Posts Tagged “refrigerated rail service”
Union Pacific Railroad announced recently the acquisition of Railex LLC’s refrigerated and cold storage distribution assets in Delano, CA, Wallula, WA, and Rotterdam, NY. Terms were not disclosed, and the acquisition does not include Railex Wine Services LLC.
Railex, a refrigerated rail service and third-party logistics leader, plays a key role in Union Pacific’s Food Network transporting fruits, vegetables and other temperature-sensitive cargo across the United States.
“The Railex team developed a fantastic business changing how fresh food arrives on America’s tables, offering food shippers fast, reliable door-to-door rail based transportation solutions,” Brad Thrasher, vice president and general manager of agricultural products for UP, said in a press release. “The integration of their highly efficient cross dock facilities and logistics capabilities into Union Pacific’s broader food network allows us to offer our customers increased access to a wider range of capacity and service solutions in a rail-centric cold chain.”
Union Pacific, based in Omaha, NE, food trains directly serve Railex’s Delano and Wallula facilities, located in the heart of major agricultural-production regions. The food train network provides a fast and reliable service from these growing regions to the Midwest consumer base via Chicago and further into the heart of the Northeast region via the CSX. Railex will continue managing facilities during the transition and integration of its operations with Union Pacific.
In an Aug. 24, 2016 post, HaulProduce.com rported the following:
Even refrigerated carriers have their challenges hauling fresh produce, but it is an awesome mountain for rail entities, which is why there have been so many failures over the years. Now we hear Railex LLC is ending service to the Southeast, although it claims it will be back one day.
The rail logistics transporter, based in Riverhead, NY, ceased operations in Jacksonville, FL August 13th with its refrigerated perishables. Rumors of the closing had been circulating since July. The company apparently felt it was in its best interest to reassess the Southeast receiving location and close the Jacksonville location…..Paul Esposito, executive vice president of corporate affairs said. “The transit times were two days longer than what we had planned and what our customers expected. Now, two years later, during the peak summer season, with transit variabilities as well as the decline in truck rates, we find it difficult to sustain any significant volume into the area.”
To read the entire post from last August, click on “Sections” and then click on “News,” then scroll down to the 8/24/16 post.
(The purveyor of this website has written off and on for decades about railroads hauling produce. More specifically, stories about how the rails often lacked an understanding of perishables transportation, as well as not making it a priority. If the following lawsuit has merit this could prove to be another example of the risks involved in transporting perishable fruits and vegetables by rail.)
A multi-million dollar federal lawsuit against BNSF Railway Co., blaming the railroad for the failure of the refrigerated rail service for fresh produce has been filed by Steven Lawson, former president and CEO of Cold Train, and Mike Lerner, former managing member of the company. Both claim they had to shut down their rail service for fresh produce because BNSF failed to meet its promise for 72-hour delivery times.
Seeking $1 million in damages, the case was filed in federal court in Spokane, WA recently.
The lawuit alleges that the 72-hour “on-time percentage” steadily dropped from 92% in August 2013 to 3% in April 2014 because BNSF was favoring oil and coal over fresh produce in its scheduling. This resulted in Cold Train losing most of its fresh produce business, including apples, onions, pears, potatoes, carrots and cherries, which was more than 70% of the company’s business, the complaint alleges.
“The shutdown of Cold Train was caused by a significant slowdown in BNSF’s service schedules on its northern corridor line beginning in the fall of 2013 because of increased rail congestion as a result of BNSF hauling larger volumes of oil and coal from the Northern Plains region,” according to the April 7 news release.
A spokeswoman for the railroad said as of April 8 BNSF had not been served with the complaint and therefore its officials could not comment on specific allegations.
“But any suggestion that BNSF would intentionally seek to cause harm to any customer runs completely contrary to how BNSF conducts business,” BNSF communications director Amy Casas said.
“BNSF did experience well documented service issues following unprecedented demand levels and historic winter weather events beginning late in 2013, but we worked to remedy those situations and regularly communicated with our customers throughout the period so that they could anticipate when service would improve and plan accordingly.”
Cold Train shipped approximately 300 containers a month in 2011, according to the release. By 2013 it was shipping 700 per month with a goal of 1,000 per month by the end of that year. BNSF required the Cold Train to acquire a minimum of 111 refrigerated containers.
“BNSF also required the Cold Train to ship a minimum of 95% of the Cold Train’s entire container movements with BNSF, effectively prohibiting the Cold Train from using other carriers,” according to the news release.
By May 2012, Cold Train had 175 containers in service with another 100 on order for delivery in January 2013. Cold Train continued to purchase and lease containers, and by September 2013, the company had over 400 refrigerated shipping containers in service.
“In March 2014, representatives of Cold Train and Federated Railways Inc. met with BNSF representatives in Fort Worth to discuss the Cold Train’s business and its future with BNSF. At the meeting, BNSF continued to encourage Cold Train and Federated to proceed with the sale. Immediately after the meeting, Federated provided Cold Train a $1.25 million capital infusion based solely on that meeting, and announced that it was acquiring Cold Train,” according to the news release.
Ultimately Federated withdrew its offer to buy Cold Train. Lerner and Lawson contend they had to “walk away with nothing” from a business that had been worth more than $30 million before April 2014.
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.