Grain Craft of Mission Woods, Kansas, needs a fast, efficient way to get its milled flour to commercial bakeries all over the U.S., and it chooses freight railroads to get the job done.
“Rail is a much more advantageous method of shipping,” said Ken Bisping, director of transportation and logistics for Grain Craft, “because four truckloads of grain fit in just one rail car. Without Wells Fargo Rail, we couldn’t compete in the marketplace.”
That very real need to ship freight from point A to point B is, in a nutshell, the business rationale behind Wells Fargo Rail — the largest owner and lessor of rail cars and locomotives in North America.
Riding the rails
Founded as First Union Rail in 1994, and most recently buoyed by Wells Fargo’s acquisition of GE Capital Rail Services in 2016, Wells Fargo Rail leases its rail cars and locomotives to Class 1, regional, and short line railroads, as well as to a wide variety of raw material and finished goods shippers across the U.S., Canada, and Mexico.
“We’ve reached a really exciting time as a leader in the railroad industry,” said Barbara Wilson, head of Wells Fargo Rail. “We’ve been growing the rail business significantly over the past several years, from approximately 60,000 rail cars just three years ago to our current fleet of 175,000 rail cars and 1,800 locomotives.”
For Wells Fargo Rail’s 750-plus customers — such as Grain Craft, one of the largest U.S. flour milling companies — using railroad transportation offers an energy-efficient and environmentally friendly way to ship freight. According to the Association of American Railroads, trains, on average, are four times more fuel efficient than trucks, meaning using rail lines to ship goods can potentially reduce greenhouse gas emissions by an average of 75 percent.
“When you can move one ton of freight over 470 miles on a single gallon of fuel, you’re able to offer customers a cost-effective transportation option that also reduces their business’s impact on the environment,” Wilson said. “The railroad industry is actually a very green industry and, in today’s world, that means a lot to our customers and government regulators. It’s one of the many reasons I think rail has a really robust future.
Wilson added that Wells Fargo “has been associated with the railroad industry since the company’s founding in the 1850’s, back when Wells Fargo offered both express delivery as well as banking services to customers.”
Across the continent ... and back
In fact, both Henry Wells and William G. Fargo began their careers as expressmen — a job that encompassed packing, managing, and ensuring the delivery of any cargo. They lived in New York before recognizing that the California Gold Rush in 1849 was generating a huge demand for regional and cross-country shipping. At the time, California had very limited express and banking businesses, and Henry and William saw a business opportunity.
In 1852, they formed Wells, Fargo & Co., and upon arriving in California that summer, the new company began establishing offices in mining towns across the state. Each office was equipped for transactions, so a miner could sell his gold or send a letter without leaving his claim for too long.
Initially, Wells Fargo contracted with independent stagecoach companies to carry its express packages, gold dust, and bullion. But the company quickly realized it was more advantageous to own and operate its own stagecoach system — thus was born the Wells Fargo stagecoach.
“In addition to providing express and banking services to those opportunistic men and women seeking their fortune in the Gold Rush, Wells Fargo also doubled as a private mail service in remote areas of the West where the U.S. Post Office didn’t go,” said Marianne Babal, Wells Fargo senior historian. “Customers not only entrusted Wells Fargo with their gold and letters, some even used the company to help reunite their families.”
While the stagecoach was the most advanced mode of transportation available west of the Mississippi River, in the East the railroad was already connecting major cities and towns. As the railroad began to stretch to the West, Wells Fargo stagecoaches bridged the gap at the unfinished ends of the transcontinental rail line, shepherding passengers and parcels the remainder of the distance to California.
The days of the Wells Fargo stagecoach empire quickly became numbered, however, when the transcontinental railroad was completed in 1869, officially connecting the U.S. from coast to coast. Fortunately, Wells Fargo was able to negotiate exclusive express rights for the new transcontinental railroad, and business flourished into the next century.
“Wells Fargo’s refrigerated cars, which they advertised as ‘Refrigeration at Sixty Miles an Hour,’ delivered the first commercial shipment of ice to Los Angeles and could transport carloads of fresh asparagus from California to New York,” Babal said.
Other specialty rail cars included a fleet of 35 automobile train cars with fully openable double-end doors, allowing for the loading and transportation of automobiles without disassembly.
By the time the U.S. entered World War 1 in 1917, Wells Fargo was operating 10,000 offices across America. That year alone, the company handled the shipping and delivery of more than 80 million packages across the country’s 80,000 miles of railroad.
One side note: In 1918, as a wartime measure, the U.S. government nationalized all express operations, including Wells Fargo. Left with only one line of business — banking — and only one Wells Fargo office in San Francisco, the rest, as they say, is history.
An express business for today and tomorrow
Rail cars have continued to evolve over the past century to meet the ever-changing needs of the businesses that use them to ship freight. Today, Wells Fargo Rail offers customers a selection of box cars, covered hoppers, gondolas, open-top hoppers, flat cars, tank cars, intermodal equipment, and locomotives to ship products and materials that help feed, clothe, supply and power communities throughout North America.
So when people think of Wells Fargo and “transportation,” they may still envision a red Wells Fargo stagecoach pulled by six stately horses. But when it comes to modern transportation, Wells Fargo Rail is helping hundreds of companies get business done.
Note: A version of this story also appeared in the 2016 Wells Fargo Annual Report (PDF).