Short Lines, Big Impact: How Short Line Railroads Power America’s Supply Chain with Joey Evans

Joe Lynch: [00:00:00] Hello, friends. Welcome to the Logistics of Logistics show. My name is Joe Lynch. Thank you so much for joining us today. Today’s topic is Short Lines, Big Impact, how short line railroads power America’s supply chains, with Joey Evans. How’s it going, Joey?

Joey Evans: I’m doing great, Joe. Thank you for having me

Joe Lynch: I’m excited to talk to you about railroads today because I feel like I don’t know enough.

W- before we hit record, we were talking about that. I always assume that my audience is similar [00:00:30] to me and go, “Yeah, I kinda, I understand what a railroad is. Have one rail move.” But so hopefully you can educate us today. So Joey, please introduce yourself and your company and where you’re calling from today.

Joey Evans: Yeah, Joey Evans Senior Director of Government Affairs and Business Development for T&W Corporation. And I’m calling out of Dallas, Texas

Joe Lynch: So what does TNW do?

Joey Evans: Yeah. So we are a transportation and logistics company that specializes in [00:01:00] short line railroads based here in Texas Dallas to be specific with short line railroads positioned around the state generally in rural communities

Joe Lynch: Yep. So I’m gonna keep asking basic questions all day today. You kn- you know that. So we have class I railroads, and those are the big ones. And then there’s the class II railroads. By the way, is there anything beyond that, or is it just class I and class II?

Joey Evans: Yeah. So there’s three different, three different tiers of [00:01:30] railroads. You have the Class I railroads, which you just mentioned, which are your big Class Is, which are BNSF, Union Pacific, CSXT,

Joe Lynch: We all see those. They dr- they go by hundreds

Joey Evans: Everybody sees those, right? And so then you get into your Class II railroads, which are considered your regional railroads, which more common like Florida East Coast Railway, Iowa Interstate, and then you get down into the short line railroads.

And so what separates those is not the [00:02:00] length of the track that someone has. It’s based on revenue or annual revenue. So for instance, it’s been adjusted every few years for inflation, but the number right now is just over a billion dollars in annual revenue makes you a Class I rev– or Class I railroad. When you get between one billion and forty-seven million, that is a Class II railroad, and then below forty-seven million that is what is considered a Class III or your typical short line [00:02:30] railroad.

Joe Lynch: Yep. And we talking about class two or class three today

Joey Evans: That’s correct. Yes, sir. That’s what… class III is where T&W Corporation, that’s where we fall as far as annual revenue goes. And we are, we don’t have any class II railroads

Joe Lynch: Yep. It’s interesting to me, I said this to you the other day. Railroads sometimes and you go, “Where’s that? I never see a train on that one.” And until I started this podcast, I used to drive by this one rail railroad tracks, and I’d [00:03:00] go, “Oh, that’s like an abandoned train. I wonder what, I wonder where it used to go to.”

And I didn’t ever think of class two or class three railroads. What are their purpose? I get the big ones. They go cross-country. Give– what are the shorter ones for?

Joey Evans: Yeah. Great point on seeing the big railroads go across the the highway per se is I relate it to the interstate highway system that moves east, west, north, and south. And so those, the big railroads they [00:03:30] really thrive in moving trains at a long distance. When you get into the short line railroads, what we serve is the rural communities that the first and last mile. And we talked about the six big railroads. There’s 615 short line railroads scattered across North America, uh, which generally all fall into rural communities. For instance, when you look at, when you look at our properties located in Dumas, Texas, [00:04:00] Brownwood, Texas, and Gonzales, Texas, those are just small communities, less

Joe Lynch: No pro sports teams there.

Joey Evans: Costcos

Joe Lynch: Not yet. Texas will eventually get ’em in every city

Joey Evans: And generally towns of less than 15,000 people, and these are the blue-collar workers of America that are making the goods that we use every

day

Joe Lynch: So these short lines, what’s their purpose? I’m, I’ve seen some, they tend to be in industrial areas. What are [00:04:30] they doing?

Joey Evans: Yeah. So they are the first and last mile of most of the products that you’re utilizing today. So as you see these manufacturers and smaller businesses that are making a product or distributing a product out to the community, we’re the guys that are offering the white glove service to these communities and serving what would otherwise be an abandoned rail line.

You, you talked a minute ago, Joe, about, driving by these railroad tracks for so many years and not seeing, a- activity on, [00:05:00] on them. What happened in the early ’80s with the Staggers Act was these Class One railroads, they realized that they had a real niche of being able to move, long distances and doing it very well. And so when you had these underutilized communities that needed goods to the national network or coming into their local communities, these short line railroads spun off. And so w- what it allowed small business owners to do was to come [00:05:30] in and to really figure out how they could serve their local communities and provide a service that was otherwise missing

Joe Lynch: Yep. Where does TNW fit in this?

Joey Evans: Yeah. We, as I mentioned, we’re a short line holding company here in Dallas and our three properties, we’ve been in business for 44 years now, going into 45 next year. And we started with our key railroad, which is TX&W Railway in Dumas. Started as just a small railroad that [00:06:00] served just a couple of customers. Since then, we’ve been able to invest in not only our infrastructure, but also into the community and help grow that single railroad into having the largest rail car storage facility in North America, and we’ll talk more about that as well.

Joe Lynch: who are your customers?

Joey Evans: Yeah. So it varies. And so when you look at, when you look at a majority of our customers in the northern region, which is Dumas, it’s a lot of agriculture and a lot of [00:06:30] petrochemical. So from a refinery to your grain elevators that are moving product either to the Gulf Coast or from the Gulf Coast or out of the Midwest to serve the local farmers. When you look in like Gonzales, which is located in the, what we call the Golden Triangle of Dallas, San Antonio, Houston, Austin area, a lot of that is plastics coming out of the Gulf Coast. But then you also have a lot of agricultural products coming in and out as [00:07:00] long as aggregates

Joe Lynch: So obviously all of the stuff you guys move has to be moved, and it could easily, I’m assuming, be moved by trucks also. But they choose rail because I’m gonna I’m gonna s-say my layman’s version of this. They’re picking rail because it’s a certain type of freight that, that’s conducive to rail. Not everything is.

