Watco Companies VP oversees rail lines serving north central Idaho and southeastern Washington

By Elaine Williams
July 15, 2017

One of the biggest questions in the debate about removing the four lower Snake River dams is whether rail could haul the grain that's now barged to Portland and transferred onto ocean-going vessels headed to the Pacific Rim.

The answer is a qualified yes, said Ted Kadau, vice president-commercial of Watco Companies, the largest short-line rail company serving the region.

Watco would move grain out of the Lewiston-Clarkston Valley, Palouse and Camas Prairie, if necessary, Kadau said. "But we also understand that the river is a critical transportation component." Any transition wouldn't happen overnight. Watco would have to add new infrastructure to handle the increase in volume.

It's unknown whether transportation prices would rise, Kadau said. "I can't tell you that, because I don't know how that would all shake out," Kadau said. "As it stands today, rail rates to the destinations that the barge goes to are higher than the barge, and that's why it moves by barge."

Kadau has quietly monitored the back-and-forth about the river in his more than 10 years working for Watco in Lewiston, as part of Watco's neutral stance on the issue. Watco is doing well with its existing volume, he said.

As much as Watco might gain from the demise of commercial river traffic, it backs the great number of its customers who depend heavily on the river, he said. "(Barging) is a very efficient, very economical form of transportation. We are very supportive of our customers."

BUSINESS PROFILE talked with Kadau about the health of Watco's operations in the region, the commodities it moves and why the public sees trains running so infrequently.

Business Profile: How profitable is the Great Northwest Railroad?

Ted Kadau: We originate here in Lewiston and we interchange with the Burlington Northern Santa Fe and the Union Pacific Railroad at Ayer in southeastern Washington, so cargo can get to or come in from anywhere in the nation served by rail.

If you've got a railroad that's 85 miles in theory, it would be nice if you could move 8,500 carloads each year. We move 16,000. That then gives you the revenue to reinvest in your line, and we do a great job of that. It's a very healthy, very sustainable railroad.

The rail line between here and Ayer is relatively young because a lot of it was rebuilt when they dammed the river (in the 1970s). They had to move it up the side of the bank, because when they dammed the river, the water level rose. Most railroads have been around for 100 years or more. You have a substantial amount of ongoing maintenance you have to do. You have to put in new ties. You have to put in new rail. You have to put in ballast (stones). You have to go in and fluff the ballast up. You push it underneath the ties. Moisture is a huge enemy of a rail line. Water gets in. It freezes. It thaws. It cracks.

BP: What kinds of commodities do you move on the Great Northwest Railroad?

TK: Clearwater Paper is our largest customer. The second-largest customer is Idaho Forest Group. Then it kind of flows from there.

For Clearwater, it's basically chemicals and pulp that are used in paper production. We also do outbound products for them. We move peas and lentils for Pacific Northwest Farmers Co-op and scrap metal for Pacific Steel & Recycling. We do some magnesium chloride for Envirotech Services at the Port of Lewiston. They use it in the wintertime for ice melt on the roads and for dust control in the summertime on dirt roads.
We bring a substantial amount of fertilizer into Central Ferry in Whitman County.

We now have McGregor and CHS Primeland over at the Port of Wilma, and we do a significant amount of traffic into their (fertilizer) facilities as well.

Typically our crew will leave Lewiston at 3 p.m. and they will be pulling into Ayer at 9 that night. They will make an entire turn in a 12-hour shift. They will leave town, take cars to Ayer, deliver loads or empties and bring back loads or empties into town.

BP: How well does the Palouse River and Coulee City Railroad do?

TK: We operate two lines of The Palouse River & Coulee City Railroad - the north line and the south line. We lease the south line from the Union Pacific. The north line is owned by the state of Washington and we contract with the state to operate the line for them. On the south line we interchange with the Union Pacific and The Burlington Northern Santa Fe Railroad at Wallula, Wash., on the Columbia River. On the north line, we interchange with the Union Pacific at Hooper, Wash.

The PCC is about 200 miles in total, not including about 50 miles between Hooper and Wallula where we have trackage rights on the Union Pacific's main line. You want to do about 15,000 cars a year, and we're at about 4,000 cars. Our partnership with the state of Washington is very critical on that railroad. We do put quite a bit of our own revenue into that railroad as well.

On the PCC, we operate a fleet of hopper cars and move grain from small country elevators in places such as Thorton, St. John, Endicott and LaCrosse in Whitman County and Spofford, and then shuttle the grain to a barge facility at Wallula. The grain is taken out of the rail cars and loaded onto a barge headed to Portland, where it's transferred to ocean-going vessels headed to the Pacific Rim. The fleet of hopper cars includes cars owned by the PCC and the state of Washington. We deliver and receive cars at Walla Walla from another short line railroad that serves a section of rail between Walla Walla and Dayton.

If the crop is great and we get enough moisture, it's a wonderful year on the railroad. If we're in a little more of a drought condition like we have been the last few years, it makes things a lot more challenging.

BP: As busy as Watco is in this area, it doesn't seem as if you see trains very often. What can you share about that?

TK: We run down on Snake River Avenue in Lewiston all the time to CHS Primeland's barley-loading facility. I get a lot of comments from people who say, 'I didn't even know you guys ran down there anymore.' Part of that is by design. We run down Snake River Avenue at 3 a.m. because it's a heavily populated area. A lot of people use the park. We try to avoid people. Unfortunately, where trains tend to interact with the public the most is at railroad crossings, and sometimes that's not always a good thing. In the railroad industry, safety is our No. 1 priority, above profitability, above customer service, above everything is safety. It's very easy to hurt someone or kill someone. We do everything we can to be safe.