Keeping the Line Open: The Mississippian Railway Cooperative

by Fred D. Baldwin

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In Fulton, Mississippi, three different modes of transportation infrastructure-road, water, and rail-meet at one loading point. Standing near a conveyor belt owned by the American Cellulose Corporation, you can watch wood chips from the firm's plant flow into one of three hoppers, depending on whether the chips are to be shipped to market on a truck, a barge, or a railroad car.

The trucks roll out to nearby U.S. Highway 78, which connects Memphis to Birmingham, a distance of 247 miles. At Port Itawamba, the barges slip into the Tennessee-Tombigbee Waterway, which connects the lower Tennessee Valley to the Gulf of Mexico, a distance of 234 miles. And the rail cars rumble along the tracks of the Mississippian Railway, which connects . . . well, Fulton to Amory, only 22 miles away.

"You're seeing inter-modal transport at its best," says Tim Weston, executive director of the Itawamba County Development Council (ICDC), whose headquarters are in Fulton, a small northern Mississippi community.

Older by far than either U.S. 78 or the Tennessee-Tombigbee Waterway, the short line railroad makes a major contribution to the economy of Itawamba County and neighboring counties. The four companies that depend heavily on rail either to bring in raw materials or to ship out their products employ a total of about 750 workers in the area.

In the mid 1980s, however, Itawamba County nearly lost its railroad. A concerted community effort in support of a series of public-private partnerships saved infrastructure (tracks and rights-of-way) that, once lost, would for all practical purposes have been lost forever. But that wasn't enough. A railroad differs from a highway in that someone has to run a railroad. The community solved that problem, too, creating another kind of public-private partnership that's proven its workability for 15 years.

The Mississippian Railway was built in the early 1920s to haul timber products south to Amory, where its tracks connect with tracks that now belong to the Burlington Northern Santa Fe, one of the nation's large Class I railroads. In time the railroad was a factor in attracting other industries, such as Mueller Industries, a manufacturer of metal products that now operates four plants in the area.

In the late 1970s the U.S. Corps of Engineers informed the railroad's owner and the community that building the Tennessee-Tombigbee Waterway would result in the flooding of about nine miles of track. The corps had concluded that it would be cheaper to buy and abandon the railroad than to relocate its tracks. The railroad's absentee owner was ready to sell, and in 1980 the line was sold to a Pennsylvania-based firm whose core business was leasing rail cars to shippers, not running a short-haul railroad.

However, local businesses along the line—Mueller Industries, Homan Industries (a producer of wood products), and a mineral products company no longer in the area—knew that they needed the railroad for moving heavy loads into and out of their plants. Wilson L. Heering, engineering manager for Mueller Copper Tube Company (one of the four Mueller Industries affiliates in the area), explains that his company's plants ship in something like 125 million pounds of copper by rail per year.

"If we can save a fraction of a penny per pound on freight," Heering says, "when you're working with that many pounds, it adds up to a large number of dollars. A railroad is one of the main things that a company like ours looks for."

A Four-Step Course of Action

Executives from the directly affected companies (notably John Staples, a Mueller vice president) and other community leaders agreed to a four-step course of action outlined by Buster Davis, then director of the state's Appalachian Regional Commission office and owner of a Ford dealership in Fulton. First, with help from Mississippi's congressional delegation, they persuaded what was then the Interstate Commerce Commission to withhold approval of the railroad's sale if a way could be found to keep the line alive. Next, they raised money for the line's purchase, using grants and loans from a number of public partners and the business firms involved.

In 1986, the ICDC became the owner of the Mississippian Railway. Since the nonprofit ICDC's 31-member governing board has representatives from local government, local businesses, and community agencies, the Mississippian is, in effect, owned by the whole community. Like others interviewed, Larry E. Homan, president of Homan Industries, emphasizes the depth of community support for the railroad. "No one drew any salaries," Homan says. "The local telephone company gave us free phones-and they were never going to haul anything on those tracks."

