South Orient Railroad may go far with West Texas trade route
02:00 PM CST on Saturday, November 20, 2004
By KATHERINE YUNG / The Dallas Morning News
FORT STOCKTON, Texas – The railroad that refuses to die is gearing up for a comeback.
Headed for the scrap heap on at least three occasions and dormant for the last six years, the South Orient Railroad is once again seeking to defy history.
Its mission: proving that a profitable trade route exists through this former Army outpost and other West Texas towns, not only with Mexico but Asia too.
Next month, barring unforeseen hiccups, companies will start sending goods by rail from Fort Worth to the border at Presidio, Texas, and on to Topolobampo in northwest Mexico.
"This could be an alternative for bringing goods into the nation," says Mario Medina, multimodal section director at the Texas Department of Transportation.
Freight trains operated by the Fort Worth & Western Railroad already run from Fort Worth to San Angelo Junction, Texas.
That's where the South Orient begins, traversing 382 miles through 11 West Texas counties to Presidio, where it connects with the Mexican railroad Ferromex.
The revival would mark a milestone of sorts. Since the early 1900s, the pursuit of a faster, cheaper way to move grain and other goods from the Midwest to the Pacific Ocean via Texas and Mexico has captivated – and eluded – those who have tried.
The dream began with Arthur Stilwell, founder of the Kansas City Southern railroad and of Port Arthur. He built most of a rail line stretching from San Angelo to the port of Topolobampo in 1911 but never saw it become the trade corridor he envisioned.
Since then, other attempts have also fallen short. But this time, things may be different.
"We're seeing a huge effort between the U.S. and Mexico to make this work," says John Helsley, president of the Community Rail Development Corp., who is helping to market the South Orient. "That's the only way it's going to work."
Expansion projects are unusual these days, at a time when many rail lines are being closed.
But resuscitating the South Orient isn't just about boosting trade. It could also help several of the isolated oil and ranching towns along its arid route, bringing badly needed jobs and people to the area.
Perhaps the biggest beneficiary would be Fort Stockton, a city of 8,524 residents about 240 miles east of El Paso. Its location on Interstate 10 is ideal for transferring goods between trains and trucks.
The city's development arm has bought 90 acres next to its historic railroad depot for warehouses and sorting and distribution facilities.
"We are desperately trying to diversify," says Doug May, executive director of the Fort Stockton Economic Development Corp.
The railroad could generate the type of high-paying jobs the city needs to attract residents.
It "will be very similar to what the oil boom did, except it wouldn't be a roller coaster," Mr. May says.
Port in the desert
The South Orient would help the city win state designation as an inland port, speeding infrastructure improvements.
Given enough time, local officials say, the South Orient will succeed.
For starters, it's got funding. The state spent $6 million in 2001 to buy right of way and infrastructure, which saved the rail line from being torn up for scrap.
An additional $5.5 million in federal funds is going to replace thousands of worn-out ties, the cross braces that support the rails.
And for the first time, a Mexican company will operate the South Orient.
In 2001, Texas Pacifico Transportation, a U.S. subsidiary of Mexican mining and transportation giant Grupo Mexico, plunked down $3.5 million to lease the South Orient for 50 years. It now pays the state $5,000 in annual lease fees.
Grupo Mexico has a big incentive to invest in the South Orient. It owns Ferromex, which links with the South Orient at Presidio, one of 15 freight rail crossings along the U.S.-Mexico border.
Joining the two railroads under a single operator would ensure seamless service, a big selling point for shippers.
Grupo Mexico is investing between $10 million and $11 million to rehabilitate the South Orient, including building a customs facility in Presidio, says Roy Williams, Texas Pacifico's chief operating officer.
Initially, the South Orient plans weekly runs, increasing its service as it builds traffic.
Repair work on the line will be ongoing, gradually enabling the railroad to increase its speed from the current 25 mph. Industry figures show that the Burlington Northern Santa Fe has been running 23.1 mph on average across its system.
The changing international trade environment also favors the South Orient, supporters say.
Total U.S. trade by rail with Mexico reached $31 billion last year, a 69 percent increase since 1997. Trains crossing at Laredo and El Paso already endure lengthy tie-ups. Diverting some of those rail cars to Presidio could reduce delays.
Rail traffic isn't the only target. Thousands of trucks carrying vegetables from the Mexican state of Sinaloa constantly stream across the border at Nogales, Ariz., before turning east on Interstate 10. The South Orient would offer a more direct route to East Coast markets.
Rapidly expanding trade with China also enhances the South Orient's appeal.
Shipments coming from the Far East are getting stuck at ports in Los Angeles and Long Beach, Calif. An alternate route into the United States could relieve congestion, the railroad's backers say.
"Before we used to talk about NAFTA trade," says Michael Dalby, president of the Chamber of Commerce in San Angelo. "Now, it's the potential for Asian trade coming into the Mexican ports."
But the South Orient faces significant challenges. Chief among them is rehabilitating the long-neglected line, which could cost up to $60 million, Mr. Helsley says.
Rising steel prices could push the tab up further. But more federal funds could be on the way if the railroad proves it can attract shippers, Mr. Helsley says.
In addition to replacing thousands of ties, the state plans to substitute heavier rails for the lighter ones now on the track. That will enable the railroad to carry heavier loads at faster speeds.
"Railroad infrastructure is expensive, and it's expensive to maintain," says Mr. Medina of the Texas Department of Transportation. "It is going to take a lot of money."
The Mexican rail line also contains a major flaw. Rail cars stacked on top of each other, which saves shippers money, can go only as far as the city of Chihuahua. The rail line west of the city, to Topolobampo, contains 87 tunnels that are too short for double-stack cars.
Modernizing the South Orient will be critical in drawing enough shippers to turn a profit.
The previous operator, a small group of investors, lacked enough customers and lost millions of dollars. It had bought the railroad in 1992 from the Santa Fe Pacific Corp., which had owned the line since the 1920s.
This time around, a dozen companies have expressed interest, Mr. Helsley says. Other potential customers are waiting to see if the railroad can deliver reliable, affordable service.
"The railroad is the only way to keep us viable," says Brian Busse, a partner in Alamito Zeolite, a new firm formed to mine zeolite, a specialty mineral, south of Marfa.
Alamito can't get enough trucks to come to such a rural location, he says.
But the railroad has lost some credibility because of delays in starting service. Companies on both sides of the border have heard over and over that the South Orient would be running again – without seeing any rail cars whizzing by.
It didn't help that this year's start-up date was moved back a few times because heavy rains washed out portions of the track.
"We've been hearing the story [about the start-up] for the last two or three years," says Charles Butts, owner of a San Angelo scrap paper recycling company.
The South Orient has formed marketing agreements with both the Kansas City Southern and Burlington Northern. The deals allow for through service and rates on each other's lines, a necessity for luring traffic.
"The railroad might not be wildly profitable in the short term, but trade patterns shift and change," says Stephen Roop, assistant director at the Texas Transportation Institute.
He says the South Orient faces plenty of challenges, but "it would be tragic to let that line go altogether."
Residents of Fort Stockton agree. Inside the furniture store he founded on Main Street 49 years ago, Pete Terrazas fondly recalls the days when trains rolled through his hometown, carrying not only goods but people, too.
"There was some traffic on it. There would be a lot more on it now. Things have changed."