Kyle Railroad

he U.S. agricultural sector has been widely recog-T nized as the world’s most efficient for more than 150 years, thanks in large measure to the nation’s railroads. U.S. railroads move approximately 16 million carloads of grain and other farm products in a typical year. Grain accounts for about 30% of these shipments, bound for export markets around the world. G&W makes an important contribution to maximizing the efficiency of U.S. agriculture. In 2021, 51 G&W roads moved approximately 225,000 carloads of grain and other ag products – with corn, wheat and soybeans comprising about half of those shipments. Among G&W’s leaders in the agricultural sector is the Western Region’s Kyle Railroad (KYLE). Operating in the heart of the U.S. grain belt, the road runs from north central Kansas approximately 550 miles into eastern Colorado. KYLE moved just shy of 20,000 carloads of agricultural products last year, primarily wheat for U.S. consumption as well as soybeans and milo bound for China.

Strong Exports to China

Despite the highly disruptive impacts of the COVID-19 pandemic on U.S. agriculture, KYLE ended 2021 slightly above plan on revenue, according to General Manager Marv Lockman. “There were several reasons for that,” he says. “Strong exports of grain to China continued throughout the year. Also, our car storage revenues continued to be healthy as we signed a threeyear contract with Southern Companies to store their railcars. Finally, we really focused on KYLE fleet utilization, which helped both our carloads and car hire earnings.”

SHUTTERSTOCK BY RANGIZZZ

DALTON BOGGS Kyle Railroad (KYLE) among the grain fields in Brewster, Kansas.

Kyle Railroad (KYLE) in Brewster, Kansas, following a snowstorm.

Steady Business Outlook

So, what is the business outlook for 2022 and 2023? “We see our business remaining steady over the next two years,” Lockman continues. “We have two unit train facilities that will help us take advantage of export programs, and we anticipate that our single-car domestic grain shipments will remain reliable. Remember, however, that much of KYLE’s business is weather-dependent. We operate in an area where there is mostly dryland farming, so there is a direct correlation between weather events, such as droughts, and KYLE’s carload numbers.”

Changing the Game

Two events that took place in 2021 are likely to change the game for KYLE in the coming years. “Over the course of 2021 and into early 2022, we undertook a bridge-strengthening project to increase the weight limit on KYLE’s line,” says Deb Alexander, sales and marketing manager for KYLE and other G&W Western Region railroads. “The project was completed on March 1 of this year, when the weight limit was upgraded to 286,000 pounds. This allows us to move more product more efficiently for ag and other customers because about half of our covered hopper fleet can accommodate the 286,000-pound weight.” The second game-changing event was Summit Agricultural Group’s acquisition of Phillipsburg, Kansas-based Prairie Horizon Agri-Energy in July 2021. Summit is investing more than $200 million to retrofit the existing ethanol plant, which is serviced by KYLE, in order to transition from production of corn-based ethanol to ethanol made from wheat starch. It is also constructing a state-of-the-art wheat protein production facility on the site, which will enable the company to meet growing U.S. demand for the product. On completion of the retrofit and construction projects, anticipated in mid-2023, Summit will be North America’s largest producer of low-carbon intensity renewable fuel made from wheat starch, and KYLE will play a key role in moving that fuel to the marketplace. “Since its purchase of Prairie Horizon Agri-Energy, Summit has already moved some shipments of cornbased ethanol to KYLE to better reach western markets,” says Alexander, “and volume will continue to grow as the conversion to wheat starch takes place.”

“Since its purchase of Prairie Horizon Agri-Energy, Summit has already moved some shipments of corn-based ethanol to KYLE to better reach western markets, and volume will continue to grow as the conversion to wheat starch takes place.” −Deb Alexander, sales and marketing manager for KYLE and other G&W Western Region railroads

Highest Priority Is Safety

Safely conducting day-to-day business remains the highest priority for KYLE, as it does for all G&W railroads. Looking back on 2021, there were positives and negatives to KYLE’s safety performance. “On the positive side, the road had just one human factor incident last year compared to four in 2020,” reports Lockman. “However, our biggest area of safety improvement was the reduction of derailments. We had 22 derailments in 2019, seven of which were FRA- reportable; six derailments in 2020, one of which was reportable; and two in 2021, neither reportable.” On the negative side of the ledger, KYLE experienced its first workplace injury in five years during 2021. “Our single injury in 2021 was a setback for the team,” continues Lockman. “In 2022, all of our employees are committed to setting a new standard in safety. We will continue to live by KYLE’s Core Purpose, which is the same as G&W’s – to be the safest and most respected transportation service provider in the world.” n

DALTON BOGGS SHUTTERSTOCK BY FOTOKOSTIC, SHUTTERSTOCK BY JENNIFER WHITE MAXWELL

Kyle Railroad (KYLE) owes its successful agriculture business to long-term relationships with three agribusinesses, which account for almost 75% of its agricultural carloads. Here is a quick look at each:

SHUTTERSTOCK BY MAKS NARODENKO The largest of KYLE’s customers is Scoular, a 130-year-old agribusiness with annual sales over $6 billion. Its more than 1,000 employees buy, store and sell commodities, such as barley, corn, soybeans and wheat, as well as manage logistics and transportation for these products worldwide. Scoular has been doing business with KYLE since 2003.

Another long-term KYLE customer is AgMark LLC, an agricultural cooperative that merchandises locally produced, quality grains for approximately 60 Kansas-based entities. Today, AgMark handles over 100 million bushels of grain annually, bound for North American end users and exporters. KYLE has been providing rail service to AgMark since 1999.

Frontier Ag is a full-service agribusiness cooperative serving customers throughout northwest Kansas and eastern Colorado. It is one of the largest agribusiness cooperatives in the area, operating in 11 counties in Kansas and one county in Colorado. It has been relying on KYLE for rail transportation since 2008.