place about the rail industry getting more serious about hauling fresh produce – and competing with trucks. In the short run it seems not to have worked out that well — at least for some.
The latest example is McKay TransCold of Minneapolis, which closed its doors November 1st, after launching a new refrigerated boxcar service last June. Known as Transcold Express, it had weekly runs between Selma, CA and Wilmington, IL. However, the company had problems with its cross dock operation in Wilmington, where it had spent monies on significant upgrades of the facility. Unable to find additional investors to continue operations, the company decided to call it quits.
Another short lived example of a foray into the rail perishables business is the Cold Train Express Intermodal service that suspended service last summer. Cold Train saw its on time service on BNSF’s Northern Corridor plummet from 90 percent in November 2013 to only 5% percent last April. Cold Train said the reason relates to soaring oil and coal shipments by rail. For example, the Northern Corridor of BNSF saw tank car shipments increase from 20,000 three years to over 400,000 this year. Unlike it’s southern routes, which has two sets of tracks, the northern route has only one set of rail tracks.
Meanwhile, Railex, which started a rail service a few years ago, seems to be doing better than anyone, with it’s coast-to-coast service. Another service, Tiger Cool Express LLC, also remains in business, but we hear little about it.
Produce is viewed by some in the rail industry as the last long-haul, $100 billion market that intermodal has yet to penetrate. Still, over 95 percent of fresh produce is delivered by truck in the U.S.. Rail officials are counting on trucks supplies tightening, with the driver shortage continuing to worsen and increasing government regulations on the trucking industry – which in theory is supposed to be deregulated.
Cold Train Express Intermodal Service suspended service this summer due to rail congestion, while two new refrigerated rail services were just getting started.
McKay TransCold based in Minneapolis began last June offering a refrigerated, dedicated boxcar unit train known as Transcold Express, which runs each week between Selma, CA and Wilmington, IL. Meanwhile, Tiger Cool Express LLC, Overland Park, KS launched intermodal services from multiple locations in southern California to destinations in the Midwest and East Coast in February. In a press release Cold Train reported that on-time deliveries for shipments on BNSF’s Northern Corridor fell from more than 90% in November to less than 5% in April due to surging more oil and coal shipments.
Meanwhile, the problems on BNSF’s northern lines reportedly has had little effect on the southern BNSF and Union Pacific rail routes.
Tiger Cool Express, reported rail shipments of oil from North Dakota on BNSF’s Northern Corridor have increased from 20,000 tank cars three years ago to more than 400,000 this year. And unlike major southern rail routes in the U.S., that northern route doesn’t have two different tracks.
Produce is viewed by some in the rail industry as the last long-haul, $100 billion market that intermodal has yet to penetrate. Still, over 95 percent of fresh produce is delivered by truck in the U.S.. Rail officials are counting on trucks supplies tightening, with the driver shortage continue to worsen.
100 years ago the railroads ruled when it came to long haul freight transportation. The advent of the interstate highway system in the 1950s changed all of that and led to a thriving trucking industry. Then in the 1970s there was a renewed interest in rail service, and this involved fresh produce. It was primarily refrigerated intermodal trailers and refrigerated box cars. However, as the trailers and rail cars aged, the companies invested in those ventures too often had problems coming up with the capital to replace the equipment. Additionally, in those days the rails had difficulty understanding perishable produce had to be treated differently than coal or auto parts. There also were too many produce receivers filing claims at the drop of a hat. The rails also were notorious for taking forever to pay claims.
But times have changed. Here are some of the rail related companies that have come on the scene in recent years.
****Railex LLC, Rotterdam, NY. This was perhaps the first one, and it partners with the Union Pacific Railroad, using 64-foot refrigerated railcars transporting produce from the West Coast to an upstate New York distribution center, where trucks take over. It also is establishing a presence in the Southeast.
****Rail Logistics Cold Train, Overland Park, Ks. The Cold Train used containers shipped out Washington and Oregon to the Midwest and East Coast.
****McKay TransCold, Minneapolis. It works with the Burlington Northern Sante Fe Railroad using refrigerated boxcars out of California to Wilmington, IL citing each boxcar is equivalent to 3.5 to 4.2 truckloads of product.
****Tiger Cool Express LLC, Overland Park, Ks. According to its website it “Provides retailers an efficient, cost-effective, safe alternative to all-spot, all-the-time brokered transportation that relies on small, independent owner-operators who supply shippers through intermediaries.”
****C.R. England of Salt Lake City. While it is widely known as the nation’s largest refrigerated carrier with about 4,500 trucks, it also has had an intermodal division for about eight years and uses refrigerated containers.
Ricky Stover is director of business development – intermodal, for C.R. England. The company has 1,150 containers and plans adding 400 more this year.
“The percentage of produce we haul is small. We do a lot of frozen food, dairy, beverages, etc. That type of stuff is really our bread and butter,” he says.
Jason Spafford, McKay’s Vice President of Business Development credits the down turn in the nation’s economy resulting in people being “more open to new ideas.”
Spafford also points to increasing regulations on the trucking industry working in favor of the railroads.
“There’s the restrictions on driving hours that’s making it harder and is pushing it more towards a rail solution,” he states.
Additionally, Spafford says McKay TransCold believes they have to offer rail rates that are eight to 15 percent less than truck rates, depending upon the commodity and specific traffic lane.
“Traditionally rail has had difficulty with box car and intermodal concerns with damage claims. We’ve developed a racking system that creates a rock solid load. It can actually have less shifting than in truck load,” Spafford says.
McKay TransCold took a different approach in that it initially developed westbound rail shipments from the Midwest with commodities like eggs and ice cream. It then developed its eastbound freight, which is the opposite approach from most companies.
While a lot of attention is being paid to rail hauling fresh produce, Kenny Lund, Vice President of Allen Lund Company of LaCanada, CA states, “Owner operators move probably 95 percent of the produce cross country. Owner operators dominate cross country transportation of produce. The carriers that haul for us have 25 trucks at the most. We work with over 9,000 refrigerated carriers and they are mostly guys with 25 trucks or less.”
Continuing, Lund points out it is the rules and regulations that are hurting the owner operators. He adds there is no driver shortage, it is an owner operator shortage. The truck broker has been one of CARB’s (California Air Resources Board) biggest critics, citing such requirements on equipment such as refrigerated units for trailers cannot be over seven years old. Lund also is critical of the new diesel engines calling them a “nightmare. They shut down and you can’at fix them out in the field. You have to tow them in. They are so complicated and these regulations are going to make it worse.”
Paul Kazan, president of Target Interstate Systems Inc., Bronx, NY, is equally critical of excessive regulations on 18 wheelers.
“You don’t see it (increasing regulations) with trains, but at every turn you see it with the trucking industry. There is a very concerted affect out there by the rail industry to restrict trucks and I’m surprised there is not a more concerted effort by the trucking industry to push back against this effect. We’ve never had the power or the clout of the rail industry,” Kazan states.
At the same time, Kazan adds he is having conversations with rail entities and says, “we need a rail component.”
Target is headquartered on the Hunts Point Terminal Wholesale Market. Still, Kazan sees the rails “shying away” from wholesale terminal markets because these facilities hold on to the trailers (TOFC) too long using them as storage.
Kazan concedes, “Rails are here to stay. You have the green (environmental) technology, the carbon footprint.”