Fueling Change in Intermodal Transportation
The high cost of fuel is leading to fundamental changes in intermodal transportation, putting more emphasis on water and rail. And that's driving the creation of more intermodal facilities.
"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.
Amazon Expands Las Vegas, Nevada, Operations
Volkswagen of America Constructs Electric Vehicle Assembly Plant in Chattanooga, Tennessee
A Site Selector’s Checklist for Locating in the U.S.
Location USA 2019
Where to Invest in the Booming Aerospace Manufacturing Industry
2019 Auto/Aero Site Guide
A Changing Food Manufacturing Industry
2017 Food Processing
Front Line: Manufacturers Look to Nontraditional Locations
2019 Gold & Silver Shovel Awards: Recipients Garnered Large Job-Creating and Investment Projects in Diverse Industries
33rd Annual Corporate Survey & the 15th Annual Consultants Survey