After the purchase, someone had to begin making business decisions on train schedules, rates, and investments. Leaving that kind of operational responsibility with a 31-member, quasi-public body seemed no way to run a railroad.

"I told them," Davis recalls, " 'The ICDC will own it. But the only way this will work is if the shippers will run the railroad.' "

After some discussion, the ICDC and the companies directly involved created a new entity, the Mississippian Railway Cooperative. It's governed by a three-person board representing the companies with a direct interest in running the line fairly and efficiently. The Mississippian Railway can always be expected to give top priority to customer service because it is, for all practical purposes, operated by and for its customers.

Even before other parts of the plan were in place, county leaders began the fourth step: raising money for upgrading the railroad's track and equipment, which had deteriorated severely. Since the purchase, more than $2 million has been invested, raised through grants (including one from the Appalachian Regional Commission), loans, and industry investments.

"The brush had grown up so that it looked like a tunnel where the trees overlapped the track," recalls William (Buddy) Carlisle, a third-generation engineer and general manager for the Mississippian Railway Cooperative, which now actually operates the railroad. "Our biggest challenge was to get to where we could serve customers on a regular basis. Crosstie condition was unreliable at the best. We got on the ground [off the tracks] six times in one day. The fun of that wore off pretty quickly."

Operating at a Profit

Now the Mississippian has four customers again: Mueller Industries, Homan Industries, the American Cellulose Corporation, and Ferguson Enterprises. Ferguson, a wholesale distributor of steel and copper tubing, opened its Fulton plant, now employing about 40 workers, largely because of access to rail transport. The Mississippian has been operated to produce a modest profit ever since the ICDC bought it, and the loans used to restore it are almost paid off.

"In a good month we'll haul between 100 and 120 cars," Carlisle says. "In a bleak month it might fall off to around 50. Normally, we run Mondays, Wednesdays, and Fridays-unless someone needs something on Tuesday or Thursday, and then we run on Tuesday or Thursday. We'll run on Saturday or Sunday, if we have to. We don't have a big enough customer base to be picky."

A railroad managed by a customer consortium is unlikely ever to become picky about how it provides service, but the Mississippian may well acquire a larger customer base. The ICDC plans to invest in a spur line to a site near the port, very close to where American Cellulose now loads its barges. The Appalachian Regional Commission will assist with this, just as it does with access roads to industrial parks. This spur will give existing and future customers along the line easier access to the waterway and to third-party logistics services. Heavy loads can be transferred by crane from rail cars to barges or trucks.

Jack Creely, who was Fulton's mayor at the time the ICDC bought the Mississippian and is now president of the board of the Itawamba Port Authority, says rail-to-port connections will bring three benefits to the area. It will enhance service to existing railroad customers, add value to the port itself and to developable land nearby, and increase the value of developable land all along the Mississippian's right-of-way.

"Not everyone realizes," Creely says, "that one of the major operations of a port involves its inter-modal capacity. It's of utmost importance to us that this spur exists. I think the railroad could enhance the service that the port provides by 50 to 75 percent.

"When Itawamba County acquired the Mississippian, not only was service undependable, but the right-of-way had more than 20 citations from the Federal Railroad Administration. Within two years of its purchase by the ICDC, after investments totaling over $2 million in grants, loans, and private capital, the Mississippian won a national rail service award, the "Golden Freight Car," in the short line "shipper commitment" category.

Buster Davis went to Chicago to receive the award on behalf of the railroad. At the awards banquet, he found himself seated between senior executives from the Union Pacific and the Burlington Northern Santa Fe railroads. "How long is your railroad?" they asked. "Twenty-two miles," Davis answered. Soon he was telling the Mississippian's story to the entire audience. After he finished, he says, the questions continued for half an hour.

His story involved a lot of characters, considerable suspense, and a happy ending. But its main theme was simple: the railroad is worth all the effort it took to save it. "When you lose a mode of transportation in a town like this," Davis sums up, "it's like you cut off one of your arms."

Fred D. Baldwin is a freelance writer based in Carlisle, Pennsylvania.