116 3rd St SE
Cedar Rapids, Iowa 52401
Iowa Interstate Railroad enjoying quiet success
Agricultural products make up most of regional carrier’s business
More than 50 years after the last Rock Island passenger train rolled through South Amana, Joe Parsons waited to catch a train there one recent morning.
“We’ve got a conference in Omaha tomorrow, so a bunch of us are jumping on our business train and we’re headed over,” said Parsons, president and CEO of the Iowa Interstate Railroad — or IAIS, by the abbreviation carried on its 600 freight cars.
Waiting in a bay of the railroad’s Dennis H. Miller Locomotive Works in South Amana, the office car Hawkeye and the dining car Abraham Lincoln were cleaned, stocked and ready to head west along the former mainline of the historic Rock Island.
The train would roll through Marengo, Malcolm, Newton and Des Moines, meeting or overtaking workaday freight trains tending to the railroad’s customers, most of whom are agricultural.
“A lot of what we move is the product of agricultural processing,” Parsons said. “The syrups, the oils, the feeds, things like that, ethanol. That’s a lot of what we move, the after-the-processing component. We do move some inbound corn and beans, but by far we move more of the outbound after the processing.”
Quiet success
Getting Iowa farm crops to market is the foundation for the quiet success of IAIS, launched in 1984 from the ruins of the bankrupt, liquidated Rock Island and an earlier failed attempt to salvage its Chicago-Council Bluffs line.
Heartland Rail Corp., a consortium of shippers backed by a $31 million state loan, initially hired IAIS as a contractor to operate the route, later absorbing IAIS. Pittsburgh-based Railroad Development Corporation (RDC) invested in the operation and bought it outright in 2004.
Both Heartland and RDC invested millions, aided by government grants and loans, to overcome decades of deferred maintenance.
Locomotive works
Today’s IAIS trains are usually pulled by some of its 20 4,400-horsepower General Electric diesel-electric locomotives purchased in 2008 and ’09. The line also owns 22 other engines for switching and local operations.
All are maintained at the Miller Locomotive Works, opened in South Amana in 2012. The facility was designed around the new engines, replacing a century-old Iowa City engine house.
“These engines wouldn’t fit in the old engine house,” said Adam Sutherland, the railroad’s director of safety and security. “These things would pull this building, if you’d let them.”
Improved bridges and installation of welded rail allow IAIS freight trains to operate at 40 mph where grades and curves allow.
About 32 of the IAIS’ current 230 employees are based at the South Amana shops, including 14 engineers and conductors and 13 who maintain and repair locomotives and freight cars.
About 40 dispatchers, clerks, marketing, and management staff work out of the railroad’s administrative offices in southwest Cedar Rapids.
‘A solid industry’
The workday begins at the east end of the railroad. IAIS reaches Chicago over about 115 miles of track owned by eastern connection CSX Transportation and Metra, the public agency that operates Chicago commuter trains.
“You go from there and work your way west, and that dictates the schedule for the railroad,” Parsons said. “We try to be flexible and nimble, and if our customers need something, we try to jump on it and amend the plan to take care of them.”
That flexibility is what attracted Parsons, 44, to IAIS.
“I’ve always been interested in transportation in general,” he said. “Growing up where I grew up in Kenova, W.V., railroad jobs were always considered to be very good jobs in a solid industry.”
Graduating from West Virginia Wesleyan College in 2001, Parsons went to work for Class I Norfolk Southern as a terminal assistant and trainmaster. Trainmasters supervise and coordinate train operations across their designated territory, working closely with crews to ensure safe, efficient service.
Working in Cincinnati, Parsons got to know a vice president of a connecting regional railroad.
“When you’re in operations management at a Class I railroad, you spend a lot of your time focusing on moving boxcars,” Parsons said. “It was interesting for me to learn the other side of the business. It’s more strategic, understanding the sales and marketing side of it, the strategy, interline relationships and dealing with other railroads.”
Parsons went to work for a regional railroad operator for two years before joining IAIS in 2013 as chief operating officer. He was promoted to president and CEO five years later.
Moving freight
From 48,689 revenue freight loads in 1994, IAIS is on pace to haul more than 140,000 carloads this year, according to Parsons.
“By and large, most of the traffic we handle would originate or terminate somewhere on the Iowa Interstate,” he said. “Some of our traffic is overhead between Omaha and Chicago, but not much. “There is competition between us and the Union Pacific and some other railroads when it comes to Omaha-to-Chicago traffic.”