But if it’s a lot of volume [00:07:30] it, it works. If it’s not a lot of volume, it’s probably not a good fit. There’s no less than truckload or a version over there in your business

Joey Evans: Y- that’s a, that’s such a great topic to talk about ’cause y- yes, for the most part, and I would go back to work, we’ll call it 10 years ago, that was really the case. You moved a lot of volume. It was conducive to rail longer distances, generally over 100 miles. But back in 2016 and ’17, we took a [00:08:00] look at that space and figured out that there were probably a lot more customers within a 50 to 100-mile radius that didn’t necessarily have the volume that would be conducive to rail, but they had a need for it. And when you look at truck-to-rail conversion, it’s about four to one. So for every four trucks, that’s one rail car. So We then spun up our logistics business at that point in time, where we went out in that 100-mile circle and we talked to the different farmers and different people that still [00:08:30] had a need, but maybe not the volume. And thence our our logistics business was born. So what we do on that side of our business is they’ll bring in a product, generally we’ll call it one rail car every now and then and then we actually perform the work for them. So we’ll offload the product into the trucks of their choosing, and then they’ll truck it out to, within, their 20 mile, 50 mile radius, whatever that looks like. And so what that allows them to [00:09:00] do is not to have to invest the capital into steel in the ground infrastructure that may be a little bit out of, their financial means, but they can still get product to that area. And that’s been a great business for us over the last 10 years.

Joe Lynch: come back and talk more about this in a minute because I think there’s some exciting things happening in the rail business. And the reason I say it that way is the business has always been hidden compared to the rest of the logistics business. The logistics business is, [00:09:30] very sales driven.

They’re chasing you down. You gotta call a few times usually to talk to somebody on the railroad. And I think I was talking to somebody about this a year or two ago and they said we kinda know what freight moves on our on our systems well, and if it doesn’t, then we’re not interested.”

So they’re not looking for everybody. Where v- trucking companies, for the most part, say, “If it moves, we’ll move it.” So it’s a it’s a specific kind of f- solution. [00:10:00] But it’s a great solution for the stuff. And again, there’s a sustainability angle and there’s a get the trucks off the road angle, which I think is we love our truckers, we love our trucking companies, but we don’t like, love congestion.

Joey Evans: And you– to your point, when you look at the truck and rail industry, a lot of people see the competitiveness in between the two, right? Of always trying to work to look at how do we remove trucks off of the

highway.

Joe Lynch: it? Yeah

Joey Evans: And that’s a big piece of it, but [00:10:30] also too, trucking really complements our business really well. And so we look at how do we form those relationships with the truckers to pull some of the product off by rail, but then to give the truckers a shorter haul, that way they can be more fluid in their business as

well

Joe Lynch: I like it. I like it. So Joey, tell us a little bit about you. Where’d you grow up? Where’d you go to school? Some career highlights before you joined the mothership, TNW

Joey Evans: Yeah, so I grew up in a small town in South Georgia, [00:11:00] Sylvester, Georgia and had the normal, age of growing up, playing high school sports and always had these dreams that I was gonna be a Major League Baseball star. Obviously, that didn’t work out very well if you and I are talking about railroading today. But I, out of high school, I realized pretty quickly that college probably wasn’t gonna be for me long term. Sports was not gonna be an option anymore. And so I had a buddy of mine that worked at the railroad as an engineer [00:11:30] and he talked about how good of a life he had. He said, it’s a lot of travel, a lot of being away from home,” but it was a really a long-term investment into your career. And so I said I wanna sign up.” And so about 25 years ago, I started my career as a conductor at Norfolk Southern. I worked my way through being an engineer and into management, uh, and then got introduced into the short line world [00:12:00] after, for me being gone all the time just was not something as my kids were growing up that I just, I wanted to do.

So got introduced into the short line world where it really is a more family-friendly lifestyle to where you’re home a majority of the weekends and at night. And so in 2000 and 2008, I made that jump into the short line world, uh, and moved around a little bit until I found my [00:12:30] home here at T&W almost nine years ago. And it’s just a such a remarkable company that I can grow with and that I can help others customers and potential customers succeed at

Joe Lynch: Yep. You’re not the first one to say, “I joined the railroad because I wasn’t sure what I wanted to do, and I didn’t think I wanted to go the college route.” And I think, I’m trying to think of the na- guy’s name ’cause it’s been a few years, but I interviewed a guy who’s either president or CEO of one of the one of the class one [00:13:00] railroads.

And he said, there’s a progression.” And he said “‘Cause I started at the bottom at the railroad company.” He goes, “And I just kept moving up.” And he said “It’s a nice life.” And I think his… I think he said his son was joining the railroad. And he said, because he goes, “It was attractive to him.”

Joey Evans: Yeah. It’s not uncommon, Joe, to see in our industry fourth and fifth gen- fifth generation railroaders. We have several people within the company that are, second and third people, or second and third generation [00:13:30] railroaders

Joe Lynch: There’s a musician Sturgill Simpson, and I heard him talk on I think it was Joe Rogan’s show. This is years ago. And he was talking about how he was working, and he goes, “I worked at the railroad,” and I wor- I forget which one. And he said, “I had a nice life. We had a nice life, my wife and I.” And he said he goes I kept thinking I, I wanna take a shot at this music.”

He goes, “But I had opportunities there, and I could see a very nice life for us there.” And he said, “So it was really tough to say, ‘Okay, I’m gonna quit the day job [00:14:00] and go do this full time.'” Obviously, it worked out for him, but not for everyone. Anyway we have a whole bunch of things I wanna talk about.

So we’ve talked about Class 1 railroads, and those are the big ones that I think, the– when you get stopped at the rail crossing, you see those. So those are the ones that you mentioned earlier, the BN- BNSF, Norfolk Southern, all those. We see those, and those are Class 1 railroads. And those I’m assuming they go [00:14:30] thousands of miles across the country.

Now, the short lines, they’re, the, whether it’s Class 1 or Cla- whether it’s Class 2 or Class 3, those aren’t classified by how long they are. They’re classified by revenue. Not su- not super important to us as shippers, but when I look at these Class 2 and Class 3 are they five miles? Are they 10 miles?

