The little engine that could still can.

Along with eight other hard-working locomotives, it’s hauling freight on behalf of a revitalized “short line” railway in northern Alberta.

Thanks to the far-sighted and employee-owned Manitoba company that controls it, the Athabasca Northern Railway has risen from a chronic loser to a $12-million enterprise in less than four years.

At the same time, Brandon-based Cando Contracting Ltd. is running money-making industrial switching operations in Chetwynd, B.C. and Ontario, while operating three more regional railways in Manitoba and Eastern Canada.

Courtesy of Cando ContractingLtd.
Gord Peters and cohorts regularly team up with major lines

Founded by an independent-minded railway man named Gord Peters 25 years ago, Cando Contracting is among the vanguard of smallish players bringing new life to the Canadian rail industry, while standing in the long shadows of CP Rail and CN.

They’ve done it by playing ball with the heavyweights, not by trying to beat them at their own game.

“We view ourselves as a franchisee of CN or CP (known in the industry as Class One railroads),” said Peters, who built his boardroom inside a vintage railway passenger car.

“It’s mutually beneficial. CN and CP are great partners,” he said, explaining that his company routinely teams up with Class Ones on a revenue-sharing basis, depending on the job at hand.

A public perception continues to linger that little guys were shunted out of the picture long ago. But more than 40 Canadian regional railways are currently active. They control 13,000 kilometres of track and represent about 30 per cent of the national railway network.

“The railway industry has changed a lot in the last five to 10 years,” agreed Tim Green, an Edmonton consultant called in to assist with set-up after Cando purchased Athabasca Northern in 2000.

“The big railways have shed some of their less profitable lines and the short lines have moved in to take over,” added Green, a lifelong railway fan who also runs a superb website (www.trainscan.com) that monitors industry news.

Cando began the aggressive acquisition of short lines during the late ’90s and immediately put its business model to work.

In B.C., the company moved in shortly after Tembec, an integrated forest products company, acquired the idle Chetwynd pulp mill 18 months ago.

With the mill now up and running, Cando manages the mill’s freight logistics, moving and loading railway cars within the pulp plant’s vast yard. Then B.C. Rail takes over, hooking up the Cando-loaded cars and hauling the product to buyers.

In Ontario, Cando employees load General Motors truck frames aboard railway cars on behalf of Magna International. Every evening, the independent railroaders turn over 25 carloads apiece to CN and CP for long-distance hauling.

“The Class One companies used to do this kind of work themselves, but they’re not interested anymore,” Peters said.

“They’re completely focused on long and heavy freight trains and they do a very good job on the mainline corridors.”

Meanwhile, Athabasca Northern Railways represents one of the gaudier short line success stories. In 2000, Cando paid a company called Rail America $6.2 million for this underperforming, 320-kilometre length of track, which connects Boyle, Alta. with another rail terminal just south of Fort McMurray.

Since then, the railway has been going gangbusters, hauling heavy equipment, boilers and pipe north to the oilsands projects and taking coking coal, sulphur and scrap steel back south on the return trip.

Cando Contracting continues to pour capital into the railway. A $1.5-million maintenance centre is under construction at Athabasca Northern’s operations base in Lac La Biche.

But Cando/Athabasca hit the bull’s-eye in late 2002, selling Alberta Pacific Forest Industries Inc. on a 10-year contract to haul 420,000 tonnes of logs a year from Fort McMurray to Al-Pac’s Athabasca pulp mill.

Al-Pac brass is delighted with the arrangement, saying the company saved $800,000 a year in fuel costs by switching from trucks to trains while reducing annual carbon emissions by 5,000 tonnes.

Peters and his marketers put together an irresistible package to close this deal. It was a masterful exercise in customer service.

“To make these things work, you have to do more than railroads have historically done,” said Peters.

To sweeten the pot, Athabasca Northern agreed to assume responsibility for inventory, weighing and loading chores, while building 50 acres of new yards and buying enough log-hauling railcars to do the job properly.

“That’s our specialty,” Peters summed up. “You have to show industry that going by rail can save them money.”