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Railroads: Still an Important Industrial Link

The manufacturing epicenters of the future will need to integrate supply chain, logistics infrastructure, work force, and community continuous improvement; the presence of rail services is an important link in that chain.

Jim Romeo (Q1 / Winter 2013)

Birmingham Regional Intermodal Facility project is designed to establish a high-speed intermodal freight rail route linking the Gulf Coast and the Northeast.

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CSX opened its North Baltimore facility last year; the technologically advanced hub is part of the National Gateway project that will better connect the Mid-Atlantic with the Midwest. Norfolk Southern will be opening its Birmingham Regional Intermodal Facility, part of the Crescent Corridor connecting the Gulf Coast and East Coast, in November. Already Birmingham has seen distributors express interest in a local facility, such as Dollar General’s recent site location. When a railroad moves into a region, its very presence stimulates growth and lays the infrastructure necessary to support industry. It can be a critical welcome addition to the transportation grid for most any industry.

According to Eric Voyles, vice president of National Business Development at the Rockford Area Economic Development Council (Ill.), rail services helped make the Chicago hub area the third-largest logistics port in the world. Many rail-specific services are focused here and such infrastructure is what helps build the region economically. The manufacturing epicenters of the future will need to integrate supply chain, logistics infrastructure, work force, and community continuous improvement; the presence of rail services is an important link in that chain.

Norfolk Southern, for example, has contributed to the expansion of some 32 energy-related facilities in 14 states they serve. Its rail service enabled Marcellus and Utica shale gas exploration projects along with coal and power-generating equipment production. Specifically, the company cites the delivery of Bakken Crude to East Coast refineries as a key development and expects this sub-sector to grow significantly in the year ahead. It also expects its rail service to be an important catalyst in the development of the metals and automotive markets.

“With transportation costs continuing to increase, railroads provide an alternative means for companies to bring their raw materials to facilities and their products to the marketplace,” says Dean Monske, president and CEO of the Regional Growth Partnership in Toledo, Ohio. “When aligned with other modes of transportation — such as interstate, air cargo, or seaport — railroads often complete that final linkage necessary for connectivity to world markets. Railroads open up geography for the transportation of heavy freight or, through their unit trains, long-haul shipments. Working with the railroads to invest more [in infrastructure] unlocks those opportunities.”

Class 1 railroads in the United States have long been actively involved in the economic development of their service areas,” says Newell Baker, Norfolk Southern Corporation’s assistant vice president for Industrial Development. “Norfolk Southern can trace its involvement in economic development to 1896, when its predecessor company, Southern Railway, established a ‘Land and Industrial Department’ to encourage industrial growth in the railway’s service area.”

Shortline railroads also have their place. In Pecos, Texas, Kinder Morgan Texas Pipeline LLC, a shale gas producer, benefited from a new rail terminal developed and operated by Watco Companies, Inc., the largest privately held shortline railroad company in the United States. Kinder Morgan’s President Duane Kokinda says this was instrumental in the company’s expansion. “We believe this unique partnership will provide a wide range of services and expertise for the benefit of customers in Reeves County and surrounding areas,” he notes.

Also in the Permian Basin in West Texas, Crosstex Energy will build a new natural gas processing facility. The company plans to buy and upgrade a nearby rail terminal to provide transportation of natural gas liquids (NGL) to its Eunice fractionation facility in southern Louisiana.

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About the Author

Jim Romeo
Jim Romeo is a writer based in Chesapeake, Virginia. Specializing in business-to-business and high-tech writing, he has more than 700 publishing credits. Romeo has written extensively about the industrial and technology sectors and is the author of two non-fiction business books. He holds an MBA in Marketing from Columbia University.

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