Post by georgiaroad on Jan 16, 2014 1:15:47 GMT -5
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ALL REGULAR NEWS OUTLETS
TAMPA,FLORIDA
January 14, 2014
Alabama Midland Railroad System, owner of Florida & Gulf Coast Railway and Alabama Central Railroad announced in its regular stockholders conference call its intention to change its corporate structure under a new name of Florida & Gulf Industries. The new name reflects the resurgence of the Florida & Gulf Coast brand and seeks to reduce cost and garner operational savings by simplifying its current split corporate structure. Upon completing the name change, the new corporation would then purchase all assets and operations of the Florida & Gulf Coast RR, Alabama Midland System and the Alabama Central RR subsidiary owned jointly by the two railroads, and combine them into one marketing entity under the name Florida & Gulf Coast Railroad. CEO James "Jack" Harrison opened new business by announcing these changes were eminent with Surface Transportation Board expected by late March, 2014. Operations under the Florida & Gulf Coast Industries name would allow the system to have one corporate brand for marketing and public relations.. The merger would see all AMRR railroad operations folded into the current FGC corporate brand with all executive, management and administrative functions merged into a single new corporate headquarters in Tallahasse, Florida.
Harrison was quick to acknowledge that both the FGC and AMRR railroad entities had managed to weather the Great Recession of 2009, but each had suffered remarkable drops in revenue due to online industry closure and reduction of shipping both raw material and finished products over both independent systems. AMRR lost two large paper mills, while the FGC subsidiary ACR lost one. Many saw mill and chipping operations also halted or ramped down and carloadings in general declined sharply over 2009-2010. FGC also lost its Amtrak subsidies that it used to maintain its Cross-Florida Division between Jacksonville and New Orleans with the reduction in Sunset Limited routing which took Jacksonville off the timetable. Phosphate loadings were slso down outside of the Bone Valley production bundle of lines, further squeezing the Cross-Florida Division for revenue. On the AMRR, loss of two paper mills silenced whole branch operations. The shift to natural gas electric generation by Southern Company also saw the reduction of one full time coal fired generator to peak duty only. This move significantly reduced the percentage of coal hauling as a primary revenue stream, and left doubt as to the long term need of coal of any kind on two of the three power plants located on the AMRR. AMRR saw the ending of all pulpwood based hauling to paper mills, as truck hauled tree-length proved more efficient and timely compared to open ended supply contracts by the mom and pop woodyards that once dotted the AMRR system map..
"We stand at a figurative and literal crossroads for our company," Harrison explained, "We have to seek out new revenue streams and employ leaner tactics to keep profitable and efficient. A new single-minded brand pulling the best of both the AMRR and the FGC will allow us to reduce redundancy and present a single, recognizable front to customers and the public. This new brand will allow expansion of RockTrain, exploit regional intermodal from Gulf ports to inland terminals through Hurricane Intermodal and find new ways to make these railroads run profitable under a single structure as opposed to the current two."
Industry analysts quickly chimed in to fill in the details of the general comments made by Harrison. The first order of business would be to combine the corporate structure. The AMRR headquarters in Columbus, GA would be closed, as would that of the FGC in Tampa. FL. A new combined center would open immediately in Tallahassee, FL to manage and oversee the combined system. The AMRR colors would fold into that of the more recognizable FGC corporate scheme, indicating the FGC as the beneficiary and controlling faction in the post merger company.
AMRR would reduce its footprint and send traffic from South Georgia and South Alabama onto the FGC which would then forward it through to traditional FGC interchanges such as Meridian, Birmingham and New Orleans. This would bolster traffic on the better maintained FGC main trunk lines through the Florida Panhandle and allow AMRR to shed expensive and underused trackage rights and terminal use between Columbus, GA and Birmingham, AL. Using the ACR subsidiary, the combined FGC-AMRR would enter Birmingham form the south on its own lines and directly link to an upgraded terminal at Ensley Yard on the Birmingham Southern, an AMRR subsidiary, right at the edge of all Class One interchange partners in Birmingham. AMRR would also release all coal operations to Georgia Road, including the sale of coal power to Georgia Road or a second party lessor. FGC-AMRR crews would then operate the coal trains at a specific rate proportion aimed at keeping these routes in good repair. The AMRR would then, in effect, be just another subsidiary operation in the larger Florida & Gulf Coast RR brand.
The AMRR has long been known for its eclectic and Spartan view of motive power. The new FGC-AMRR would utilize excess motive power to bolster new pools associated with RockTrain and Hurricane Intermodal operations which would spread to some regional cities on the AMRR route.The new system would also work closely with Georgia Road to align its own regional Hurricane Intermodal Service to that of the nationwide QuickSilver Intermodal network, with the idea at increasing originating and terminating intermodal of the FGC-AMRR system. This alignment in intermodal would give FGC the edge in keeping its newest perishables express train to the new RailEx distribution warehouse being built in Jacksonville, FL. Test runs for Tropicana out of Bradenton, FL to Georgia Road in Birmingham have already proven a FGC-AMRR-ACR route could be successful, given carloadings could be stabilized with the addition of non Tropicana cars. and rate structure could be reduced to one non Georgia Road carrier.
"The new AMRR side will be smaller but more efficient in terms of cost per mile versus revenue per mile" Harrison noted." A right-sized core system on both merger partners will ensure we see the next decade as profitable and poised to follow the US economy as it rebounds further. Construction and housing markets are on the rise in Florida and in Alabama, fueled in part by the large number of foreign automakers settling in the Deep South. Port traffic is up in the Gulf and we are poised to be an integral part of transportation from the Gulf to inland consumers in the region of the Deep South. We are also participating with the FDOT in building a state wide passenger rail system that could eventually mover over most of the FGC." In a new conference about the planned merger following the meeting, Harrison announced that FGC was the chosen designated operator of the new Florida DOT SunRail commuter operations about to start up between Sanford, Orlando and Tampa. He also indicated that FGC was in talks with both SunRail and FLDOT to expand the service to Jacksonville where it could link with the former Amtrak Sunset Limited route over the panhandle region of Florida. Dubbed the Sunsetter Initiative, the final plan would see FGC allow SunRail to link Miami, Tampa, Orlando, Jacksonville and Tallahasee to points west in Pensacola, Mobile and New Orleans.
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