CSX wagers on a public-private partnership to place the double-stack National Gateway in the intermodal win column
The wind picked up speed as it blew across Rice Yard on a late November afternoon. The same can't be said about the level of activity at the Waycross, Ga., hump yard.
Capable of humping 3,000 rail cars per day, the CSX Corp. facility was on pace to hump about 2,700. Since early October, traffic has been tracking about 5 percent below last year's levels, said Terminal Superintendent Brian Barr as he scanned dozens of empty receiving and departure tracks from the yard's tower.
Nonetheless, the trains that are flowing into and out of the facility of late are doing so more fluidly. Several months ago, CSX built a second track into Rice Yard and relocated lines away from the heart of Waycross' city center. The infrastructure improvements enable the yard to process traffic in a shorter amount of time, said Barr. An outbound train no longer has to wait until an inbound train clears a single track and trains moving through the city don't have to slow down to pass grade crossings.
Eighty miles southeast of Waycross, senior executives stationed at CSX's Jacksonville, Fla., headquarters are pursuing an initiative that will provide the railroad a much larger traffic boost from infrastructure that'll be upgraded on a much grander scale. In May 2008, the Class I unveiled the National Gateway, a double-stack train route that would run through Maryland, North Carolina, Ohio, Pennsylvania, Virginia and West Virginia, and link three mid-Atlantic ports with Midwestern markets.
Proposed as a public-private partnership (PPP), the gateway calls for upgrading track, bridges and tunnels, and expanding and constructing several intermodal terminals during the next seven years — to the tune of $724 million, half of which would be funded by CSX.
Although the gateway doesn't include Rice Yard, the Waycross facility would handle some of the traffic generated by the project — provided the Class I can attract the public financing and political support necessary to carry out the PPP. It's not a small task given the number of constituents involved: three ports, six states, the District of Columbia and, CSXers hope, the federal government. Senior execs know it won't be an easy one, either, since half the project's cost needs to be split between the states and feds. Each are being asked to provide $181 million.
So far, the call for public funding has partially been answered.
"We've been at this for about nine months, and the initial support from the states has been good," says CSX Chairman, President and Chief Executive Officer Michael Ward, adding that it's difficult to gauge the level of federal support until the new Administration takes office. "We're trying to ensure the gateway is high enough on their priority lists."
How? By stressing that the National Gateway will provide $8 in public benefits for every public dollar invested in the project, such as reductions in highway congestion, air pollution and fuel usage, and the creation of hundreds of new jobs.
CSX also is emphasizing how the route would serve much of the nation as a major rail artery tapped into what's expected to be a heavier flow of imported containers at ports in Baltimore, Wilmington, N.C., and Hampton Roads, Va. With West Coast ports becoming increasingly congested, populations growing in major consumer markets and the Panama Canal building a third set of locks projected to open in 2015 — clearing the way for more ships to travel from Asia to the East Coast — the three ports are prepping for a lot more container activity.
"We'll be in a position to bring goods arriving at the East Coast ports into the nation's heartland, says Ward. "We'll also get two-way traffic flows by bringing grain and manufactured goods to the ports, then loading trains with import containers for the return trip."
In addition, the gateway will position CSX to better compete with other carriers for the growing international intermodal traffic, says Executive Vice President and Chief Operating Officer Tony Ingram.
"We can take advantage of the good deepwater ports," he says.
Clearing the Way
But first, CSX needs to establish double-stack clearances along every track, in every tunnel and on every bridge located on three existing corridors: the I-70/I-76 Corridor between D.C. and northwest Ohio (via Pittsburgh); the I-95 Corridor between North Carolina and Baltimore (via D.C.); and the Carolina Corridor between Wilmington and Charlotte, N.C.
"We've got good route structure, but in some areas, we don't have the clearances," says Ingram.
Pending the availability of government funding, CSX plans to complete 61 clearance projects in five of the states and D.C. by 2015 (see page 18). No clearance work is required in North Carolina.
Among the proposed projects: replacing the roof and building a double track in D.C.'s Virginia Avenue Tunnel. Projected to cost more than $120 million, the project will provide a 21-foot clearance in the tunnel.
