Keeping Mills on Track

Maine’s paper mills rely on the state’s railroads, so when that service is unreliable, as they say it is with the state’s largest rail carrier, it threatens their business, which in turn hurts the state economy. While the state may not be able to fix the situation, it can at least try to figure out what the problem is and then help the companies involved look for solutions.

The first question that needs to be answered is why the railroad that many of the mills depend upon, Guilford Rail System, is providing service that the mills say is unreliable. Orders are being completed on time only to sit in a warehouse waiting days for rail cars to show up. The situation is so bad that one mill customer in the Detroit area said it is faster and easier to order paper from Scandinavia than from Maine.

Dan Innis, dean of the University of Maine College of Business and an expert on transportation, says it appears Guilford may be engaging in monopolistic behavior. The company knows the paper mills can’t look elsewhere for transportation services. Hauling raw materials and rolls of paper by truck would be up to three times as expensive – not to mention the increased wear and tear on the state’s roads and complaints from residents about increased truck traffic. No other railroad company can service the mills south of Lincoln because Guilford owns the rails.

Given this dynamic, it appears Guilford is providing only the minimum service necessary. In addition, the company has not upgraded rails and equipment in Maine, further contributing to the reliability problem. Part of the problem may be that the company can make more money by serving customers in other states, which generate more volume and, hence, more profits for the company. Maine should want to find out if this is the case and, if so, what could be done to solve it.

For example, many rail cars coming into Maine are empty but go out full. Are there companies here that could get deliveries by rail, helping to fill up incoming cars? Typically, this should be a problem solved by the company because it wants to maximize profits by having full cars all the time. However, Guilford has yet to come up with a solution, so maybe state officials can help out.

Dean Innis says it is unprecedented for shippers to go to the state government for help in dealing with a railroad. Their concern that the situation is so bad that it is jeopardizing potential investment in the state’s mills should raise alarm among state officials.

To begin solving this problem, the governor, who has done a lot to bolster the state’s paper and forest products industry, should convene a meeting of mill and railroad officials. The governor should demand an open discussion of the reasons for the current rail service. Then a plan for improving the service could be developed. State officials should then keep pressure on the railroad to ensure it is working to meet the needs of its customers. Lawmakers are currently looking at ways to have the Public Advocate’s Office help in this regard.

The state has done a lot in recent years to help its paper industry. Ensuring reliable train service should be a high priority.