Are they 100 miles long? How long are these short line railroads?

Joey Evans: That’s such a great question, and it [00:15:00] completely varies. When you look at I talked about our properties that we have, our TSR Railway in Brownwood, Texas, is only six miles long. So that’s what most people think of when they hear the term short line railroad. They think, “Oh, it’s just very short.” But then you also take the same short line railroad as Rapid City, Pierre & Eastern, which is a Genesee & Wyoming railroad, and it’s 600 miles long. So there, there’s no variation you know

Joe Lynch: 600, [00:15:30] miles of Wyoming, you might only bump into what? Three, four people.

Joey Evans: It if you look at, if you look at the RCPE Railroad, for instance that one and Genesee Wyoming is the holding company, but it stretches the entire state of South Dakota,

right? And

Joe Lynch: so those states, there’s a lot of extraction, there’s a lot of agriculture. So anything that comes out of the ground, I’m assuming is a really good fit for rail. Agriculture’s a good fit for rail. Now are these class two, [00:16:00] class three, are they moving oil also?

Joey Evans: There are some movements of oil. We move a lot of petrochemical products out of our TS&W Railway in Dumas down into the Gulf Coast out of, comes out of a refinery in Dumas and goes down into the Gulf Coast in different regions and down into Mexico

Joe Lynch: the other day I was stopped as a railroad stop and I was just paying attention to all the the different types of cars and a lot of them were [00:16:30] tanker cars. And somebody said to me the other day, I think they said, “Oh, that’s 40% are tankers cars.” I don’t know if it’s that high on all railroads, but I thought that’s, that– And that speaks to it being some sort of chemical

Joey Evans: That’s exactly right. And y- and I would say that number’s probably pretty accurate. I think when people look at those tank cars, they always generally try to associate it with hazardous materials, and that’s not always the case. There’s a lot of [00:17:00] non-hazardous, even agricultural materials like palm oil and beef tallow that move in those cars, corn syrup and so forth. And, You look at hazardous materials just for a minute, talking about these tank cars, one staggering fact is 99.9% of all shipments that are moved by rail, hazardous materials are moved safely across the network with no interruptions, no issues at all. And, that’s a staggering number when you look at the [00:17:30] number of rail cars that move across North America

every year

Joe Lynch: This is a little bit of an aside, and if I can find the article, I’ll put a link to it in the show notes. By the way, I’ll make sure I put a link to your LinkedIn profile, link to y- your website, any other links you and your go-to-market team give me, I’ll make sure I put those in the show notes so people can reach out and talk to you.

I saw an article, I th- I wanna say it was in Forbes, and it said, “What’s the best way to move oil?” And I know we’re not talking about moving oil here today, but they said you can move [00:18:00] it by rail, you can move it by truck, you can move it by barge. You can also move it by pipelines. And so somebody wrote the article, “What’s best?”

And they said, “Depending what best means.” And a pipeline’s pretty efficient if you say this is gonna be going for a while. Now, are they always safe? I think the– I think we can make them safe, but what’s interesting about it is I remember, I forgot which [00:18:30] pipeline it was, where they said, “Oh, we shut down this pipeline,” and every…

Not against the environmentalism, but the, it’s can get a little silly in that oil is pumped out of the ground. It is going to be transported to market. Do you want it to go by pipeline? No. Okay, we shut the pipeline down. Good. It’s going by barge or truck or rail. They’re not throwing the oil away.

They’re not pumping it. It’s getting pumped out of the ground. Somebody paid a lot of money to get it pumped, and they had approval to get it [00:19:00] pumped, and they still have the approval to pump that oil. So if I can find that article, but I thought it was very interesting when they said, “What’s the best way?”

You go, “Depends what best means.”

Joey Evans: That, that’s exactly right. And it, it also depends on what the market’s doing at the current time. As you just talked about, as they’re pumping, they’re gonna continue pumping it out of the ground. I think, one of the, one of the things when you look at the rail industry as a whole, when you look at the fluctuating markets and, is there a geopolitical [00:19:30] event going on in the world

Joe Lynch: Yes, there is.

Joey Evans: That that, that’s causing certain fluctuations in the market, is you look at, and you can take any one of the major plastics companies, refineries, whatever business you wanna choose, they’re not gonna shut their production down just because of an event going on.

What they have to do is they have to figure out what’s– how do they become flexible during that time? Because I can guarantee you it costs them a [00:20:00] lot more to shut production down for a single day than it is for them just to continue producing and figure out, “Okay, am I gonna store this product somewhere during that timeframe, or what does that look

like?”

Joe Lynch: It’s interesting. So I remember talking about a pipeline with a friend, and I said, “Yeah, they’re no, no longer pumping that oil through the pipeline, but it is going in on trucks or rail.” And I said, “So if, God forbid, there’s a flipped over truck with oil, that’s [00:20:30] obviously a bad thing. It c- but the oil is still coming out of the ground.”

Anyway so the other day we met and I asked you, could you put together some points ’cause I’m not smart enough to talk about short line railroads with you. So you were kind enough to put together five t- topics to talk about today. So the first one, first topic is why short line railro- railroads matter more than ever.

Joey Evans: Yeah. Yeah, so first point. Yeah so first point goes back [00:21:00] to the conversation we had earlier about being the first and last mile and being able to serve those communities and just kinda give you a brief overview of kinda how T&W works at and, through my business development role. As we’re out meeting with potential opportunities the ability for us to be flexible and agile with these customers and potential opportunities is far more superior than a lot of a lot of larger companies can just because there, there’s a very short [00:21:30] distance between my office and the CEO of our company, Paul Triangan’s office. And so as we’re out meeting with those opportunities and we’re sitting down our first question is always, “What does success look like for you?” Which is a breath of fresh air for a lot of these companies that they generally don’t, they don’t hear. And so we work backwards, and once we figure out what their long-term goal and success looks like, we take that back and figure out a plan. How can we [00:22:00] land them on one of our properties? How can we scale them up to where they need to be? and and that is what all short line railroads are all about,

right?

