While it is good news that the Maine, Montreal & Atlantic Railway has — for now — postponed its abandonment of more than 200 miles of track in northern Maine, much work remains to be done to make the rail line financially viable.
Rather than abandon the track, which it said in February it planned to do, the railroad now will work with the state and others to come up with a plan to keep trains running in Aroostook County and northern Penobscot County.
A cornerstone of such a plan must be that the line is financially viable. This is especially true if the state buys the rails and turns them over to a private entity to operate.
According to MMA’s president, Robert Grindrod, the railroad was losing between $4 million and $5 million a year on the northern Maine lines.
Montreal, Maine & Atlantic Railway filed a “notice of intent” in February with the federal Surface Transportation Board to abandon 233 miles of its track in Aroostook and Penobscot counties. The notice covers the railroad’s line from Millinocket to Madawaska with spurs to Presque Isle, Easton, Limestone and Houlton.
The federal Surface Transportation Board said Monday it had postponed — for three weeks — a May 10 field hearing in Presque Isle so the parties can engage in mediation.
In a letter , Mr. Grindrod said traffic dropped by about 40 percent over the previous year. Wood chips, lumber, pulp wood and cooking oil for McCain Foods are the primary freight on the lines.
Mr. Grindrod suggested that a state takeover of the rail lines was the “best possible solution.” However, another sentence in his letter should give state officials pause. “MMA, as a private company, cannot continue to sustain the level of financial loss which is currently ongoing, with little or no prospect of improvement,” he wrote.
The state certainly can’t sustain such financial loss either.
An industry standard says that a railroad should earn between $50,000 and $60,000 per mile annually. MMA is earning about $20,000 on these lines. The only way to earn more is to get more companies shipping more freight on these lines. If the state is to intervene, it must have commitments from local mills and businesses that more volume will be shipped on the line.
Such a commitment is also important as voters will consider $7 million for the rail line as part of a bond package on the June ballot. To purchase the line, the state would add $7 million in cash while rail stakeholders, which include 22 major Maine manufacturers, would contribute $3 million in hauling fees.
The state must preserve the crucial rail corridor. As important, it must find a financially viable way to run it.