High fuel prices are causing turmoil in the airline industry, curtailing family vacations, and helping to drive up the cost of food. They may also be ushering in a new era in intermodal transportation. An increasing volume of shipments that once traveled by truck are now being loaded onto ships and trains.
"The increase in fuel costs is a problem, as is the declining value of the dollar. These two forces together are contributing to change," says Patrick Sherry, Ph.D., co-director of the National Center for Intermodal Transportation and a professor at the University of Denver. "As the value of the dollar goes down, it makes imports more expensive and exports more profitable. Add fuel costs that make it more expensive to transport materials, and people are considering more attractive transportation modes."
While train transportation historically had been seen as the most attractive option for longer hauls, it's an up-and-coming choice for shorter jobs as well. "The tipping point of where it becomes economical to use trains versus trucks - that distance is shrinking," says Rich Martinko, director of the Intermodal Transportation Institute at the University of Toledo. "The average train haul has been 600 miles, but now hauls are getting down to 200 miles."
Sounds simple enough, but moving to shorter rail hauls is a bit easier said than done. A shorter haul is only feasible if there's a relatively nearby place where goods can be loaded onto a train, and there are plenty of parts of America where that's not easy to accomplish. As Martinko observes, "that opens up more intermodal opportunities." Consider, for example, the case of Chicago, the biggest Midwest intermodal site. If a typical rail freight trip is 600 miles or more, then it wouldn't make sense to build very many intermodal facilities within a 600-mile radius of that super-hub. If rail shipments are traveling significantly shorter distances, Martinko says, "more intermodal sites become feasible."
In the meantime, rail carriers seem to be holding up well in the face of increased demand for their services, according to Sherry. "The railroads are saying that everything is fine right now, that they have plenty of capacity and no congestion. They can move things easily," he says.
Not only are shorter rail trips more attractive, but it's looking like shorter trips by water also may become more of a possibility. "It's what we call short sea shipping in the Great Lakes, between ports in the Great Lakes," says Martinko. For generations, bulk commodities have crossed the Great Lakes, serving such industries as steelmaking. "This would be container shipping," he says, which involves cargo vessels retrofitted for container use. "At one time, short sea shipping would not have been competitive, but now it might be." That's why the Maritime Administration, an agency of the U.S. Department of Transportation, is exploring the development of a robust short sea shipping system. The agency views short sea shipping as a logical response to growing freight congestion on the rail and highway systems - a solution that's cost-effective and environmentally sound.
Intermodal Rail Improvements
The Midwest and Great Lakes regions are significant hubs of economic activity, Martinko notes, with manufacturing of motor vehicles and other goods. It's important for shippers to be able to reach those areas at the center of the continent as quickly as possible.
"At one time it was quickest to go from the West Coast through to Chicago and the Midwest catchment area," says Martinko. But America's West Coast ports are popular places these days, particularly with goods arriving from Asia - and they may be a little too popular for their own good. "They are backed up and vessels sometimes have to sit six or seven days outside the port," he says. "East Coast ports are becoming more attractive" as an increasing number of shippers are looking for alternatives for sending their goods into the heartland of America.
That means the rail infrastructure in the eastern half of the country needs to be up to the task. Railroads, governmental agencies, and other partners are busy making sure that's the case. A number of major intermodal infrastructure initiatives are under way, making improvements for the present and investments for the future. "There's a lot going on trying to deal with the infrastructure of freight, decrease congestion, and increase the flow of goods," says Sherry.
As an example, in March, the Norfolk Southern railroad opened its $68.5 million Rickenbacker Intermodal Terminal near Columbus, Ohio. Part of the Rickenbacker Global Logistics Park, it's the fifth Norfolk Southern intermodal terminal in Ohio. The terminal, in its initial phase, covers about 175 acres and can handle more than a quarter-million containers a year. It has the latest in automation technology to help it deliver overweight containers to nearby customers. It was designed with expansion in mind, and has local development leaders eager for the economic impact. In announcing the opening, Columbus Regional Airport Authority President and CEO Elaine Roberts said, "We expect 20,000 new jobs over the next 30 years as a direct result of the new intermodal facility."
The Rickenbacker facility is part of Norfolk Southern's Heartland Corridor project, a three-year improvement plan designed to speed the movement of containerized freight between the East Coast and the Midwest. Right now, double-stack trains loaded at Virginia's port facilities must take longer routes through Pennsylvania or Tennessee, but when the project is done by 2010, they'll be able to move from Virginia through West Virginia into Columbus and on to Chicago or Detroit. It'll cut a day of transit time and about 250 miles off the trip. Instead of moving along single-track routes that are not only longer but becoming increasingly busy, they'll be diverted onto a double-track route with much less traffic.