Joe Lynch: so Joey, give me an example, and you don’t have to use a name. If you can use a name, great, but if you can’t, give me an example of what they’re moving and where they’re moving it. What’s point A? What’s point B for them?

Joey Evans: Yeah. So when you look at, we’ll use Texas in the Gonzales region, for instance, where our TSGN Railway is located. We have a new brick-and-mortar [00:22:30] customer that just came online. That was a a process of getting them onboarded, but they’re moving lumber out of the Pacific Northwest. When you look at, when you look at that Gonzales-Austin market, we use Austin as the kind of everybody knows where Austin is at. There’s so many new home starts that are happening in that region that all of that lumber’s coming out of the Pacific Northwest or either East Coast Pines coming out to build those homes. So all of that product’s [00:23:00] funneling into us, and they’ll

Joe Lynch: And where do you pick it up at?

Joey Evans: So we get our products specifically, at Gonzales location, Union Pacific is our class one railroad that we interchange with, and so we interchange with them.

Joe Lynch: in all cases?

Joey Evans: Nope. Ju- just for that specific short line. Uh, BNSF is a partner to us up at T, S, and W and at Brownwood, and then we have Union Pacific at TSGN. So we’ll pick that up from Union Pacific five days a week, and then we’ll haul [00:23:30] it about 12 miles into Gonzales to our different customers around what we call town. Uh, and then we’ll spot ’em every day, and we’ll pick ’em up and take ’em back to the national network

Joe Lynch: So this stuff’s coming out of the Pacific Northwest on which railroad?

Joey Evans: Union

Pacific I’m assuming it gets t-taken from some sort of lumber facility to a rail yard, rail head, whatever you wanna call that. They load that into the rail cars. How long does it take to get from up there down to [00:24:00] Texas?

Yeah, so generally what I see is somewhere between four and seven days

Joe Lynch: So it’s a little longer than truck, but it’s also you’re getting four times,

Joey Evans: That’s right

Joe Lynch: four time- if four truckloads fit into one rail car. So if it’s super, if you’re moving something, it’s obviously not an expedite, it’s obviously not n- there’s a lot of things that’s not, but what it is high volume.

So you could fill a whole bunch of trucks, I’m sorry, a whole bunch of cars with [00:24:30] and then haul that down there. So s- you pick it up somewhere in Texas at your short line. Now how does that, how does that– What’s the handoff look like? ‘Cause I’ve, I understand short line, I understand nice… Is this one of the things where they do the r- the rail exchange?

How does that mo- how does that work?

Joey Evans: Yeah, so it, it’s called an interchange. And so generally they’ll bring it in the Union Pacific will use them in this example. They’ll bring it in to a specific track. [00:25:00] They’ll set off a group of cars for us and then they’ll pick up a group of cars from us that’s going back

Joe Lynch: So they drop this off. It’s not like a live load. They dropped it off and when you guys are ready, you pick it up

Joey Evans: That’s correct. Yeah. So and generally for us, just as a specific example, they’ll drop off their rail cars to us at about five AM, Monday through Friday, and they’ll pick up that afternoon or either right then depending on kind of what that looks like, and they’ll take back to San [00:25:30] Antonio and distribute out. and and that kind of leads into when you ask about the specifics of an interchange. Up until about five years ago, we had some challenges at our interchange because it was a single track, right? So if you think about it, if I go put cars out there for Union Pacific to pick up there’s nowhere for them to bring us our cars. And What we’ve done through some government grant programs, which is called, it’s called CRISI for short, [00:26:00] C-R-I-S-I, Consolidated Rail Infrastructure Safety Improvement. Through that grant program we were awarded, uh, the opportunity to then spend that funding to build out our interchange.

So we created two interchange tracks. We lengthened them. Uh, we worked on some bridges, and now we have two tracks that can be interchanged to and from UP to make it more fluid

Joe Lynch: Yep. So when you pick it up, where are you taking those things to?[00:26:30]

Joey Evans: Yeah, so we take it into our no matter w-which railroad we’re talking about, we take it into our serving yard where we will then classify those rail cars by customer, by commodity

Joe Lynch: Thinking back to that lumber example, where do you take… So you gotta, you go, you said 12 miles or however many miles. Are you taking it to lumber distribution companies, or where, who are you taking it to?

Joey Evans: Yeah, so in that specific case, it’s going to a truss manufacturer. Their [00:27:00] name is Synergos. They are based out of Arizona located,

Joe Lynch: they’re do- so they’re building a lot of the houses prefab in a way.

Joey Evans: That’s correct. Yes, sir. That’s correct.

Joe Lynch: It’s not really prefab, I guess they’re just doing some of the assembly i- in a facility rather than at the job site

Joey Evans: That’s correct. Yeah, they’ll bring in the lumber, make the truss, and then it will– the truss will get trucked out to the sites

Joe Lynch: Okay. Very nice. Very nice. Obviously you can move[00:27:30]

lumber by truck also, but they’re choosing to do it this way. I know you’re not trying to convince somebody not to do it with rail. What would be a reason they wouldn’t do it with with rail? What doesn’t work for you guys? ‘Cause I know there’s lumber moving, you see it on the highway.

What wouldn’t work for you? Or, and when I see it on the highway, is that more likely to be short runs?

Joey Evans: Yeah, that’s exactly right. So I think when you look at what doesn’t work for us and there’s, uh, there’s nothing that won’t work for us from a rail perspective. It’s really what is gonna be feasible [00:28:00] for the customer. And, I use an example recently of sitting down with someone that was looking to potentially bring rail into one of our railroads. And as we sit down and looked at the mathematics and realized that the run was just gonna be too short for them, it was only like 37 miles it didn’t make, it didn’t make financial sense for them to try to do that, or from an operations standpoint for them because the rail cars, if they got [00:28:30] loaded, would have to go to San Antonio or Amarillo to then get distributed back to us, and by that point in time, they could have moved a number of trucks. And so o- one of the things that we’re really good at is being okay with telling the customer, “Hey, w- we don’t think this is gonna help you be successful.” And so we’re comfortable enough in the services that we do offer that we can tell a customer, “Hey, it’s probably gonna be better for you to ship by truck.”

