Pan Am keeps the paper flowing
By Glenn Ostle
(Editor's note: This is one of five outstanding industry efforts highlighted in the November/December "Proud to be a Papermaker" issue of Paper360°, now being mailed. Be sure to read them all!)

"For us, the state of Maine isn't about lobsters and tourism, it's about pulp and paper," says David Armstrong Fink, president of Pan Am Railways, a 1500-mile rail network that winds from Boston, Mass, to Bangor, Maine, and serves most major pulp and paper mills in New England. "Actually we go from Albany, New York, into Canada," laughs Fink," but Boston to Bangor just sounds better."

If the name Pan Am sounds familiar, it's because Guilford Transportation Industries bought the former airline out of bankruptcy in 1998 and integrated it into the company's transportation business. "We flew the planes for 10 years," says Fink. "But it's a tough business to make money." However, the company is trying to start up an air charter service which it hopes to have approved by the end of the year.

Today, Pan Am relies heavily on its rail business, 60 percent of which comes from the New England pulp and paper industry and 40 percent from transporting everything from autos to coal to building products, sand and road salt. "If you touch something on a daily basis, there's a good chance that a railroad has carried it," says Fink.

Pan Am Railways serves all the big pulp and paper mills in the area including Verso, New Page, SAPPI, Irving, Old Town, and Madison. "We bring in all materials that the mills need: chemicals, clay (domestic or from overseas), round wood or chipped fiber, and then transport out finished product either in boxcars or as transloads to truck or to intermodal," says Fink. "This gives our customers great flexibility in getting their products to market."

According to Fink, railroads are interdependent on one another to provide a seamless transportation service. "We may be the primary rail supplier, but the mills decide how that product will be routed," he says. "It can go to any of the Class 1 railroads in the eastern U.S. and we interchange with Canadian National, Canadian Pacific, Norfolk Southern and CSX. If our customer wants their product to go CSX to Chicago and on to Nevada, we can do that. If he wants Canadian National through Toronto to Chicago to the west coast, we can do that too. We can even send overseas through the ports in New York and New Jersey."

To better serve its pulp and paper customers, Pan Am maintains a fleet of about 3000 boxcars, several hundred of which are now being re-worked. "Our paper customers need specialized boxcars--50' long and with cushioned underframes," says Fink who calls them the Rolls Royce of boxcars, each costing about $100,000. "They are the lifeblood of the pulp and paper industry and our railroad. That's why we have continued to make investments in our fleet and will continue to do so as long as our paper customers need our services."

David Fink is the fifth generation of his family to work in the railroad industry. After graduating with a Master's Degree in Logistics, he went to work for General Motors in the 1980s where he became an early convert to quality systems--Kaizen, the Toyota Production System, and Just In Time--before they were in vogue. He brought the discipline to Pan Am.

"We've seen a lot of changes in the pulp and paper industry," he says. "There's been more demand for consistent transit times, which we've worked on with all of our customers. We've done 6 sigma and Kaizen events with all our large mills, and have gotten our customers and our people together so that everyone understands each other's business and what we and they need at multiple levels of the company.

"I know what the top paper company executives need, but sometimes the guys in the mills and the guy running the train, may not understand the gravity of making sure a door is properly closed and latched, or that the car doesn't have any leaks. So we've drilled down to make sure that everyone who works for us knows how important it is that our paper customers get a boxcar that will move their product from the mill to the printer with no problems. Unhappy customers will go elsewhere or they will want to ship in a truck, and that's not good for us. So we need to get every load of paper we can on the rails and be sure that these folks stay competitive."

Fink has also work hard to establish strong relationships with top executives at the paper companies. "We've come a long way in the last two years, but it is through the efforts of paper executives like Mike Jackson, Lyle Fellows, Mark Gardner, John Donahue, Russ Drechsel and Wayne Howard, that we are where we are today, so we really appreciate the senior level input."

Pan Am's efforts seem to have paid off. Despite the changes within the pulp and paper industry, Pan Am is hauling more paper now than they did 10 years ago which Fink attributes in part to the fact that they deal with mills that produce high quality paper. "Even though there is less of it, it is still in demand," he says.

Fink compares running a railroad to managing a factory. "Some people say all businesses are alike," he says, "but ours is basically a 1500-mile assembly line that's outside which can lead to difficult operating circumstances--such as weather. For instance, people in Northern Maine don't realize that a tropical storm in Vermont can wreak havoc on our ability to serve them. It is different than a factory that has a big roof over it."

Glenn Ostle is Editorial Director/Associate Publisher of Paper360°. He can be reached at: gostle@tappi.org.

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