by Max Marbut
Staff Writer
Friday Mayor John Peyton will record another first for his time in office when he “christens” a pair of RailAmerica locomotives that will soon be traveling the tracks of North Florida and as far away as Canada.
RailAmerica relocated its corporate headquarters to Jacksonville from Boca Raton last November. The company owns and operates 42 regional and short-line railroads over more than 8,000 miles of tracks in 26 states and three Canadian provinces. Its trains haul major carload commodities including coal, aggregate, grains, lumber and paper. RailAmerica is owned by funds managed by affiliates of Fortress Management Group and is the holding company for the Florida East Coast Railroad.
The genesis of the short-line segment of the railroad industry is another example of what can happen when the federal government deregulates business.
The short lines emerged in 1980 when the government decided to allow the Class 1 railroads (CSX and Norfolk Southern, for example) to abandon unprofitable lines, said John Giles, RailAmerica CEO.
Today there are about 500 short-line operations in America “owned and operated by people with railroad experience who figured out how to make the short lines work,” he added.
RailAmerica employs 2,500 people including 400 at the Jacksonville headquarters and does about $800 million in business annually.
“Two thousand customers depend on us every day,” said Giles. “Lines like CSX and Norfolk Southern run the superhighways, the main corridors and routes. We’re the railroad that picks up that cargo at the major hubs and transports it to the outlying areas.”
RailAmerica’s longest route is 700 miles while the shortest is just 13 miles, a route in Texas the company purchased from Alcoa Aluminum. Finished aluminum ingots are loaded at the foundry and transported to to a hub where they are transferred to the Union pacific Railroad.
“Our business isn’t like running 42 drug stores. Each line has a different geography and customer base,” said Giles.
He described the senior management team at RailAmerica as “people who have worked together for over 25 years” and the group has just about every major railroad in America on their collective resume. They decided to move their headquarters to Jacksonville to take advantage of a more attractive cost of living compared to Boca Raton and access to a larger population of potential transportation workers. Giles said the University of North Florida’s logistics education curriculum also will have applications in RailAmerica’s future growth. The University of North Florida’s Department of Continuing Education will begin offering courses designed for first-line transportation industry supervisors with an emphasis on leadership and communication skills.
Growth is high on RailAmerica’s agenda and the railroad industry will be an accurate barometer of the economic turnaround when it begins, said Giles.
“We’re how the raw materials will get to the factories and how the finished products will get to the consumer,” he said.
He’s also predicting that when the economic cycle returns to the upswing, the opportunities for short-line railroad acquisition will also be on the rise.
“As the banking environment improves we’ll be keen on growing. Many of the 500 short-line railroads are owned by entrepreneurs who bought in 25 or 30 years ago and who might be ready to get out of the business and we’ll be looking for opportunities,” said Giles.
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