Not [00:29:00] ideal for us, but more feasible for the customer, and they will remember that long

Joe Lynch: Yep. So what are some of the typical products or commodities that you guys are moving?

Joey Evans: So petrochemical plastics you’ve got lumber, you’ve got aggregates, a lot of agriculture whether it be wheat,

Joe Lynch: Now when you say aggregates, that could be like potassium and stuff like that?

Joey Evans: G-generally when we talk about aggregates, we’re thinking in more terms of rock. So [00:29:30] obviously when you look at Texas, everything is under construction at all times. And so there’s so many unit trains of rock aggregates that are moving for these highway projects. And again, complement to trucks and highways, right?

So we bring in the raw material, they’ll load it out and take it to the site itself where they’ll finish out a construction project.

Joe Lynch: Yep. Yeah, so the, so what we’re talking about these chemical plastic aggregates. This is, I– This makes [00:30:00] sense ’cause I’ve seen all that stuff roll down the ex- the, on the highway. And again, I can understand where this is a big advantage if I’m bringing, let’s just, grain or corn or something to market that, that’s a com- a commodity that we’re gonna load up a truck with and lo-load a car with.

I’m so used to talking to trucking people. No, I get it. This makes a lot of sense. One other thing, and please elaborate on this. Am I right to say railroads are [00:30:30] paid for by the railroad companies?

Joey Evans: In, in some cases, yeah. So you have a number of different ways that you can get paid, right? So you have what we call interline settlement or Rule 11. I believe truckers are familiar with that process as well, to where you have a single entity, like the origin railroad is billing for the entire route of that rail car traveling, and then that money gets distributed to all the parties that handles it

Joe Lynch: what I what I meant is the [00:31:00] actual rail, rails that you see. When you guys build the rail, you build the railroads, right?

Joey Evans: Yeah, so generally those are all purchased from Class I railroad. So when we talked earlier

about this

Joe Lynch: the actual tracks, someone put the tracks down. You guys paid for all those, right?

Joey Evans: That, that’s correct. Yeah. So

Joe Lynch: that’s unlike the expressways, which we pay for and then the trucking company– I’m not complaining, it’s just it’s a little different. So the infrastructure, you guys paid for it all. And you– instead there’s [00:31:30] some grants, and I think the reason I ask about that is there’s a lot of economic development that comes from what you guys are doing.

It’s like a port. If you open up a port, it is n-not just any old business. It’s a business that drives trade, and that’s the same with railroads. They drive trade.

Joey Evans: Yeah. When you look at talking about the infrastructure, the– when you look at the public or the private investment that we make back into our [00:32:00] infrastructure, and so when you think about the majority of short lines that get purchased, and I-I’ll stick to short lines specifically, those railroads were sold for a specific reason, generally because infrastructure was outdated, it was old.

Some of that infrastructure that railroads are still operating on is over a hundred years old. And so when we purchase those railroads that are sometimes neglected, it takes a lot of private [00:32:30] money going back into that infrastructure to build it up. When you look at you look at the gas prices from nineteen ninety-seven to today, the increase that you’ve seen, you take that same measurement and you look at the inflation of building infrastructure. Short line railroads like ourself, we’re putting thirty-three to fifty percent of our annual revenue back into new infrastructure, whether it be new build-outs and investments for our customers or whether it be maintenance projects. [00:33:00] And so that’s where that public partnership of these CRISI grants they come into play because what it allows us to do is to speed up that infrastructure investment by about fifteen years which is something that typically we couldn’t do until I’m gonna call it five years ago, is where when the CRISI really got guaranteed and the IAJA allowed short line railroads to just really build out infrastructure at a quicker

rate.

Joe Lynch: And [00:33:30] we had at the ports during COVID, we had we had issues obviously there, front page news. And I imagine you guys were just swamped because everyone was trying to get stuff out of those ports. The railroad, I’m sure those guys were struggling because if– with those rail, those things come off of the boats, they’re a lot of time getting onto a probably class one railroad.

But during that time there was some issues and we had the we had the [00:34:00] feds get involved and create some changes at the port on detention and demurrage. We learned some lessons, our supply chains worked pretty darn well. None of us it was a difficult time for a lot of families, but pretty good for a lot of trucking companies financially.

But we found some brittleness. What, what went on in your business? What did, what lessons did you guys learn from COVID?

Joey Evans: So I, for us, we learned a lot of different things, and number one was to continue or [00:34:30] try to learn how to be even more agile and flexible than we were before. Customer demands changed during that time. People had a lot more time at home to where I, I’m gonna call it a re- a refreshment of the workforce and here’s what I mean by that. If you look at the average American spending 30 minutes to an hour in the car every morning commuting to work and then back home, that’s two hours of their day that is out of the office. [00:35:00] What I found during COVID specifically was that more people were willing to learn dive into their work, read more books, study more things because they had

Joe Lynch: Oh, pod- podcasts really took off during that time.

Joey Evans: Right

Joe Lynch: Yeah and by the way, I don’t know if this is true, but f- I think a lot of the podcasters I talked to saw such growth during that time, and then it all went back to

Joey Evans: the the norm.

Joe Lynch: yeah

Joey Evans: And and then also too, you look at like Amazon, for [00:35:30] instance, during COVID, and you look at the amount of packages and the amount of growth that Amazon had. And so people got used to what I call the Amazon experience. And so they then took that back to work and said if I can know where my package is, and I can know exactly when it’s 10 stops from my house and so forth, I wanna know the same thing about my rail car.” And so the questions really changed after COVID

Joe Lynch: But do you guys have visibility tools like similar [00:36:00] to Project 44 or MacroPoint or all those tools that we use on the over-the-road stuff?

Joey Evans: We do. So back in r- during COVID and coming out of COVID, we developed our own tool in-house called My TNW which is powered from a company called Four Thirty Six Software. And so we built out this tool that allows complete transparency back to our customers. And so

Joe Lynch: That’s brand new ’cause I, my assumption, and this is the wrong way to say it, but I feel [00:36:30] like rail is rail. When it gets picked up, it moves from Los Angeles to Chicago, and when somebody says can you tell me where it’s at?” Kinda. It left LA, usually it gets here to Chicago on this day.

