End of Healy coal-hauling contract hurts railroad

Posted: Thursday, January 02, 2003

ANCHORAGE (AP) -- The Alaska Railroad expects an $8 million drop in revenues for 2003 due to a decline in freight after the loss of its Healy coal shipments last year.

The state-owned railroad is predicting a $1.1 million profit on revenues of $99 million in 2003. Last year the railroad estimated revenues of $107 million and profits of $4.2 million.

And the railroad doesn't expect to see revenues at last year's levels again until 2007, according to a 5-year forecast prepared by the railroad.

Alaska Railroad Corp. hauled its last load of coal in 2002 from Healy to the Port of Seward, marking an end to an 18-year relationship that provided millions in revenues for the railroad.

As a result, the railroad expects freight revenues to dip to $74 million in 2003, down from $81 million the previous year. Coal accounts for about 5 percent of its freight earnings.

The railroad is projecting only modest growth in its freight revenues through 2007 after they quadrupled in the last few years.

Railroad spokesman Patrick Flynn told the Alaska Journal of Commerce that the slide is ''natural maturation after a sustained period of growth.''

Petroleum shipments, which make up most of the freight revenue for the railroad, are expected to drop by $1 million in 2003.

Decreased oil activity on the North Slope will also hurt revenues for the railroad's joint rail-barge venture with Seattle-based Lynden Inc.

The number of passengers expected to ride next year is expected to remain at about 500,000 and lease revenues are expected to drop, according to the railroad's budget.

The railroad has seen passenger numbers dip dramatically since 1999 when ridership was pegged at 679,000. It attributed the drop to the opening of the 2.5-mile Whittier tunnel in June 2000.

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