Commodity: Beer Malt
Customers: Northern Dry Bulk/Brewers Supply Group/Founders Brewing
Location: Grand Elk Railroad – Grand Rapids, Michigan (AKA, Beer City USA)
The craft brewing scene in the U.S. continues to grow as consumers look for new, creative spins on one of the world’s oldest beverages; beer. Founders Brewing Company is one of the largest players in the craft game, with distribution in nearly all 50 states. They brew hundreds of thousands of barrels of beer each year, in a variety of styles, from sours to stouts, at their headquarters in Grand Rapids, Michigan.
One of the key ingredients in brewing is malted barley, and making that much beer takes a lot of malt. Fortunately, the Grand Elk Railroad’s (GDLK) Hughart Yard is just two miles down the road.
Founders’ supplier for the malt, Brewers Supply Group (BSG), originally shipped the malt to Chicago, where it was transloaded and trucked to Grand Rapids. However, their on-time delivery was a meager 35%. While BSG representatives were in Grand Rapids visiting Founders, they happened to drive by the Hughart Yard and noticed the rail infrastructure and the trailers of a GDLK customer, Northern Dry Bulk.
“When BSG initiated the conversation and told me about the issues they were having, my first thought was, ‘well, we can do better than that, we can beat that,’” said Northern Dry Bulk owner Tom Kunse. “We actually said no the first time, because it wasn’t something we did, we were at capacity, and are building a new siding.”
That was in March 2019. BSG approached Northern Dry again in mid-June with a commitment of about 100 railcars each year. Kunse decided to take a look at what it would take to make it work, and went to meet with GDLK commercial manager Kirk Small. Unbeknownst to Kunse, BSG had already reached out to Small as well.
“They reached out to us simultaneously because they saw Huhgart Yard and our trailers. Kirk and I have a pretty good relationship. I mean, we’re on your railroad and transload hundreds of railcars each year,” Kunse said. “So I went to him and said, ‘hey, I’ve got this opportunity,’ and he was like, ‘wait a minute, is this Brewer’s Supply Group?’”
That conversation set the wheels in motion. The first obstacle to overcome was finding the right equipment. BSG wanted the grain conveyed from railcar to truck using an auger system. Everything Northern Dry does is pneumatically conveyed. Watco has auger systems in our network, but they’d primarily been used for frac sand previously, and this needed to be foodgrade.
“We’re familiar with food-grade operations, but to do the grain with the auger was a different world,” said Kunse. “But we went out and got the conveyor and learned how to use it. We worked with Kirk to get the pricing done, and we ran our test car in October.”
The test car went well, and everything’s been moving smoothly since. Each railcar arrives carrying between 105 and 108 tons of malt. It takes Northern Dry four trips to the brewery for each car. Each car carries enough malt to make roughly 125,000 gallons of an average-bodied beer. That’s more than 1 million cans.
The operation is going so well that BSG is hoping to move more of its operations from Chicago to Michigan. The Grand Elk and Northern Dry could become a gateway for the craft beer supply chain in Michigan if all goes well.
“They’ve been great to work with, Kirk’s been great to work with, and we can do this,” Kunse said. “The exciting part is, they’re already pushing us to expand to other destinations. Battle Creek, Alpena, Traverse City, and all these other destinations. That’s something we’ll be looking at in 2020.”