Y- it’s a, there’s a timing, and if somebody says oh, it’s two hours away,” it kinda doesn’t matter in a way. It’s gonna get there when it gets there. There’s no expediting once it’s on that rail.

Joey Evans: It, it used to be it used to be called the black hole, right? With where’s my [00:37:00] railcar at? It’s somewhere between Los Angeles and Atlanta. That’s all I know. But coming out of COVID, as those c- as those, questions changed, we went to work to try to figure out how can we give our customers a better experience? And so our customers today, when they log on to our portal, they can not only see the railcars that are on our property, but they can also see the railcars on other whether it be class one properties, and we can give them accurate dates of when the cars [00:37:30] are gonna be at our property.

Um-

Joe Lynch: One other thing, and this is probably more of a class one problem than it is– perhaps it’s a class, perhaps it’s a short line problem, too. I’ve seen a lot of videos where people are stealing from these rail cars, and it’s a problem we have in the over-the-road trucking industry.

Cargo theft went from opportunistic to more strategic. And I was in Port of Long Beach for a [00:38:00] conference, the IANA conference, highly recommend it, and I was talking to a guy and he said, “A lot of the people know,” he was talking about theft, he says, “They know the containers that it got off the boat, and they know what cars it’s getting on, and they know, and they’ll follow it.”

If it’s an ex- if it’s a product, and again, I’m thinking drugs or electronics, they might say, “Yeah, we’re willing to follow that. We know where that truck, we know where that rail car is going, and we know they’re gonna stop [00:38:30] at some point.” And d- do you guys, are you seeing theft in a an uptick in that?

Joey Evans: Y- we don’t see it specifically at our properties, and we’ve done a good job. The way that we have our security system set up at all of our properties w- between cameras and different people that are monitoring our properties, we’ve eliminated any opportunity for someone to come onto our properties and steal product from us. Because that’s one of the requests and one of the demands of our customers. They were like, [00:39:00] “We need to ensure that when we send a rail car to you, that it’s gonna be safe.” So we pivoted, you know, years ago and said, “Okay, if this is important to you, it’s now important to us.” And so we continuously look at how technology can help us to monitor our rail yards and to be able to provide that comfort and transparency.

Joe Lynch: about stealing something, the commodities where it’s chemicals, plastic, aggregates, agriculture, you’re like, “Oh yeah, there’s a whole bunch of corn. I’m gonna take my pickup truck and we’re gonna steal all…” [00:39:30] It’s not– You really would have to be very strategic about it, but let’s face it, this stuff is all valuable.

And I think as much as anything now, we’re worried about tampering. So if you’re moving corn or grain, you wanna say, “I’m delivering that to someone who’s gonna make food from it, so it has to be it has to be safe from the time I pick it to the time it gets to your table.” That’s the f- the food safety standards kinda require that of us.

Joey Evans: That’s right. That’s

Joe Lynch: And by the way, similar with chemicals. There can be no [00:40:00] contamination in your c-chemicals. I guess with your rocks, I don’t know. I don’t want anyone messing with my rocks. I don’t want ’em ruined.

Joey Evans: When you look at, when you look at the commodities like corn you use, for instance, that’s why it’s so important for us as we are, hauling products or whether we’re transloading it for specific customers, each one of those rail cars and compartments have seals on them. So as we’re getting ready to unload a product or we’re inspecting a train, is we’re checking for those seals to [00:40:30] ensure that the product is safe and secure. And if it’s not, then we then reach out to the customer and say, “Hey, this car arrived to us, and we noticed there’s a seal that’s been tampered with. What do you want to do?” And so it’s all part of, again, that’s that short line mentality that we offer back to customers is ensuring transparency, safety, security. And we, going back to our broad overview is we have such a large footprint at each one of our properties that [00:41:00] we can hold multiple products during any kind of uptick or downtick in the market for someone, uh, which is not something that a lot of people can do.

Joe Lynch: Nobody seems to have extra cars anymore. That’s the same with I’m an automotive guy originally, and I always remember you would see in factories and you go, “What are those 10 trucks sitting out there for the last month?” And they’re like, “Oh, y- adds a little bit of this, a little bit of that.

And I was a I did [00:41:30] lean facilitation, so we would always go are those acting as a warehouse?” Because that, we don’t like that. But y- it’s also, you used to see every time you go to any industrial facility, you see a con- shipping container and I go, “Do you own that?” And some of them are decommissioned, I understand.

They may- maybe you bought it. There was a buddy of mine, he owns a, business not too far away, and I was taking football tickets over to his, and I go, “Dude this shipping container belongs to this company.” And he goes, “Yeah. They didn’t come [00:42:00] get it, so we started storing stuff.” And I go, “Y- at some point, you’re gonna get charged for it.”

Joey Evans: That’s right “

Joe Lynch: You better call them. S- they’re w- th-they’re they’re gonna find it eventually.” But a- anyway it’s nice that you guys can if, so if somebody has, says, “Hey, don’t ship that yet,” you can say, “We’ll wait. We’ll wait a week on this.” Not everyone’s got extra rail cars. So one of the other things I wanna talk about is sustainability.

People come to you ’cause they’re moving this kind of product, and they [00:42:30] said, this is a less expensive way to move our product.” But it’s not just less expensive, it’s also more sustainable. Please elaborate.

Joey Evans: Yeah. Goes back to the service, right? When you look at the, when you look at the cost and, not always is it always cheaper to ship by rail. And while, w-while some of those decisions that get made are s- are strictly based on finances, for us, what we see for sustainability [00:43:00] is being able to provide that service, that same service over and over again.

