Guelph’s city-owned railway is seeking a new operator after an option to renew a 22-year-old contract with its current operator was not renewed.
The Guelph Junction Railway (GJR) is owned entirely by the City of Guelph and is one of only a few railways in Ontario owned by a municipality.
Although the city owns the railway, the operations are currently contracted out to Ontario Southland Railway (OSR), which has held the contract since 1998.
“The three-year contract with the current railway provider is maturing in December 2020,” said Les Petroczi, general manager of GJR in an email to GuelphToday. “Any service provider can apply for this contract, including the current provider OSR.”
The GJR is seeking only an operator for the railway, with maintenance of track and signals to be managed by Guelph Junction Railway and its contractors.
As of Monday afternoon, six companies had requested further information as part of the Request for Proposal.
The bid closing date is April 14, 2020.
Absent from the list of interested parties so far is OSR. A spokesperson for OSR said the company is not offering a comment at this time.
“The current contract for railway service provider was for three years,” said Petroczi. “The option to extend the contract was available and was not pursued.”
In its 2018 annual report, GJR noted its track maintenance and flagging costs increased because of an OSR labour increase.
Petroczi said the GJR continues to invest in future growth and customer expansions.
In the four years up until 2018, GJR has experienced a significant increase in revenues from freight, with average net income of $3.6 million, compared to $2 million from 2014 and prior.
As the GJR’s sole shareholder, the City of Guelph was paid a dividend of $80,000 in 2019, the maximum dividend payout rate.
“In 2019, Guelph Junction Railway invested heavily in new railway spurs to accommodate for this customer growth,” said Petroczi. “Our railway traffic has grown to over 5,000 plus railway cars.”
Petroczi said the GJR 2019 audited statement report will be presented to Guelph City Council in the summer with financial highlights of the year to be available at that time.
The term for the new proposal is five years with an option of an additional two years, at GJR’s discretion.
The preferred bidder is expected to be selected in April, with commercial operations to begin July 6.
The short-line railway runs through the heart of Guelph from the CPR near Campbellville and to the Canadian National Railway (CNR) near the intersection of Edinburgh Road South and Speedvale Avenue.
