Welcome to AlaskaJournal.com - Alaska's longest running weekly business publication, covering issues that matter in the 49th state
width
Web posted Sunday, August 26, 2007

Alaska Railroad sees deep declines in gravel train runs

By Carly Horton
Alaska Journal of Commerce


  Anchorage Mayor Mark Begich proclaimed the state of the city as “excellent” at his fourth annual State of the City address. PHOTO/Melissa Campbell/AJOC    
The Alaska Railroad Corp. this year has hauled half the gravel from the Matanuska Valley as it normally would, and railroad officials said the year's rock hauls are expected to be down by 25 percent.

The railroad moves gravel from roughly April to October. In 2006 the railroad transported about 4 million tons of gravel, according to Patrick Flynn, the railroad's assistant vice president for marketing.

“We'll be lucky if we bring in 3 million tons of gravel this year,” he said Aug. 17. “As of two weeks ago, we were approaching 1.2 million tons versus 2.7 million tons this time last year.”

Since most of Anchorage is relatively boggy, the gravel is primarily used as engineered fill for building foundations, parking lots and the like. Some of the gravel is processed into asphalt and other materials.

Daniel Guay, aggregates manager for Quality Asphalt Paving, said a downturn in the housing market has partly contributed to the decline in gravel runs.

“A lot of private-sector projects are being built on existing sites,” he said. “And the housing market has dropped. That means fewer projects going on overall.”

Of the projects currently under construction, most are concentrated in east Anchorage, which means the gravel is coming by truck instead of rail.

“It's how your logistics stack up,” Flynn said.

Instead of transporting gravel by rail to south Anchorage and moving it from there, it is now being trucked in directly from the new sand and gravel pit located in Eklutna, 25 miles northeast of Anchorage. Alaska Aggregate Products is a joint venture of Cook Inlet Region Inc., Alaska Interstate Construction LLC and Eklutna Inc.

Alaska Aggregate has been up and running since May. Curtis McQueen, director of corporate affairs for Eklutna Inc., said business got off to a rocky start, but has since picked up momentum.

“We've had some incredible activity over the last 60 days,” McQueen said. “There are trucks lined up back to back as early as 7 a.m. most mornings. There's a mad dash going on right know that I suspect will carry us through until the snow flies.”

Charles Bates, general manager for Alaska Aggregate Products, agrees.

“We got a slow start this year, but I expect to see a robust finish, especially during September and October,” Bates said. “I estimate we'll move half a million tons of aggregate by the end of October.”

Alaska Aggregate is providing rock for several projects in Anchorage and surrounding areas, including the Wal-Mart expansion in Eagle River, the Creekside Town Center in Muldoon and Providence Alaska Medical Center, among others.

In addition to that, Bates also said that Alaska Aggregate will supply a large amount of aggregate to the Port of Anchorage this fall and next spring. The port is filling in several acres of Cook Inlet in a large-scale expansion project.

Eklutna Inc.'s McQueen said that all indications point to Alaska Aggregate getting its fair share of the market this year, but he does not see the new pit as a major competitor.

“Companies like Anchorage Sand and Gravel are established and have infrastructure,” he said. “I think there's room enough in the market for us. I don't think our business will have a negative effect. I don't think the 'big boys' will see a huge impact because of the volume (of gravel) they bring in.”

“The Eklutna pit is new, so I'm not sure the effect it's having (on railroad hauls),” Flynn said. “What I do know is that the railroad is able to move things very efficiently.”

According to Flynn, one train can move the same amount of gravel as 320 trucks. That many gravel-laden trucks means more traffic and wear and tear on the roads. That's bad news for motorists and taxpayers, but could be good news for windshield repair shops.

The cost of gravel may soon increase as well, since less gravel is being moved at once in a less-efficient transport method.

Two more possible contributing factors related to this year's drop in gravel runs were the late spring and lack of federal funding for construction projects.

Due to the late thaw, most construction projects got a late start. Also, state and municipal projects were put on hold waiting for federal funding.

“The federal government didn't pass their budget last fall, so the DOT was paralyzed,” Flynn said. “The plan for this year's Statewide Transportation Improvement Program wasn't approved until July.”

“Projects are a lot easier to do and get done more quickly if they're released in May and not July,” Guay added.

Wes Vander Martin, vice president/general manager for Anchorage Sand and Gravel, sees the downward trend continuing, at least for the foreseeable future.

“There's only so much fillable land (in Anchorage),” he said. “It's a combination of a downturn in the economy and housing market and increased competition with the Eklutna pit.”

Flynn is uncertain as to what the future holds.

“This is one of many segments to our business. On the whole, we've experienced modest growth most years,” he said. “But gravel is an important piece of business and valuable to Anchorage and Mat-Su residents. When the trains aren't running, those are jobs that aren't available.”

Flynn predicts that business will improve over time, but he is cautiously optimistic.

“My guess is we'll do better next year, but I'll be surprised if we get back to the 4 million mark anytime soon,” he said.

Carly Horton can be reached at carly.horton@alaskajournal.com.

Top 40 Under 40 Nomination icon

Top 40 Under 40 Nomination form

share on facebook
Alaska Journal on Facebook
width

AlaskaJournal.com | AlaskaStar.com | AlaskanEquipmentTrader.com

Add to My Yahoo! | Contact Us | Jobs | Subscribe | Privacy and Legal Information

Copyright © 2007-2008 Alaska Journal of Commerce & Morris Communications Inc

Explore the Kenai | Visit Homer Alaska | Fishing Report