A transportation consultant provided blunt advice recently for those trying to rescue the Treasure Valley Reload Center from its stalled status.
The original plan to load rail cars with local produce and other goods is “not viable.”
Switching to a container-loading operation works only if Union Pacific Railroad is enthused about the idea.
And any new operation should start modestly, using a mobile office instead of a million-dollar warehouse, working on gravel instead of pavement.
Dan Smith, an executive with Tioga, on Wednesday, Nov. 6, shared his firm’s assessment with the directors of the Malheur County Development Corp. The county-created company has been considering for more than a year what to do with $30 million in rail lines, switches and a building kit.
Smith ticked off the challenges facing the public company.
And he had one final piece of advice.
“You don’t need any more consultant studies,” he said.
READ: Tioga report
Tioga is the latest in a string of consultants that project leaders brought in over recent months. Tioga will get $3,500 for its work so far. A Texas consulting company was dismissed earlier this year after it kept failing to produce a vital report. And a consulting company owned by Union Pacific is at work on its own study.
By the end of the MCDC’s recent meeting, project leaders hadn’t settled on a course.
“We’re looking at all options yet,” said Grant Kitamura, MCDC president.
But the directors made one choice – to sell the $1.2 million steel building that’s been sitting on the ground in pieces for more than two years. The state, which has funded most of reload center, “must approve” such a sale, according to Shawna Peterson, MCDC executive director.
“If MCDC finds itself trying to persuade UP of the potential, the idea will probably not work.”
–Tioga report
Tioga is familiar with the Nyssa project, acting as an adviser to the Oregon Department of Transportation as it considered funding the reload center before construction started.
Smith was questioned about why his firm switched from issuing cautions about the Nyssa project in 2019 to supporting it just months later.
He said he hadn’t read those reports in some time but his recollection was that the Treasure Valley project had cleared significant obstacles. That included getting an operator – Americold – in place and cutting a deal with Union Pacific Railroad for access to its Nyssa line.
The project was pitched by local advocates since 2015 as a way to bolster the region’s onion industry with better shipping to Midwest and East Coast markets. More recent research by MCDC found that only one-third of the volume originally expected would move through the Nyssa project.
Mike Walker, an Adrian farmer on the MCDC board, led the board to consider scrapping the transload idea and instead consider shipping cargo containers in and out of Nyssa.
Tioga, in its 24-page report to MCDC, detailed the challenges of doing so. Smith reiterated those in a remote appearance before the board.
The lynchpin to making that work at all is Union Pacific, the Tioga report said.
“Their positive engagement is critical to success,” the report said. It said that if the railroad sees “a significant near-term potential” in Nyssa, that would be a “strong positive sign.”
“If UP is just politely encouraging or negative, that is a bad sign,” the report said. “If MCDC finds itself trying to persuade UP of the potential, the idea will probably not work.”
Smith underscored that, saying the railroad can’t be “drug into it kicking and screaming.” He said MCDC should be alert if the railroad is willing to talk but “hems and haws” about a commitment.
“You can never take those conversations to the bank,” Smith said.
The report said the railroad “is unlikely to support a Nyssa terminal if it would attract traffic away from existing terminals.”
One of those would be a terminal in Wallula, Wash., southeast of the Tri-Cities area. A new operator recently started intermodal service there, using a facility built and owned by Union Pacific.
“UP would be expected to favor their tenant/buyer over a competitor at Nyssa,” the report said.
Nyssa also would face competition from an intermodal terminal in Pocatello, Idaho.
Peterson
said on Thursday, Nov. 7, that the intermodal discussion is “very new” and would need to be “explored” with Union Pacific. She said she expects to meet with Union Pacific officials soon and said she will ask if they have any interest in an intermodal facility in Nyssa.
Tioga in its written report and through Smith’s presentation outlined other challenges, from getting cargo containers to arranging enough traffic to and from Nyssa to justify operations. The report warned that trucking firms likely would cut their prices if necessary to compete against lower shipping costs that Nyssa might offer.
The report and Smith also urged MCDC to consider a more modest facility.
“You need an office trailer, a guard shack and a fence” to start up a container shipping center, Smith said.
MCDC had been facing another $3 million in costs to erect its building.
Tioga recommended “next steps” if MCDC wanted to press ahead with a container shipping operation. The firm cautioned first that “it would be difficult to establish a successful rail intermodal facility at Nyssa.”
Step one: “Talk to UP. If they are just being polite and not behind the project the odds are heavily against success.”
Then, project leaders should talk to intermodal marketing companies, operators and directly to potential customers.
“Long-term market demand should be verified on the ground, not through abstract market studies,” the report said.
Finally, “We would not recommend additional consulting studies (even by us),” Tioga wrote.
If MCDC proceeds, it should minimize “initial investment and risk,” the report said, noting that a rough design by other consultants for containing shipping in Nyssa is “far more elaborate and costly than necessary.”
Peterson said the current direction of the project is “two-faceted.”
She said one part includes completing rail spur connections to Union Pacific’s mainline.
She said she is tracking down information about what work still needs to be done and its cost. Then, she said MCDC would need approval from the Oregon Transportation Department to pay for the work.
The other area of focus is the business plan, she said. That portion, she said, “continues to be vetted and will be informed by the Loup Logistics and Tioga input.”
Last month, the board decided to bring in Loup Logistics, a subsidiary of Union Pacific Railroad. The work with Loup is a more in-depth study, according to Peterson.
She said the firm is producing a feasibility study that involves identifying optimal shipping routes and obtaining the updated rates. She said the consultants also are comparing total costs as compared to trucking.
Other questions MCDC is looking to Loup for answers are transit times, the availability of refrigerated cars and the capacity within Union Pacific to service seasonal volumes.
She said she has also spoken to Loup about the intermodal idea.
Determining the future use of the reload center is currently “the board’s focus,” Peterson said.
“Ultimately,” she said, “any direction and building is subject to ODOT approval.”
Reporter Steven Mitchell contributed reporting.
PREVIOUS COVERAGE
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MCDC board member reports that shipping onions out of Nyssa rail center won’t work
County court approves plan to pay off more rail reload debt
Treasure Valley Reload Center gets vital state money as new rail spur issue emerges
Top ODOT leader signals support to release more state money to get rail center moving
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