In it for the short haul: keeping Huron Central Railway alive is key to bringing Sault multi-modal plan on track.

• Author: Ross, Ian
• Position: SPECIAL REPORT: CONSTRUCTION

Whether a northeastern Ontario short-line railway servicing Sault Ste. Marie exists in 2009 may depend upon the results of contract talks with Algoma Steel.

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Negotiations on a new five-year contract involving the Huron Central Railway to move steel expires at the end of this year.

"The outcome of this negotiation will basically tell the story," says Mario Brault, president of Genesee & Wyoming's Canadian subsidiary, owners of the Huron Central Railway. The short-line railway leases the 305-kilometre long Sault-to-Sudbury track from the Canadian Pacific Railway. As a connector line, the Huron Central hauls steel, lumber, paper products and chemicals to CP intermodal yards and their customers. But the steadily deteriorating track is also a vital link for Algoma Steel and the centre piece of a Sault Ste. Marie transportation study to explore whether it's feasible for international container freight to be unloaded from train onto truck at the Sault for shipment into the United States.

The City of Sault Ste. Marie's logistics consultants identified the need for a $154 million investment to address shortfalls in the area's transportation network. About $50 million to $75 million of that needs to be spent on the Huron Central track. Brault says the railway is not exactly on its last legs, but the line has been a chronic money loser for its Connecticut parent company since the Huron Central's creation in 1997.

"It's true that Huron Central's profitability is not good," Brault says.

The railway handles between 18,000 and 22,000 car-loads annually, with Algoma Steel supplying between 1 million to 1.4 million tonnes of steel.

"We hope to get enough volumes and revenues to have the Huron Central survive."

Brault wouldn't elaborate how much money the carrier has lost in the last decade, but says it's "several million dollars."

A major hurdle is operating a 300 kilometre line with one major customer at its western end (Algoma) and few customers in between, he says.

Domtar's Espanola pulp and paper mill has been a regular shipper "with some hiccups," but other business has dried up.

The Huron Central is in the middle of a 20-year lease with CP. Brault wouldn't comment if his railway has an escape clause in the contract.

Its parent company, Genesee & Wyoming Inc., doesn't post financial results from its individual railways in the U.S., Canada, Australia and Bolivia. But GWI reported earnings of $13.9 million in the fourth quarter of...