Suffering from a sharp decrease in profits, the Alaska Railroad company is pinning its financial hopes on new opportunities that entail the shipment of natural gas and lease income from retail cannabis stores.
The state agency’s revenue has dramatically crashed because of the decreased demand for coal and reduced petroleum shipments after the North Pole refinery was closed in 2014.
According to the CEO of the Alaska Railroad, Bill O’Leary, the railroad had to put the Seward Coal Loading Facility in “cold storage” in September 2016. It was the end of Alaska coal exports to external markets.
The “grim” situation has forced the Alaska Railroad to cut more than 300 jobs over the last six years, and now the total number of employees does not exceed 600 people. The annual net income of the Alaska Railroad is expected to decrease to $6.1 million, which is considered significant taking into account the financial result of 2014 with a net income of more than $14.1 million.
To change the situation, the company has found the opportunity to get more out of the 36,000 acres it owns in the state.
According to the Anchorage TV station, the Alaska Railroad is starting to sublease space to retail cannabis shops, for instance, the land in Fairbanks, near the railyard.
The opportunity comes from the existing limitations concerning where marijuana retail stores can be located—away from residences and schools—opening up the spots where the Alaska Railroad owns land. In general, this plan does not make any significant changes, but in the long-term perspective, it will sustain the existing leases.
The railroad is also working with the group of developers on a project in the area that involves a 24-unit housing complex.
The liquefied natural gas is another the source of income for the railroad, as it is the only railroad in the U.S. with the federal permission to carry LNG. The market for LNG is quite small in Fairbanks, and truck deliveries absolutely satisfy the need, but the railroad could make it more efficient according to the officials.