The Kelowna Pacific Railway, which supplied a shipment route for companies like Tolko (pictured in background), went into receivership Friday.

(CHARLOTTE HELSTON / iNFOnews.ca)

OKANAGAN - The shipment routines of several Okanagan businesses have been derailed following the bankruptcy of the Kelowna Pacific Railway, which went into receivership Friday.

The KPR employed about 40 people in Vernon and transported about 16,000 rail cars of product annually. As trustee, John McEown, of Boale, Wood & Company Ltd. in Vancouver, will be taking over the railway's assets.

He says the railway was suffering financial difficulties due to a reduced market in the forest industry, and was forced to cease operations. All employees have been laid off, and McEown says they have been told how to recoup wages.

"The decision had been considered over the last month," McEown says.

The railway shut down operations abruptly on Friday, giving little notice to companies who depend on it for product shipment. 

Janice Lockyer, communications advisor for Tolko, says a substantial portion of the company's wood products were shipped by rail.

"It was a surprise," Lockyer says. "It happened late on a Friday evening."

The mill put its contingency plans into effect over the weekend, and Lockyer says every effort is being made to keep shipments on time.

"In business, we have to be prepared with contingency plans. There can be other disruptions to transport," she says.

Over 50 per cent of the mill's product is already shipped by truck, Lockyer says.

"What's happening now, is we are participating in discussions with stakeholders, including the CN, trying to come up with a situation that would work for everyone."

With the closure of the railway, something will have to fill the void, and at least one Okanagan trucking company is eager to step forward.

"Am I sad the rail is gone? No," says Elgen Davidson of EH Davidson Trucking.

Davidson Trucking is based in Vernon, but has contracts outside the area as well. A decade ago, Davidson was hauling plywood from a mill in Kamloops. That was until about eight years ago when the mill moved much of its product back onto freight trains, Davidson says.

Now it's looking like things are going to be rerouted again.

"There's probably quite a bit of opportunity with the amount of product that's there (at Tolko)," Davidson says.

One Penticton trucking business thinks the same.

"It'd be safe to guess there will be an impact," Dorothy Vankoughnett says.

Berry and Smith has 110 trucks, operates Penticton's public transit and the school district bus service. What they would need if offered more business is qualified drivers. There is a shortage she says.

To contact the reporter for this story, email Charlotte Helston at chelston@infotelnews.ca, call (250)309-5230 or tweet @charhelston

News from © iNFOnews, 2013