Small-Road Briefs: Universal Logistics Holdings, G&W, LongWater Partners, Watco

Universal Logistics Holdings

Universal Logistics Holdings announced Sept. 30 that it has its acquired Parsec, a provider of terminal management services to the Class I, regional, and short line railroads across North America.

With a workforce of nearly 2,100 employees, Parsec offers a comprehensive suite of terminal services at more than 20 rail yards throughout the U.S. and in Canada. Parsec specializes in time-sensitive, container lift on and lift off services “ensuring efficient and reliable operations at some of the most complex rail yards across the country,” according to the company. Among other services, Parsec also provides crane and intermodal equipment repair, drayage, and container and chassis stacking. For the trailing-twelve months ended August 31, 2024, Parsec reported total operating revenues of $230.2 million. Parsec will operate within Universal’s contract logistics segment, and the transaction is expected to be immediately accretive.

The cash purchase price was $193.6 million, subject to customary post-closing adjustments. Dykema Gossett PLLC and Vistula PLC served as Universal’s legal advisors on the transaction. Livingstone Partners served as exclusive financial advisor to Parsec, and Katz Teller served as Parsec’s legal advisor.

“I am extremely excited to welcome Parsec to the Universal family of companies,” stated Universal CEO Tim Phillips. “This is an exciting opportunity to build on Parsec’s long-standing customer relationships and further diversify our contract logistics service offering. Partnering with the railroads for over 35 years, Parsec is a go-to service provider offering rail yard terminal solutions. This strategic acquisition further enhances our value-added service offering and provides Universal a meaningful presence in the rail terminal services space. On an annualized basis, the acquisition of Parsec is expected to boost Universal’s contract logistics segment revenues to over $1 billion.”

G&W

G&W on Oct. 2 announced that its previously proposed transaction to partner with Grupo México Transportes (GMXT) as owners of CG Railway, LLC, closed on Sept. 30, 2024. As part of this transaction, G&W now independently owns Central Gulf Railcar Services (CGRS), a railcar repair shop located in Mobile, Ala.

CGRS, which specializes in railcar maintenance and repair, can accommodate up to 90 railcars at a time and offers transload storage for up to 14 railcars.

“With the addition of CGRS, G&W will focus on providing safe and efficient railcar maintenance in the Mobile area, which can assist shippers in managing their railcar fleets throughout the Southeast U.S.,” said G&W Regional Vice President of Sales and Marketing Kimberly Thompson.

CGRS becomes G&W’s third dedicated equipment maintenance and repair operation in North America—with another railcar repair facility located in Ontario, Canada, and a locomotive maintenance shop in Alberta, Canada.

LongWater

LongWater on Oct. 2 announced the formation of Cypress, a new railcar services company that it formed in partnership with longtime industry executives Randy Meyer and Brian Trammell.

Following the partnership comes the company’s first acquisition: certain railcar maintenance assets of Northern Plains Rail Services (Northern Plains), a diversified provider of rail services. Cypress plans to build a significant railcar services platform through additional expansion and investment.

The railcar maintenance assets that Cypress is acquiring include locations in North Dakota and Minnesota, as well as a strong base of loyal and talented employees, according to the company. “Northern Plains’ railcar maintenance team has a long-standing reputation for high quality service and safety, which are two of Cypress’ core values,” the company said.

“The rail services industry is underserved in the upper Midwest, and we see tremendous opportunity to deliver a differentiated solution for our customers,” said LongWater Senior Managing Director Neil West, who has significant prior experience in the rail industry. “We are excited to support Brian and Randy as they build Cypress Rail Solutions through further expansion in additional geographic markets.”

“We are thrilled to launch Cypress Rail Solutions with the support of LongWater, which has a strong track record of supporting executives who are building businesses in industrial sectors,” said Trammell and Meyer. “Northern Plains is a great first acquisition for Cypress that provides a strong foundation across the United States and Canada. We look forward to collaborating with LongWater to build the Cypress platform in the coming years.”

Prior to co-founding Cypress, Meyer and Trammell had distinguished careers in the rail industry.

Watco

Watco short lines Fox Valley and Lake Superior Rail System (FOXY), Louisiana Southern Railroad (LAS), and Mississippi Southern Railroad (MSR) were recently selected as part of a pilot project to install about 1,000 composite railroad ties.

These railroads were selected, Watco says, because they operate in extreme weather conditions and on track that includes curves, bridge approaches, joints, crossings, and switches, all within a small geographic footprint.

The Watco team selected three composite tie vendors for the pilot, and each railroad will install ties from multiple vendors. This, Watco says, will allow its team to see how each company’s product performs in a variety of environments and help them decide which are best for each track structure.

“Louisiana and Mississippi are high-decay zones for wood ties. The water and heat make them rot especially fast,” said Watco Director of Rail Network Solutions Will Long. “Then, there’s the cold in Wisconsin. We’ll be able to see how all three products perform in extreme environments and in a variety of applications.”

Composite ties offer several benefits, Watco noted. First is sustainability. Each tie contains about 180 pounds of recycled plastics. They’re expected to last up to 50 years, which is two to three times longer than the average lifespan of traditional wood ties. If they perform well in areas where wood ties are prone to rot, that means safer, more stable track for trains and fewer tie replacements for Maintenance of Way (MOW) teams. When they do need to be replaced, the ties can be recycled again and go back onto a railroad. They do cost a bit more up front, though.

The FOXY was the first to complete its installation in early September. Roadmaster Rick Grant says, “it went well for their first experience with the new ties, but there were a couple of concerns.”

“You have to pre-drill the holes for the spikes, which can be difficult since we have different sizes of rail. And there are special plugs you use in those holes when we repair rail, which is different from the traditional wood plugs,” Grant said. “But I’ve walked all the locations where we installed ties and we’ve been running trains over them. Everything looks good and it went very well. I can’t wait to see how they hold up to a Wisconsin winter.”

The MSR and LAS expect to install their ties by the end of the year, according to Watco. Then, all three railroads’ MOW teams will monitor how the new ties perform compared to wooden ties over the next year or so.

“This is just the beginning,” Long said. “Once we know how they perform and where they perform best, we’ll decide when and where we want to move forward with which vendor. We’re hoping these ties hold up to challenging environmental conditions. Each tie we install keeps plastic out of landfills and can help make our railroads safer.”