Reading & Northern Railroad (R&N), Pennsylvania’s largest privately-owned railroad, once again broke its own records for freight revenue, freight traffic and excursion passenger ridership. Freight revenues rose an impressive 10 percent over both 2020 and pre-pandemic 2019 levels fueled by increased traffic and a shift in traffic mix to higher revenue moves. RBMN also earned significant ancillary revenues related to its warehouse and transloading business.
Leading the way in traffic growth was R&N’s Forest Products franchise, consisting of pulp, paper and wood products. Traffic rose by approximately 1000 carloads to almost 11,500 carloads. The 9.6% year over year increase doubled the 4.7% growth of the nation’s railroads. And this growth was done without any new facilities opening on R&N. Growth resulted as many R&N customers reached new highs in rail inbound volume. Much of the growth can be attributed to the so-called “Amazon Effect”, the fact that more Americans are relying on home deliveries of goods thus increasing the demand for corrugated packaging. R&N is fortunate to have many manufacturers of packaging material on its railroad. Growth would have been even higher if not for the diversion of over 400 rail carloads to trucks due to various service disruptions on the nation’s rail system. R&N Senior VP Marketing Rian Nemeroff
is optimistic this growth will be sustained in the future. While Forest Products leads R&N’s business portfolio in volume and revenue, R&N still focuses much of its attention on outbound moves of anthracite coal. Known as “the Road of Anthracite”, R&N continued its pattern of significant investment in the coal business in 2021. R&N purchased 153 additional coal cars at a cost of over $1.5 million as well as 3 additional conveyors at a cost of over $600,000. These
conveyors are critical to R&N’s strategy of assisting the movement of Pennsylvania anthracite to domestic EAF (electric arc furnace) steel mills. For the last few years, the EAF market segment has been R&N’s largest and fastest growing. With domestic steel production surging; two new mills came on-line in 2021, additional furnaces were added to 4 existing mills and 6 new mills have been announced, R&N, under the leadership of Senior VP Coal Bill Clark, has been laser focused on getting Pennsylvania anthracite to the steel mills. Part of that strategy was to invest in off-line facilities where the coal could be transloaded from rail cars to trucks for delivery to the mills. That is where conveyors come into the picture. Another part of that strategy was the construction of a new coal loadout on R&N at Locust Summit where an off-line coal producer can truck coal for loading into barge-equivalent rail shipments for movement to inland rivers. The growth of the EAF market has helped to soften the blow of the rapid decline of export coal. Over the last 5 years R&N, and Pennsylvania anthracite producers, have lost half of their export business to foreign competition. Although R&N hopes to see an increase in exports in 2022, the fact is Russia has been dumping coal into the global market for the last few years and that has made exports a difficult market for Pennsylvania producers.
While Forest Products and Coal provide the bulk of R&N’s traffic base, R&N continues to handle significant Food, mostly adult beverages like wine and beer, Plastics, Chemicals/Minerals, and Metals business. And R&N continues to invest in facilities to handle these commodities through warehousing or transloading. Those commodities add close to 10,000 carloads a year for R&N as well as millions of dollars in revenue. In 2022 R&N anticipates its largest growth in business will come from these segments. R&N has just completed construction on a large Marcellus Shale-focused transload facility in Tunkhannock, PA that is in an excellent geographic location to help that region more efficiently handle the development of the area’s gas reserves. Jim Raffa, Vice President Market Development, is leading the development of that facility. R&N has also signed a construction contract for another significant customer who will come on-line in the third quarter of 2022. As a result, R&N’s traffic base will be even more diversified in 2022.
While R&N’s success in its core freight business was notable in 2021, its success in the passenger business was nothing short of amazing. Under the direction of General Manager Matt Fisher, R&N hosted 225,175 riders in 2021, a 75,000 rider increase since R&N’s pre-pandemic high! The growth in ridership was achieved by adding more train trips, more equipment, and more origins. In 2022 there will be further expansion of R&N Passenger service. R&N has ALREADY begun passenger service in 2022 as Jim Thorpe trains are now operated year-round. Later this year R&N will be starting excursion service from the Wilkes Barre/Scranton area out of Pittston. And, of much interest to rail fans everywhere, R&N steam locomotive 2102 will be entered into train service. As further proof of the commitment to the passenger business, R&N Owner/CEO Andy Muller, Jr. purchased 13 additional passenger coaches at a
cost of over $2 million. The future looks very exciting for R&N passenger operations. Despite all these amazing accomplishments, 2021 will be remembered at R&N as the year it acquired the 19-mile rail line connecting its Lehigh and Reading Divisions. Although R&N had trackage rights over that segment for over twenty years, the lack of ownership prevented R&N from doing the significant track upgrade that was necessary for this midsection of the R&N mainline. This year R&N reached an agreement with Carbon County to acquire the line for a total of $4.7 million, which included $1.7 million in track improvements and crossing upgrades at Jim Thorpe. After acquisition R&N forces began the long overdue work of upgrading the track, which is essential for both the freight and passenger business. “The accomplishments of R&N this year, and in fact over the last two years during the worldwide
pandemic, are nothing short of amazing. They are a testament to the men and women at the R&N who come to work every day dedicated to taking care of our freight customers and passenger riders. I couldn’t be prouder of our workforce, and my entire family is thankful for all that they do,” said Andy Muller, Owner/CEO.
In recognition of the efforts of R&N employees, the Muller family shared the company’s success with them. In addition to the existing profit-sharing program, the Muller family announced a 3% pay increase ]for full-time employees to assist with the impact of inflation. The family also gifted all employees a $500 “Turkey Day” check before Thanksgiving. These efforts were in addition to the decision early in the year to give all employees two additional paid holidays, bringing the total to eight. The way R&N treats its employees has been critical to R&N’s success. Not only is R&N successful in retaining its staff, but even in a tight labor market R&N was able to hire 31 additional employees this year bringing the total full and part-time staff to over 300. In summarizing the year’s success, Muller said, “The secret of our success is simple. Take care of your employees and work with them to take care of your customers. If you focus on people, everything comes together. That’s the Reading and Northern way.”
=via Press Release