And I’ll elaborate on that for just a minute. So T&W, we’re a very metric-driven company. Everything that we do is built around a operating plan that has metrics that help hold us accountable to get better. Prime example of that, uh, back in 2017, when we established our metrics and three of the metrics that you see across the [00:43:30] rail industry as a whole is what we call dwell. How long is a car sitting? Right car, right train, which is did my car make the right train that it was supposed to be moved to the next location? And how long did it take you to spot the car at my facility? And so that’s from a customer standpoint. So when we started that in 2017, we had these numbers that we thought were still really good numbers, and they were. But what we have done [00:44:00] now is we’ve shortened that timeframe in such a manner to where our customers can rely on that. And so they know that their business will be sustainable day in, day out. And yes, it, and not from our standpoint, but from the cost of shipping a piece of product from the Pacific Northwest down to Gonzales. We don’t dictate what those rates are in between those two points, and so there may be ups and downs on those. But [00:44:30] they know, “Hey, it may cost me a little bit more to get a car into this specific location,” but T&W’s gonna handle that with transparency, security, and that a- that, that allows them to be sustainable year after

year

Joe Lynch: What I was thinking, and I appreciate that, ’cause it’s not just always going for cheaper. This, there is a certain convenience with saying, “Hey, I have I have an approach that is sustainable.” What I’m talking about is rail is cleaner and greener than [00:45:00] trucks. So I’m assuming certain companies are looking at rail for their supply chain and saying, “Is this a way for us to meet our sustainability targets?”

Because every major, every big company, the Fortune 500, all of them have sustainability goals. And we’re getting cleaner with trucks every year every year. I just spoke to some guys about renewable natural gas engines. Even the regular diesel ones are [00:45:30] getting cleaner and greener, but rail is cleaner and greener

Joey Evans: And that’s sustainability, and yes, you’re right. And I would also mention too that it really kinda depends on the administration that’s in office on what’s important as far as sustainability goes, right? So you may see the current administration that is less focused on green items as compared to the previous administration and so forth. But, that’s another one of the services that we offer [00:46:00] is we are, at all of our properties, we’re Operation Clean Sweep. And so what that means is these plastics manufacturers, they need to know that to, to be environmentally compliant, that those pellets aren’t getting on the ground. So we went through a process to become Operation Clean Sweep compliant that provides a framework of what happens when those cars come on our property. Whether or not it be end- showing that there’s a pellet leaking out of a [00:46:30] car or pellets that have been found. So that’s another one of the things that we help customers meet that sustainability.

Joe Lynch: What I was getting at is putting f- four, the equivalent of four truckloads into one car, and then a rail going across country uses less energy than trucks. So

Joey Evans: one, one gallon per every 300 miles on a rail car. That’s the typical

Joe Lynch: And I’ll also say this, forget what the silly folks in Washington are doing. I know you have to visit them [00:47:00] as part of your job, but regardless of who’s in office, the major Fortune 500 companies almost across the board say, “We value sustainability.” And so they’re gonna have their green goals. And c- and the reason they’re, they have it isn’t because of Washington.

They have it because their customers say, “Hey, is this sustainable?” And by the way, w- if you go to the store today and you’re buying something and it says, “Hey, this is 100% recycled w- whatever,” and this one isn’t, you’re like, “Oh, I’ll pay an extra 20 [00:47:30] cents. What do I care?”

Joey Evans: You’re 100% right. It

matters.

Joe Lynch: so all these major– By the way, I remember years ago when I was still in moving logistics rather than just talking about it, I was moving solar panels, and we were moving solar panels to all the Walmarts around the country.

And you go why does Walmart care about that?” Walmart has really dove into being sustainable. And people are gonna say yeah, it’s not sustainable. They have all these stores.” We’re going to those stores. [00:48:00] But they’re doing the best they can. Their trucks, they have a lot of trucks, and they have, they’ve been one of the leaders in green transportation to the extent you can be green when you’re moving a truck.

So anyway, I know there’s been a lot of upgrades in the rail business, and I think, it’s the same with the transportation over-the-road stuff. We were w- I’m not saying it wasn’t like it was unprofessional, but it was more casual. I think there was a sense that “I’m [00:48:30] p- no one’s gonna steal from me.

No one’s gonna do this. No one’s gonna defraud me.” Now I think we, we know that we can be victimized by the bad people. I think we also realized during COVID the importance of supply chain and everything upgraded since then. So what do you see as the future in your business as and don’t just talk about class short lines, but also the class ones?

Joey Evans: Yeah, I think what you’re seeing now as far as [00:49:00] how, what the future looks like in rail is you’re seeing AI. Everybody talks about AI nowadays. You’re seeing that really creep into all of the railroads. And whether that be, most people when they think of AI, they think, “Oh ChatGPT.” That, that’s a small piece of it that I think is really helping different pieces of the rail business. But when I look at AI, I look at, how are these autonomous rail cars [00:49:30] being, made today? There’s some companies out there that… I was in DC a couple weeks ago or about a month ago, and this company, Parallel Systems, has created this autonomous

car.

Joe Lynch: those guys

Joey Evans: Yeah. So you have them, you have another customer GLID out of Texas that is getting into that market. And I say GLID because I can’t remember if they pronounce it glide or glid

But A a great company out of Texas that [00:50:00] is working towards that same same feature. Those are the kind of things that I think are really gonna change the landscape year or long term in our business

Joe Lynch: this idea of autonomous for rail because obviously it’s going to stay on the rail. So if you said that, that thing’s gonna run all night maybe it takes off time. Obviously a human driver has to stop and there’s safety standards required. But if you say that, that rail car moves across the country the same way all the [00:50:30] time.

Now, autonomous trucks, we’re gonna get there, but it’s a little scarier because we’re driving on those roads. Nobody’s driving on the rail railroad that day.

Joey Evans: Joe, when you also think about just the, what we’ve talked about some maintenance of the infrastructure. When you look at, 10 years ago, when temperature gets to a certain degree either high or low, people are out manually walking and riding to look at that infrastructure to see if they see any breaks, any cracks in the infrastructure is the [00:51:00] gauge out what does that look like?

And so with today’s technology, now you have these autonomous track inspection tools.

Joe Lynch: Oh, that’s crazy.

