Heath,
My impression has always been (false maybe) that logs that traveled like this by rail were higher value hardwood for furniture making (ash, oak, maple, walnut etc.). I wonder if these factories had their own small sawmill operations? Of course there is the famous factory on-line at Paoli, and I think there are some photos in David Longest's South End Monon book of some.
Regards,
Mike Aufderheide