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Get On Track With a Rail-Served Site

The economic and environmental benefits of freight rail transportation should be considered when developing your next facility.

Q1 2018
BNSF’s logistics center in Sweetwater, Texas, serves industrial customers including Cape and Son, Vulcan Materials, and Fairmount Santrol.
BNSF’s logistics center in Sweetwater, Texas, serves industrial customers including Cape and Son, Vulcan Materials, and Fairmount Santrol.
Should your new or expanded facility be rail-served? Whether you ship consumer goods or industrial commodities, immediate access to the resources of a Class I Railroad can provide significant benefits. Class I Railroads — freight railroads with operating revenues of $433.2 million or more — have the scale and expertise to bring real development and supply chain advantages to companies looking to expand or open new distribution centers, warehouses, or other facilities.

These Class I Railroads are BNSF Railway, CSX Transportation, Canadian Northern Railway, Canadian Pacific, Kansas City Southern Railway, Norfolk Southern, and Union Pacific Railroad. Chances are, at least one of these major freight transportation providers will be able to meet your location and capacity needs. In total, the U.S. freight rail network covers more than 140,000 miles and moves more freight than any other freight rail system in the world, according to the Federal Railroad Administration (FRA). Let’s take a look at some of the potential benefits of working with a railroad to create a rail-served facility.

1. Rail offers a cost-effective, competitive supply chain solution.
The United States has the most efficient and cost-effective rail system in the world. The U.S. rail industry transports 40 percent of the nation’s goods, in terms of distance and weight, for only 10 percent of the intercity freight revenue. And the value of that transportation continues to rise. Since 1980, prices for rail transportation have fallen by more than 50 percent in real dollars adjusted for inflation, according to the Association of American Railroads (AAR). Volatile fuel costs, increased regulations, and driver shortages contribute to making rail a cost-efficient alternative to entirely over-the-road transportation options.

2. Rail is positioned to meet your capacity needs as you grow.
U.S. freight railroads invest heavily to maintain and expand their networks in order to meet their customers’ capacity demands today and into the future. And future demand is expected to be robust. The U.S. Department of Transportation projects that demand for rail freight transportation, measured in tonnage, will increase 88 percent by 2035.

Railroads are responding with heavy capital investments (unlike other modes of transportation U.S. railroads own and maintain their own rights of way). According to AAR, from 1980 to 2016, privately owned freight railroads have devoted more than $630 billion to capital investments, with an estimated $22 billion more spent in 2017. A major driver of these investments is the need to position railroads to be able to handle growing capacity needs going forward.

The U.S. Department of Transportation projects that demand for rail freight transportation, measured in tonnage, will increase 88 percent by 2035 3. Rail can reduce your environmental impact.
Moving freight by rail instead of with trucks reduces greenhouse gas emissions an average of 75 percent, according to AAR. One double-stacked intermodal train can carry the equivalent of several hundred truckloads to any of the country’s major markets. In 2016 alone, BNSF customers saved 34 million metric tons of carbon dioxide from being emitted into the atmosphere — the equivalent of removing seven million cars from the nation’s roads.

4. Railroads deliver significant facility development resources.
With departments variously labeled as “Economic Development,” “Business Development”, “Industrial Development,” or “Real Estate,” major railroads offer customers deep resources in facility development. Experts are available to help customers through the entire process, from real estate market research and planning through property acquisition, construction, and the commencement of shipping. Incorporating your transportation needs from the inception of a project typically leads to significant cost and time savings in the development process. And customers are taking advantage. At BNSF alone, our customers and local economic development organizations invested nearly $7.7 billion in new or expanded facilities in 2017. Moving freight by rail instead of with trucks reduces greenhouse gas emissions an average of 75 percent. According to AAR
  • Certified Sites — Each major railroad has its own unique programs. At BNSF, for example, we have a certified sites initiative for customers who ship industrial or agricultural products by the carload. Certified sites are pre-selected areas of land considered prime for development following extensive vetting to confirm they meet critical criteria, including availability of utilities, public services, highway access, proper zoning for industrial usage, and transparency of current land ownership. On average, by utilizing a certified site, customers can save up to nine months of development time.
  • Logistics Centers — Some railways also offer carload customers co-location opportunities at strategically located logistics centers. At these facilities, the railway typically owns the land and builds the shared track, mainline turnouts, and other required infrastructure. Logistics centers can accommodate multiple industries and support rail, truck, and transload services. BNSF’s logistics center in Sweetwater, Texas, for example, serves industrial customers including Cape and Son, Vulcan Materials, and Fairmount Santrol.
  • Transload — If building or expanding your facility at a rail-served site is not feasible, you can still access rail networks. In conjunction with motor carrier and logistics partners, railroads offer transloading services, where your freight is trucked to a transload facility, loaded onto the rail network, transported by rail, and then trucked to its destination. Transloading allows customers to obtain the cost convenience of using individual railcar service without having to have a rail-served facility.
  • Logistics Parks — For shippers of consumer goods in containers or trailers, many railroads offer attractive co-location opportunities. Transportation costs typically account for more than 50 percent of total distribution costs. Locating your distribution center or warehouse at a logistics park can substantially lower those costs, reducing drayage charges, maximizing truck turns, adding fuel savings, and lowering emissions. A competitive cost per square foot further boosts the bottom line.

    Logistics parks are located on land around one of a railway’s existing intermodal shipping facilities, cutting miles out of the supply chain. Major intermodal facilities are typically located at established railroad hubs offering access to large markets and include Chicago, Kansas City, and Dallas/Fort Worth. Logistics parks serve a range of logistics and retail customers. For example, BNSF Logistics Park Kansas City serves companies including Amazon, UPS, Kubota, Spectrum Brands, and Horizon Global.
5. Railroads share their logistics and development expertise.
Class I railroads have a wealth of expertise in the development of rail-served facilities as well as in supply chain logistics. BNSF, for instance, works closely with our carrier partners to help businesses transporting a variety of consumer goods create an intermodal transportation plan that allows them to grow and keep their transportation cost-competitive. We also help businesses design intermodal transportation plans that enable them to reduce their carbon footprint on containerized loads, while realizing cost savings and consistent and timely service.

So, does creating a rail-served facility track with your objectives? With the economic and environmental benefits of freight rail transportation, coupled with the advantages inherent in developing a rail-served facility, we think it makes sense to investigate the opportunities of working with a Class I railroad.
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