What has driven your acquisition strategy across multiple states like New York, Kentucky, and Indiana?
Our strategy developed organically over time. My business partner and I, who have worked together for 30 years, didn't start with a master plan for acquisitions. Instead, we gained confidence as we moved into more complex operating environments. For instance, areas like the Ports of LA and Long Beach, and New York City, are particularly demanding. As we expanded, we noticed other parties gaining confidence in us too. It’s not about verticals or sectors—it's more about geographical challenges. The more complex the area, the more we've thrived, which has shaped our acquisition strategy over the years. That said, it wasn't something we envisioned 35 years ago.
Could you describe the types of commodities you are transporting and the clients you are working with?
We handle a highly diverse range of customers and commodities across our six railroads, which are spread throughout the country. For example, South Shore Freight's major commodity is steel, as it serves two large steel plants on Lake Michigan. Pacific Harbor, on the other hand, moves over 2 million containers annually, handling everything coming into and out of the marine terminals. The container business is a massive part of our operations, particularly on the West Coast. What is interesting is how we have adapted to different regions. Each railroad has its unique mix of commodities, but collectively, we cover a wide spectrum of industries. It’s hard to say that demand has changed for specific products, but we've certainly seen shifts in how goods are transported, particularly with nearshoring and reshoring trends reshaping logistics.
Have you noticed changes in demand at key locations like the Port of LA due to shifting client needs or broader economic factors?
The Port of LA and the Port of Long Beach have been extremely busy lately, with record months in August. A significant factor driving this surge is the well-publicized fear of strikes at East Coast ports. As a result, many companies have shifted their cargo to the West Coast, increasing demand. These changes directly impact us. We can see when ports are operating at high capacity, and when they're slower. It’s a dynamic environment, and we constantly adjust to meet the needs of our clients, whether they're shipping steel, containers, or other goods. The ebb and flow of port activity plays a big role in our day-to-day operations.
You mentioned transloading and multimodal strategies. How do these fit into your overall business model and future plans?
Transloading has become a significant focus for us, which is why we formed Precision Terminal Logistics. This company handles the movement of goods between different modes of transportation—truck to rail, barge to truck, and so on. We also acquired the Kearney Companies, which specialize in warehouse logistics, further expanding our multimodal capabilities. By branching into transloading and warehousing, we're able to extend our reach beyond regions where we physically operate railroads. This diversification allows us to serve more customers and enter new geographic markets. As the supply chain continues to evolve with nearshoring and reshoring trends, these capabilities will become even more crucial.
What are the key opportunities in the nearshoring and reshoring trends that you're seeing in the industry?
One of the biggest opportunities is in moving construction materials. Every time a new plant, data center, or factory is built in North America, it requires a significant amount of materials—everything from steel to concrete. Additionally, the ongoing infrastructure rebuilding efforts in the U.S. are also driving demand for these goods. We are closely monitoring these developments because the transportation of construction materials represents a major growth area for us. As more manufacturing capacity shifts closer to homethe need for rail to move these materials will only increase.
What keeps you up at night regarding the railroad industry and Anacostia's role within it?
One of my biggest concerns is the overall decline in the railroad industry's market share over the past several years. Much has been written about this trend, and while Anacostia can succeed in winning specific customers or projects, for long-term success, the entire industry needs to grow.
Growth isn't just about our railroads; it requires collaboration across the industry. A single customer’s freight will often move across multiple railroads, so the success of one is tied to the success of others. The industry must focus on growth if we are to reverse the current trend of declining market share.
What recent milestones has Anacostia achieved, and are there any upcoming announcements?
This past summer, our Chicago South Shore railroad purchased 100 brand-new coil cars, which are used to transport steel coils. This may seem small in the context of the broader railroad industry, but for a short line like ours, it was a significant investment. Short lines don’t typically buy new equipment because of the high costs, but this purchase reflects our commitment to our steel customers and to expanding our operations. It is also a meaningful signal of growth for us. This investment isn’t just about serving our current customers—it’s about positioning ourselves for the future, particularly as demand for steel continues to rise in the U.S.
Given the environmental benefits of rail, how is Anacostia contributing to sustainability efforts in the industry?
Rail transportation is significantly more sustainable than trucking, and we’re committed to furthering that advantage. One of our most exciting projects is the testing of a zero-emission locomotive in California. This battery-electric locomotive, has been running for about a year now. It charges in much the same way as an electric car, using a large charger installed at our shop. While this technology is still in its early stages, we believe it represents the future of rail transportation. Zero-emission locomotives have the potential to make the rail industry even more environmentally friendly, further differentiating rail from less sustainable modes of transport.
