Sixty-six miles of railroad tracks may not seem like it would play a large role in the business model for Knife River, but thanks to the forward thinking of leadership at Ellis & Eastern Railroad, each of those 66 miles of track is helping both E&E and Knife River grow their services.
Running a railroad wasn’t part of Knife River’s business plan until 2018 when the company acquired Sweetman Construction, based in Sioux Falls, S.D. As part of the acquisition, KRC also took over Ellis & Eastern and 66 miles of tracks stretching from the heart of Sioux Falls to Worthington, Minn.
Ellis & Eastern does a little bit of everything with that track, starting with hauling aggregates to Knife River’s plants in Sioux Falls and out to the Corson Plant, which produces sand for ready-mix and asphalt plants. Hauling material by rail is safer, cheaper and more efficient: Four truckloads of sand or rock fit in each rail car, and Ellis & Eastern hauls a minimum of 20 rail cars per day to distribution yards around the city, helping maximize production and minimize costs.
A large chunk of the track – 40 miles from Manley to Worthington, Minn., is used for railcar storage. Third-party customers pay Ellis & Eastern to store their rail cars on the E&E lines. Ryan Hunsaid, general manager at Ellis & Eastern, said that rail car storage is very profitable and helps diversify the company’s services to additional customers.
Ellis & Eastern also teams up with Rail to Road – another Knife River subsidiary that came with the Sweetman acquisition – to transload rail cars for customers.
“South Dakota is so vertically integrated,” Hunsaid said. “We make the materials in our quarry, we haul with our own railroad, we bring rail cars with fly ash or cement powder around town, and then we transload at Rail to Road.”
With owning a railroad – no matter how long or short – comes needing to maintain the tracks. Ellis & Eastern’s latest venture is saving money on track
maintenance while also helping to grow the company and expand its service area.
For many years, Hunsaid and the crew at Ellis & Eastern hired out the railroad contracting – or maintenance – to GA Fossum. The family-run business included Dylan Fossum, his dad, Gary, and a handful of employees dedicated to fixing railroad tracks, including the Ellis & Eastern tracks.
Hunsaid had been in touch with Dylan, and when Gary retired in Spring 2024, Ellis & Eastern bought many of the GA Fossum assets, hired Dylan, and used Dylan’s contracting knowledge to start growing that piece of the business.
Jerry Hegstrom joined the team in Spring 2025 to expand Ellis & Eastern’s list of services, and now the company has contracting projects in Iowa, Minnesota, North Dakota, South Dakota and Montana.
The contracting arm at Ellis & Eastern continues to grow and helps customers with railroad upkeep, monthly walkthroughs and maintenance, and consulting. Through September, E&E had invoiced 115 contracting projects, up from 70 in 2024, and has 17 contracting employees – with more to come. Hunsaid looks for continued growth in the Midwest and beyond as the company continues to expand its services.
“Our short-term goal is to take care of local customers,” he said. “Our 10-year-plan is to serve customers across the U.S. The rail is so generalized: in California or New York, it’s all the same specs. It’s nice to have Knife Rivers operations across the country, which allows us to utilize their expertise and relationships while growing our business as a whole.”