Joey Evans: So they’ll go out and do the work for you and be able to identify, okay, am I out of gauge? Is there a small crack somewhere? Is there… And it’s monitoring not only that track, but it can monitor rail cars. So it’s looking to say, “Hey I see this rail car here has [00:51:30] a piece of material protruding off of it,” or, “I see this that is wrong with the internal pieces of the rail car.” So it, it’s gonna continue to make for a safer rail industry. W- when you look at, when you look at last year, 2025, we finished out the year as having the safest record across the entire rail industry in its existence, in 200 years. So we had– And so it’s only gonna continue to get better as we [00:52:00] move to taking the human factor out of certain things. We’ll never replace people, but it will help

Joe Lynch: Yeah it’s When you talk about rail track, r- the railroad track inspection or the truck inspection, that is a job that is not good for a human. If you and I were res- responsible for walking a mile down a track and saying, “Yep, everything’s good,” we might be like, “Ah, this is my seventh mile today. I…

Yeah, it all looks good to [00:52:30] me.” Much better to have a machine that, with sensors, go down that rail- railroad track. Anyway, I’m gonna wrap this bad boy up, then I want to get your final thoughts on the topic. I’m talking to my friend Joey Evans, and today’s topic is Short Lines, Big Impact: How Short Line Railroads Power America’s Supply Chain.

I ask a lot of very basic questions of you today. I appreciate you hearing me out and answering my questions. The big railroads that we all know of the Class One, the [00:53:00] BNSF, Norfolk Southern, many others that you mentioned, those go the long distance. You call those the kinda the expressways of of the rail business.

But there’s these other ones, the short lines, which would be Class Two and Class Three railroads. These are the ones that kinda are the connectors. So these might be five miles long, it might be 600 miles long, but a lot– what they’re serving is a lot of this, these commodities that are big, bulky stuff that it’s [00:53:30] usually more cost advantageous to move this stuff via rail.

A rail car is four times as big as a tr- a truck box. It’s moving chemicals, it’s moving plastics, it’s moving aggregates, agriculture stuff. And we talked about the role of the Class Two and the Class Three, the short lines. We talked about, when you have these rail- railroads, whether they’re the Class Ones, Class Twos, or Class Three, these are similar to a [00:54:00] port in that it drives trade for a region.

So if you all of a sudden have a Class Two, Class Three that’s coming into an area that means you’re gonna be able to have certain types of businesses that you couldn’t have otherwise. And that’s why when you’re in an industrial park, sometimes you’ll go, “Why is there a railroad here?” There’s a railroad here because they weren’t gonna build that industrial park unless they got that railroad.

And because cer- certain stuff, it’s just… let’s face it, when you’re talking about agriculture, that’s a [00:54:30] very difficult business. You can’t pay extra for your transportation, plain and simple.

Joey Evans: Very thin margins

Joe Lynch: Yes. So a lot of economic development driven by the railroads. We talked about some supply chain lessons learned.

I think you talked about scorecards and visibility tools. I don’t think we would’ve had that conversation five, seven years ago. The world has changed since then. We talked about sustainability. A lot of companies are looking for a way to save on environmental impact. This is [00:55:00] one good way to do it.

You gotta have the volume, you gotta be the right fit. That’s why you gotta talk to the railroad people. I think you said it a few times, much more open to what makes sense. And if it doesn’t make sense, they’ll be quick to tell you, “No, we can’t help you.” They’re not gonna, they’re not gonna do your l- your final mile to delivering groceries, but there’s a lot of other good places they fit.

Let’s see. What else did I miss here? I think that’s it. Anyway, put a big old bow on this, Joey Evans. Final thoughts on the topic.

Joey Evans: [00:55:30] Yeah. What I would tell anybody that’s out there that’s looking to solve their supply chain challenges, T&W Corporation, we’re– we focus, primarily on short lines and operating those short lines. We’re open to moving and working anywhere in the country. We just happen to be headquartered in the great state of Texas. But we’re here to solve challenges for you. So if you’ve got a problem that needs someone that’s really gonna offer that white glove service to you and is really gonna [00:56:00] focus on safety first and foremost, and then at that point is gonna talk about how to drive your long-term success, whether it be through your typical freight haul or transloading or different ancillary services related to rail, we’re here to be your, we’re here to be your solutions provider.

We’ll always put your focus first and foremost. We will make you to where it provides a scorecard and a baseline for you at your other locations as [00:56:30] well. So you can find us at www.tnwcorporation.com. Uh, and myself and the other team members, we’re happy to help you solve any challenge you’ve got

Joe Lynch: Yep. Sounds good. Sounds good. So what I’ll do is I’ll make sure I put a link to your LinkedIn profile, link to your website, any other links you and your go-to-market team give me. If you guys get case studies or anything, we’ll put those in the show notes. And I’ll look for that one article I talked about, which was what’s the best way to move oil?

And I not that it was a [00:57:00] big part of our conversation, but I think it’s interesting because there al- there’s alternatives and there’s a good fit. And I think over time we’re figuring out where stuff belongs. This is the nature of our supply chains becoming more and more efficient. 25, 30 years ago, you might say, “I’m picking that up in LA.

I got a truck.” Now, a lot of times people say is it better for a truck or is it better for rail and pick it up in Chicago?” We’re figuring those things out and it’s it’s why we have [00:57:30] the inexpensive products that we have. I know everyone’s saying everything’s too expensive. Our world has become very cheap compared to our grandparents and great-grandparents.

Joey Evans: Sure. I would say, Joe the best way to move anything is T&W Corporation.

Joe Lynch: Exactly. Exactly. Anyway, thank you so much for taking the time.

Joey Evans: Thank you, Joe. It was my

Joe Lynch: Oh, be-before I forget, what conference are you guys going to this year?

Joey Evans: Yeah, so next week I’ll be at Railway Interchange in Omaha, Nebraska. It’s the largest railroad conference there is, [00:58:00] about 4,000 attendees. I– you can always catch me at American Short Line Regional Railroad Association Railroad Day on the Hill, their annual conference, or any one of the Association of Rail Shipper conferences, and any other conference that you think I need to be at, don’t hesitate to reach out and I’ll join you there.

Joe Lynch: Yeah. It was, you should definitely get over to Manifest. That’s the– I always call that the Super Bowl of supply chain. Everybody’s there.

Joey Evans: All right, I’ll check it out

Joe Lynch: Thank you so much for taking the time, Joey.

Joey Evans: Thank you, Joe. I enjoyed

it.

Joe Lynch: me too.

Joey Evans: [00:58:30] Thank you so much

Joe Lynch: And thank all of you for listening to my show. Your support’s very much appreciated. Until next time, onward and upward