RailUSA LLC acquired the newly-christened, Florida Gulf & Atlantic Railroad (FG&A), from CSX Transportation in early June of 2019, after developing a business plan and bid in concert with RLBA.
Running roughly 430 miles along the panhandle of Florida linking Pensacola and Baldwin (23 miles west of Tallahassee) via Tallahassee, the FG&A has made news about its plans to actively grow its inherited customer base in that corridor, presenting a notably ‘can-do’ attitude.
In the words of its President, Charles “Hank” Hankerson, the FG&A believes that “there are industries, customers and prospects that want to get into the rail industry and if it requires us to put in a siding track, use existing infrastructure, do something differently, we’re extremely flexible to do that.”
That’s great news for local business in the Florida Panhandle. However, before new management could declare that they were open for business with notable enthusiasm, before the line was even theirs to manage, the team’s first move was reaching out to RLBA.
Deciding to buy a segment of a Class 1 Railway requires serious planning and due-diligence and those efforts must take place before the considerable process of completing the purchase transaction itself. RLBA helped with every one of these major, intermediate steps. On behalf of and in concert with the FG&A, RLBA managed the bid process in its entirety, including:
1) Developing a business plan to operate the Class I railroad as a standalone regional railroad, which stemmed from a detailed analysis of shippers, origin/destination pairs, crew bases, tonnage rating, and customer needs;
2) Determining the staffing required to operate, maintain, and manage the railroad;
3) Performing rail asset and rail corridor real estate valuation tasks to support both the formulation of the bid and to facilitate its financing;
4) Undertaking a waybill sample data exercise using a proprietary software to determine the average cost of the incumbent Class I railroad incurred in moving the existing freight, as well as determining the estimated rates that railroad charged the customers on the line;
5) Determining what rates the new short line railroad might be able to realistically charge the existing Class I railroad to take over service, including the anticipated revenue split of existing traffic, based upon the aforementioned waybill sample data analysis and
6) Synthesizing all of the findings into a bid package that ultimately was attractive enough to become the favored bidder for line while promising high enough returns to secure financing.
On the newly purchased line, the FG&A “will partner with new customers, and if it takes us to finance the infrastructure that needs to be put in, we have options. That’s what we look at first. We want to grow the business and maintain what we already have in place.”
That’s a commendable, growth-driven strategy, from a great team – a team that chose RLBA to help them make it all happen.