Spencer-Medford shortline sold to Watco

Tri-County Rail Team works alongside transportation company to improve local rail service

By Kris Leonhardt

CENTRAL WISCONSIN – After a year of negotiations, Watco – a transportation service company based in Pittsburg, KS – has finalized the sale of the shortline line of railway between Spencer and Medford.

Watco announced in March of 2021 that it had signed an agreement with the Canadian National (CN) Railway subsidiaries of Wisconsin Central Ltd. and Algoma Central Railway Inc. to purchase certain assets from both railways, which included the 28 miles of track connecting Spencer and Medford.

Founded in 1983, Watco grew from one locomotive into a transportation services company operating a network of short line railroads, terminals, ports, and repair terminals. Watco image

“Watco’s relationship continues to grow and flourish with Canadian National as we work together to

provide the best value-added services to rail shippers in North America,” said Watco Chief Executive

Officer Dan Smith said in a release, adding that it was “an extremely important and exciting next step in this relationship, and we look forward to serving these crucial customers and expanding our footprint in the Upper Midwest and Canada.”

“This acquisition from Canadian National will lead to significant growth and expansion opportunities,”

said Watco Chief Commercial Officer Stefan Loeb. “We look forward to providing Watco’s customizable

and localized service to customers along the line, and creating a positive impact on all of the

communities we will operate in.”

On Dec. 20, after a long delay, the Surface Transportation Board (STB) approved Watco’s purchase from the CN-owned Wisconsin Central of approximately 652 miles of branch lines in Wisconsin and Michigan.

“On April 5, 2021, Watco filed for a series of exemptions to acquire the rail lines. The board received numerous comments supporting the transactions and numerous comments opposing it.  After careful consideration of all comments received, the Board finds that the issues raised do not demonstrate regulation is necessary to carry out the rail transportation policy and that it is appropriate to allow Watco to proceed with the exemption process,” the STB said in a release.

WATCO took over the Spencer-Medford shortline on Jan. 29.

The Tri-County Railroad Team

Working alongside the transportation company was a representation from three central Wisconsin counties, including officials from seven cities and villages, along with other community leaders, with the goal of “advocating for the preservation and enhancement of freight railroad between Spencer and Medford.”

Clark County Economic Development Corporation & Tourism Bureau Executive Director Sheila Nyberg said the effort was started in 2019. At that time, CN was the owner of the Spencer to Medford line.

“The short line rail between Spencer and Medford had several companies that were using or desired to use that rail for services.  Our Clark County EDC office took the lead to unite all of the three counties affected by this shortline – and bring them together for a mutual purpose.  This team became known as the Tri-County Rail Team because it involved not only Clark communities/businesses but also Marathon and Taylor,” said Sheila Nyberg, Clark County Economic Development Corporation & Tourism Bureau Executive Director Sheila Nyberg

“The team’s mission is to bring the railroad and the communities and business owners together to ramp up rail services. We knew that working together was necessary for our future success along that line.  Therefore, we introduced everyone, so we could grow rail services and partnerships on this short line.

“Team members are from all 3 counties and all towns, cities and villages along that rail line.  It also includes all the businesses that have interest in rail.  We also brought the railroad company leaders into the meetings so they could have face to face contact with customers and communities.  Also an important team member was the WI DOT – Freight Railroad Program Manager.  It was crucial that everyone was in the room to have clear discussions on needs, opportunities and how to plan and fund growth.

“After much communication to work on growing services over the past two plus years it was announced in 2021 that CN had put this shortline along with many other parts of their lines in the northern part of Wisconsin up for sale as a group package deal.  We stayed involved through the process and kept constant communication between all the partners.”

Wisconsin Department of Transportation Freight Railroad Program Manager Rich Kedzior, was part of that team. He provided technical support to the communities on freight railroad service issues.

“WisDOT has a goal to preserve freight railroad service in the state wherever possible.  WisDOT supported Watco’s acquisition of the CN lines in northern Wisconsin because we believe that Watco’s business model is more attuned to the needs of small businesses and communities,” he said.

“The conditions along the Spencer–Medford line seem to be a better fit to Watco’s business model than CN’s. There is a lot of potential in the line’s communities that CN was unable to develop. I have a lot of optimism that Watco’s outreach to businesses in the corridor will result in more rail shipments on the line and improved service, and this could lead to business investment in the line’s communities.”

The rail system’s history

In 1871, the Wisconsin Central was awarded an 880,000-acre land grant to build a line from Menasha to Ashland. The line of track from Spencer to Medford was constructed in 1872-73, with rail service starting shortly after its completion in the area. The entire line was completed until 1886.

In 1890-93, the railroad was leased to Northern Pacific. Control returned to the Wisconsin Central (WC) for about 16 years, before the Minneapolis St. Paul and Sault Ste. Marie (MStP&SSM) Railroad, or Soo Line, began a nearly century-long lease.

“During this lease, the WC operated as a separate entity, with its own board of directors, and profits and losses were posted to the WC, not the Soo Line. Locomotives and rolling stock of the WC bore the Soo Line logo but had a small ‘WC’ identifier,” said central Wisconsin railroad historian, George Winkler in his piece “Wisconsin Central Railroad.”

“In 1961, a major reorganization occurred, the Wisconsin Central, the MStP&SSM, and the Duluth. South Shore & Atlantic were merged to the ‘New Soo.’ The old Soo Line ‘dollar sign’ logo was replaced with ‘SOO.’

“When the Soo Line acquired the Milwaukee Road in 1987, the old WC main was operated for a time as Lake States Division.”

It was later sold to a new firm, Wisconsin Central Ltd, which operated the railway until it was sold to Canadian National in 2001.

Canadian National maintained a small amount of rail freight service from Spencer to Medford, but the shortline was never a crucial part of operations; however, Nyberg said that the service remains significant to the area.

“Having this very important transportation service available to this area is crucial.  We will continue to work with all our partners to make certain we are united in our work so that everyone can grow and prosper,” Nyberg added.