Malheur County pursues major logistics company to operate rail center

AmeriCold Logistics said in a letter to Greg Smith, Malheur County economic development director last week that it may be interested in operating a rail reload center planned north of Nyssa. (The Enterprise/File).

VALE – AmeriCold Logistics is one of the largest transportation firms in the United States and Malheur County officials hope the company will step in and operate a multimillion-dollar rail reload center proposed north of Nyssa.

The Malheur County Development Corp., a public company created by the county to oversee the $26 million facility, outlined the proposed role of AmeriCold in documents delivered to the state last week.

The county also addressed its plan for obtaining rail cars needed to move onions from Treasure Valley to markets in the east.

The issues are central requirements for the Oregon Transportation Commission, a five-member board that will decide later this month whether the county will receive the bulk of the $26 million in taxpayer funds earmarked to build the Treasure Valley Reload Center.

County officials have been working on the proposal for three years, but have encountered tough questioning recently from state officials and their consultants about whether the Nyssa project is feasible.

The effort to allay those concerns advanced in last week’s submissions to the state.

Malheur County officials told the state they are in “active conversations” with AmeriCold about leasing and running the publicly built rail center.

A company official said in a “letter of interest” on April 12 to Greg Smith, Malheur County economic development director, that AmeriCold was willing to sign a deal to operate the reload center. The company provided no details on the terms.

AmeriCold is based in Atlanta, Georgia, and touts it is “the world’s largest owner and operator of temperature-controlled warehouses” with 137 warehouses and “over 75% of these have rails cars.”

State officials had asked for evidence that negotiations were underway for such a deal and a timeline for getting it accomplished.

Instead, Malheur County said it couldn’t go any farther with AmeriCold until the state approves the funding.

“This conversation is on hold,” the county told the state.

And the effort took another twist Monday, according to an email to the Enterprise from Smith.

“A very tentative negotiation – that would have been great for Malheur County – appears ended,” Smith wrote. He blamed a report on the Enterprise’s website last week.

Smith didn’t respond to emails Monday seeking clarification, and AmeriCold officials didn’t respond to email messages asking their intentions. Grant Kitamura, president of the Malheur Economic Development Corp., had no comment when contacted Monday.

AmeriCold operates an Ontario plant and its general manager, Jeremy Leathers, has been serving on the board of the county’s development company handling the rail project.

Kitamura said Friday he was cautiously optimistic about the project now that a potential operator has been identified.

“We are progressing. Not as fast as I‘d like to, but we are progressing,” said Kitamura.

Kitamura said four firms expressed interest to the development corporation to operate the reload facility, but he declined to go into detail about the companies.

Rail car access is an obvious cornerstone to the project and it became a critical issue in February when representatives from Union Pacific told the Oregon Transportation Commission the railroad firm didn’t plan to provide the cars. A state consultant said securing a dependable source of rail cars was vital so the reload facility can pay its own way.

Since the first of the year it was unclear where county officials planned to acquire the rail cars and appeared to be addressing the issue – identified by state consultants last fall – at the last minute. Smith has consistently refused to answer questions on the rail car issue and no longer provides interviews to the Enterprise. 

Instead, Smith and his team tried to counter consultants’ concerns about that supply by highlighting a media report last fall that Union Pacific Railroad was ordering 1,000 refrigerated rail cars.

Malheur County Economic Development included that information in a recent presentation to the Transportation Commission and then in March shared the media report on its Facebook page with the note, “As the county’s reload center opens, some brand new cars could be in the yard.”

Now, the county confirmed to the state that Union Pacific won’t be providing rail cars for Nyssa, as the Malheur Enterprise reported April 3.

“Union Pacific, while supportive of serving refrigerated rail cars, appears to be moving in a direction of requiring shippers to own or lease their own equipment,” the county told the state.

The Treasure Valley Reload Center won’t buy rail cars, the county reported, so it is considering two options to move onions – let AmeriCold use its might to bring in cars or go out and lease the rail cars.

State transportation officials had asked the county for details about those rail cars. The state wanted to know what type of rail cars would be needed, who would provide them, if railroads were providing the rail cars, how the cars would be provided and where the cars would come from.

County officials explained one challenge is finding paying loads to fill rail cars returning after delivering onions to the east. Oregon’s long shipping distances and relatively small population “does not induce nor incentivize return rail loads.”

The first choice, county officials said, would be to rely on AmeriCold because its national footprint gives it “a competitive advantage in procuring rail cars.”

A second option would be for the county itself to lease refrigerated rail cars but that would then require marketing to get shipments into leased cars for the return run to the west.

The county didn’t specifically answer who would lease rail cars. Instead, the corporation wrote that “companies such as Rail Logistics, LC, Greenbrier and TTX provide leasing services and could meet the rail needs of the Treasure Valley Reload Center” but provided no indication the county has talked to any of them.

Kitamura said he wasn’t sure how leasing rail cars would impact operating costs for the facility.

“Normally the rates are cheaper when you have your own cars, but it depends on the lease,” said Kitamura.

Kitamura said rail cars are available “for lease or sub lease.”

That is why, he said, a deal with AmeriCold is crucial.

“They have the connections to get them from a lot of different places,” said Kitamura.

Kitamura said he is still cautious because “a lot of things can happen.”

“We haven’t talked about rates or leases and, from the standpoint of a shipper, everyone has to be competitive. It (rates) can’t be higher than a truck. But the main thing is we get it. If we have it we will always have another mode to get our onions to market and that is important because traditional rail service is slow,” said Kitamura.

The development corporation still must collect a firm agreement from Union Pacific regarding service to the center. Kitamura said the corporation has “a verbal commitment of service.”

The reload facility is the foundation of a local economic development plan to inject jobs into the county and bolster the $80 million onion industry. According to the county, the shipping center would cut costs for growers and shippers by about $2 million a year. According to the county the center would employ seven year-round and provide up to 19 seasonal workers.

Reporter Pat Caldwell: [email protected], 541-473-3377.

For the latest news, follow the Enterprise on Facebook and Twitter.

TRY A FREE SAMPLE – You can see for yourself the kind of local news reporting produced by the Malheur Enterprise with a news team focused exclusively on news that’s important to you. You can read us for free for 30 days. Signing up is easy and then you have 24/7 access to our reports. Sign up HERE. Or you can support some of the nation’s best journalism by subscribing to our digital news service for $5 a month, easy and automatic. Subscribe HERE.