ROCKLAND, Maine — Loss of a freight customer that supplied more than 95% of Midcoast Railservice’s revenue on the 57-mile Rockland branch leased from Maine’s Department of Transportation has prompted the Finger Lakes Railway subsidiary to exit the property.
The move upends plans the state, Northern New England Passenger Rail Authority, and Amtrak had been working on with Midcoast to operate scheduled passenger service as an extension of the Boston-Brunswick, Me., Downeaster corridor
“Our lease agreement is that we give Maine DOT 120 days’ notice, but they told us they won’t hold us to that,” Midcoast President Mike Smith tells Trains News Wire, adding, “They have been very cooperative all along, recognizing that with the departure of Dragon Cement, it’s not possible for us to move forward.”
The pilot plan
Before Midcoast assumed the lease in August 2022 that Maine previously granted to a short line subsequently acquired by Canadian Pacific, the company had suggested operating Budd Rail Diesel cars on the branch to connect with Amtrak’s Downeaster at Brunswick.
At its own expense, Midcoast designed and installed an accessible bathroom in a leased RDC at Finger Lakes’ Geneva, N.Y., shops when News Wire visited during the month the Maine takeover occurred.
“The first accessible bathroom cost us $75,000 but we were able to do one in a second RDC for $25,000,” Smith says. “Why pay a consultant to study whether a service will be viable if you can spend the same amount of money to find out, ‘Hey, there’s a market here, or maybe there isn’t,’ ” he reflected recently.
Downeaster Executive Director Patricia Quinn was onboard with testing the concept. In an August 2022 News Wire interview, she said the Maine Department of Transportation and Amtrak were both supportive. “Ideally, I would like to see three round trips per day, seven days per week, that would provide connectivity in both directions,” she told News Wire then. In early 2023, the state agreed to provide $3 million for a two-year demonstration test [see “Maine DOT proposes $3 million for pilot of Brunswick-Rockland RDC service,” News Wire, Feb. 2, 2023].
The newly dubbed “Coastliner” equipment moved to Rockland last summer and participated in sold-out excursions to the popular Rockland Lobster Festival and other events.
Then the innovative, “let’s just try it” plan began to unravel. Midcoast was informed by the RDC owner, AllEarth Renewables of Barre, Vt., that it was selling the entire RDC fleet in 2024 to interests in Quebec for use on a line once used by VIA Rail Canada’s Montreal-Gaspe Chaleur, although that route was still undergoing rehabilitation. The news came after one of the cars suffered a mechanical failure during a fall excursion [see “Downeaster’s Rockland branch experiment encounters equipment snag …,” News Wire, Jan. 25, 2024].
By then, Midcoast had already learned that primary freight customer, Dragon Cement, was considering shutting down, which that company later confirmed. Continuing efforts to attract other carload shippers failed to bear fruit — in part, says Smith, because the connecting Class I carriers “don’t seem to be willing to price to get the business.”
Host agreement and insurance costs
Though Midcoast, Maine DOT, NNEPRA, and Amtrak began working on a plan to extend at least one Boston-Brunswick, Me., round trip to Rockland utilizing one or more Downeaster trainsets, the cost equation dramatically changed for Midcoast. According to Smith, “We put together a host railroad agreement which would cover the expenses of what is essentially a passenger railroad from the rails down: track inspections, signal and bridge inspections, dispatching, and employees. With freight service five to 10 cars per month — an impossible volume of business to support a 57 mile railroad, costs would continue, and someone would have to pick up those costs if there were to be passenger service.” While Smith declined to disclose the exact amount of Midcoast’s proposal, he pegged it in “the high six-figure” range.
Smith stresses that the Maine DOT has been excellent to work with, “providing maintenance and emergency repair money associated with bad weather in the spring. We’ve also had a positive experience working with Amtrak; they are enthused about doing things.”
He notes, however, “the real cruncher is insurance. Amtrak requires $325 million in insurance that is only available from brokers in Bermuda or London. If you can get it, the annual premium would be about $2.5 million with a deductible of about $25 million. So you would have to go into the reinsurance market in order to get coverage for the deductible,” Smith says.
Like tourist railroads, whose insurance rates are not arbitrarily set by statute but are the result of the industry’s claims experience, Midcoast has operated “excursions” on a policy that costs a fraction of intercity passenger rail requirements.
“Our view,” Smith says, “[is] negotiations with Amtrak and the insurance carriers would be an extended discussion and we weren’t confident we would see the money that we would need.”
New operator sought
Maine DOT spokesman Paul Merrill tells News Wire the $3 million of pilot funding “is still in our Work Plan. We haven’t reached a final decision on the pilot project, but having Midcoast as an operator was a key component. Our work [with NNEPRA and Amtrak] to find interested operators and funding opportunities for a seasonal service will continue, but the absence of a freight operator on the line creates further headwinds.”
The statement continues, “We are disappointed that business circumstances have forced Midcoast to give up the service, but we understand that it cannot continue to operate the line with significant losses. Maine DOT will work with current shippers on the line to see if there are any cost-effective service scenarios or transload opportunities for their products. We will also investigate and see if there are any reputable rail operators willing to operate the line and service the remaining customers on the Rockland branch.”
In an email to News Wire, the Downeaster’s Patricia Quinn says, “This development is disappointing, but we certainly understand the difficult decision made by Midcoast Railservice given the constraints they faced. NNEPRA continues to work with Amtrak and Maine DOT to explore options and determine next steps.”
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