“They’ve got intermodal on both ends of the line, and they may pick up some of that in the local area,” said Bill Rose, assistant professor of supply chain management at Iowa State University. “What they’re doing is trying to serve that market in Iowa and Illinois, and most of that business they already have is in that agricultural space.”
IAIS’ multiple connections with all five of North America’s Class I railroads offer its customers options to send their freight to its destination by the most direct route.
(The Surface Transportation Board assigns freight railroads class status based on annual revenue, adjusted regularly for inflation. The threshold for Class I status was just over $500 million in 2019. IAIS is a Class II regional, earning at least $40.3 million.)
Iowa City transload
Shippers will get more options when the railroad opens a transload facility on 30 acres on the southeast side of Iowa City. Planned to open this fall, the transload is designed to efficiently transfer loads between trucks and rail.
“We’re getting a lot more inquiries about rail options from shippers who have never called us before,” Parsons said. “When the first press release went out about that, our sales and marketing team got phone calls that week from people we’d never heard of that said, ‘We would like a rail option, or at least explore it.’ That’s the goal of that site.”
“There has been talk for over a decade about the truck driver shortage,” ISU’s Rose said, noting it takes two or three semi-trailer trucks to haul the load of one rail car.
“It’s more efficient and they can load up that much quicker,” he said. The transload “is a way to connect some of the local trucking industries to the larger railroads, or trying to connect the long haul to that last mile.”
COVID, derecho
Parsons and his staff navigated operations through the COVID pandemic.
“There was no playbook,” he said of the pandemic. “The biggest impact on operations was just the number of sick employees” despite masking and distancing precautions and disinfecting work areas.
Still working through COVID, Parsons was at the railroad’s Cedar Rapids headquarters the morning of Aug. 10, 2020, the day of the derecho.
“Somebody in the dispatchers’ office came back to my office and said ‘Just to give you a heads-up, we just got a call that there’s a grain bin laying across the main (line) in Malcolm,’ ” he said. “I thought, ‘That’s odd, I’ve never heard of a grain bin falling over.’ ”
The derecho seemed to follow IAIS’ route across Iowa, littering the line with downed trees, power lines and that grain bin.
“It was a challenging time for a lot of different reasons, but the team got through it,” Parsons said. “We had the railroad basically back to normal within 48 hours.”
Home at night
IAIS isn’t part of the Class I railroads’ negotiations with rail labor unions. Instead, it bargains directly with three unions representing employees.
“We continue to negotiate fair agreements that aren’t making the headlines like the national groups have,” Parsons said. Employees get at least five sick days a year, and schedules allow most conductors and engineers to get home every night — something virtually unheard-of on Class I railroads.
“You might be able to go work at a Class I railroad for a bit more money, but there is a trade-off on schedule and quality of life,” Parsons said. “We try to provide the best schedule we can for our employees, knowing they have families, they have kids.”
Taking advantage of the railroad’s manageable size, IAIS train crews often meet about halfway along their route and exchange trains to return to their home terminal.
“I’m home every night, and all the employees that work with me are home every night,” said Mike Morris, trainmaster based in Urbandale.
“That mental health issue is becoming more pertinent in all areas if transportation,” Rose said. “Being able to say everybody gets to go home at night is a huge benefit.”
“Railroading is railroading,” said trainmaster Mark Miller as he waited to give the departing business train a rolling inspection. “But this one is one of the best to work for.”
Steam excursions
They’re no longer owned by the railroad, but the Iowa Interstate’s two steam locomotives will be back on its rails someday.
The railroad bought two locomotives from China Railways, the world’s last operating steam railroad, in 2006 to pull passenger excursions. Trips benefiting local volunteer fire departments help build relations with communities along the IAIS.
The engines were donated to Central States Steam Preservation Association, a nonprofit dedicated to the preservation of vintage railroad equipment based in the old Rock Island shops in Silvis, Ill., where they await federally mandated boiler inspections and renewal.
“Hopefully at some point in the next few years it’s back out and running,” said Joe Parsons, president and CEO of IAIS
In the meantime, IAIS will continue to operate its fire department fundraisers. One is planned to benefit the Marengo Volunteer Fire Department in October.
“The diesels still generate a lot of interest, but the steam is unique,” Parsons said. “Those volunteer fire department benefit trips are great because we can generate quite a bit of money for the department in one weekend. These first responders along our railroad, they’re our lifeline, too, so anything we can do to support them …”
Daily Newsletters