Meanwhile, CSX Corporation has a major intermodal project of its own, called the National Gateway. Announced in May, it's a $700 million public-private infrastructure initiative designed to improve efficiency of shipments between the Mid-Atlantic ports and the Midwest. CSX has already committed some $300 million to the project, and is working with states and the federal government to line up more funds. As with Norfolk Southern's project, the National Gateway includes a lot of improvements in Ohio, where the plans were initially launched. Among other things, there will be two new intermodal terminals in Wood County and Columbus.
In the Chicago area, there's a lot of attention being given to improving the infrastructure to make intermodal transportation more efficient. A major part of the plan is an initiative called CREATE - the Chicago Region Environmental and Transportation Efficiency Program. About a third of the nation's freight rail traffic passes through Chicago, which historically has been the country's busiest rail gateway. About 1,200 trains a day pass through the region, and that tends to create traffic jams on both the rail lines and the city streets that they cross. That spells delays for motorists as well as freight shipments. With that in mind, the CREATE project is investing some $1.5 billion in capital improvements to boost the efficiency of the rail infrastructure. That includes 25 new roadway overpasses or underpasses, replacing grade-level crossings. It includes work that will separate passenger and freight tracks, and some viaduct improvements.
Intermodal Port Improvements
and down the East Coast and across the Southeast, numerous expansion
projects are boosting capacity at port facilities. In Jacksonville,
Florida, for example, a 160-acre container terminal is in the works.
Two Asian shipping giants have major plans in Jacksonville, and their
growth is expected to help the triple boost its container traffic by
Meanwhile in Virginia, state officials are exploring ways
to pay for port expansion projects that are in the cards, and have
discussed privatization as an option. Farther north in New Jersey and
New York, the next decade will see nearly $2 billion in infrastructure
projects, including upgrades at marine terminal facilities and the
roads and railways leading to port facilities.
In Texas, port
officials are looking ahead to Panama Canal expansion and exploring
expansion options of their own, with the knowledge that what happens in
the Canal Zone will ultimately boost the need for container handling
capacity in Texas. Similar discussions have happened in such places as
Savannah, another port that could see increased volumes when Panama
clears the way for larger ships to pass through - as many as a third of
the world's container vessels are too big to clear the canal right now.
Savannah had a record-breaking year in 2007 and has a $1.2 billion
capital plan in the works, with an intermodal container facility one of
the first projects on the list.
The West Coast has plenty of
projects of its own, according to Sherry. For example, there are
ongoing efforts to improve efficiency along the Alameda Corridor that
serves the ports of Los Angeles and Long Beach, which are the nation's
top two ports, according to statistics from the American Association of
Port Authorities. In all, more than $13 billion worth of projects are
planned in the next decade or so to keep up with the increasing cargo
demands at the incredibly busy ports of Los Angeles and Long Beach.
Projects range from channel deepening to new intermodal facilities to
terminal expansions to road and rail improvements.
upgrades are in the works in and around the Port of Tacoma in
Washington, says Sherry. Seattle's port is busy as well, and goods
often must be trucked to offsite staging areas. The region is working
to speed that traffic along. "The ideal is to have on-dock rail, but it
takes a major investment and takes a long time to do," says Sherry.
Among other improvements, the port is investing $5.5 million to upgrade
trucking connections between terminal facilities and the highways
outside the port.
At the far north end of the West Coast, the
Port of Anchorage continues a major intermodal expansion project. The
long-term, multifaceted project includes road and rail improvements to
improve cargo flow, as well as marine terminal redevelopments designed
to improve crane reach and expand commercial dock space. Work to fill
in acres of tidelands to add space began in 2006.
forces of fuel, the dollar, and increasing demand, there are
infrastructure needs all over. "Clearly the West Coast, Chicago, and to
some extent the Southeast - those areas are seeing increased need for
additional infrastructure," says Sherry.
The Human Infrastructure
It isn't just rails and switches and cranes that needs attention, though. "Another thing that concerns me is our competitiveness in terms of our human capital," says Sherry, noting that there's a significant difference in productivity between American ports and those elsewhere. "Our productivity is not as high as that of our Asian counterparts."
Not all of that can be attributed to physical infrastructure. "We've got to look at the people who are doing our jobs as well as the equipment that we have to move containers on and off ships," says Sherry. It's a situation that is threatened by the pending retirement of a lot of the work force. An urgent need is more training. "Very few universities are actually training people in intermodal transportation and logistics at the same time," he says. "One thing we're focusing on is ensuring that we have competitive human capital."
Martinko points out that the current softness in automotive manufacturing could provide part of the solution to the work force needs of intermodal transportation. "You can trade off one industry's downturn," he says.
All in all, the intermodal transportation sector will need all the ingenuity it can get to deal with the challenges and opportunities of the coming years. "A lot of unconventional opportunities are opening up due to the volume of shipping," says Martinko. "It's ripe for creativity right now. A lot of ideas are being put together because of the economic times."