The upgrades will improve operations both for intermodal trains and passenger trains run by Amtrak, Maryland Transit Administration's MARC service and Virginia Railway Express, says Lisa Mancini, who previously headed the National Gateway as vice president of strategic infrastructure initiatives until CSX appointed her senior VP-law and public affairs, general counsel and corporate secretary in late November. Louis Renjel succeeded Mancini and now oversees the project.
CSX long has had double-stack clearances from the mid-Atlantic ports to other regions, such as New England.
"Now, we need a clear route to the Midwest," says Mancini.
A Constructive Approach
The Class I also needs to build more terminals to expand intermodal capacity. CSX opened one in Chambersburg, Pa., in September 2007, and held a ceremony there on Dec. 5 to commemorate the terminal as an official part of the gateway. The railroad plans to construct three more terminals in Pittsburgh, and North Baltimore and Columbus, Ohio. The four facilities are considered cornerstone terminals for the gateway because of their key locations, senior execs say.
Construction on the North Baltimore facility is slated to begin in early 2009, initial site selection is under way for the Pittsburgh terminal and the Columbus facility still is in planning stage, according to CSX spokesperson Lauren Rueger.
The Columbus terminal will help Ohio further its plan to become the nation's logistics center, says Mancini. Large rail-served inland distribution centers are expected to be built in the area to capitalize on the increased volume and speed of containers flowing into major hubs.
"There's big interest in distribution centers locating around the gateway," she says.
CSX also is considering plans to build or expand other intermodal facilities along gateway routes, such as a new terminal to serve the Hampton Roads area, a relocated facility in Baltimore, and an expanded and upgraded terminal in Charlotte.
The projects would require various approvals from the municipalities.
However, there's one thing that's more daunting to CSXers than the scope of the gateway-related projects, and lobbying efforts necessary to fund and complete them: the price tag. The clearance work alone will cost about $347 million.
There's no chance the Class I could foot the entire $724 million bill and complete the gateway by 2015, says Mancini.
"Without the public-private partnership, we could do it ourselves, but over a much longer time period," she says.
CSX's share of gateway funding mostly will cover the terminal projects.
"We want to control the process of building the terminals and avoid a prolonged funding process," says Mancini. "The states and feds mostly would fund the clearance work."
So far, Pennsylvania has been the gateway's biggest supporter and the first to pony up funds.
Last month, the state agreed to provide $35 million during the next three years to help fund clearance and bridge work. Pennsylvania previously provided $48 million for the Chambersburg terminal.
"How quickly we can move goods into and out of the country is key to our economic future," said Pennsylvania Gov. Ed Rendell at the ceremony held in Chambersburg last month.
Ohio Gov. Ted Strickland also has voiced support for the National Gateway. The initiative will help the state solidify its position as a transportation gateway for the nation, he said in May when CSX unveiled the project.
"This is a major competitive advantage that can greatly benefit the citizens of Ohio, and the state is committed to doing its part to help build this sort of needed infrastructure," said Strickland. "In doing so, we'll also be setting an example for other states around the nation."
In addition, Virginia's Department of Rail and Public Transportation has included the gateway in their long-range transportation plan, and CSX continues to solicit backing in Maryland, North Carolina and West Virginia, says Mancini.
Last year, CSX set up a Web site (www.nationalgateway.org) that describes the project and its public benefits to help generate support for the initiative.
It also helps to have something in black and white that shows state officials exactly what the gateway has to offer. Last year, CSX commissioned Cambridge Systematics Inc. to conduct a study on the project's public benefits — that same firm that in late 2007 released an Association of American Railroads-commissioned study that showed U.S. freight railroads need to spend $135 billion the next 30 years to address capacity constraints.
Cambridge determined that during the gateway's first 10 years of operation, state highway maintenance costs would decrease because more than 2 million trucks would be diverted from freeways, CO2 emissions would decline by more than 4 million tons, gasoline consumption would drop by about 500 million gallons and shipping costs would fall more than $2 billion.
In addition, shifting freight from highways to rail would save the states up to $250 million in safety-related costs, the study found.
The benefits are worth a total of $3.2 billion over the 10 years, says Mancini. Virginia's public benefits alone would exceed $550 million.
"Cambridge will do a new study soon that will give a breakdown of new jobs to be created in each state," she says. "But that $3.2 billion figure likely won't change."
Dawn of New Era in D.C.
The change that's occurring in D.C. could bode well for CSX's chances of landing federal funds for the gateway. The new Administration and Congress might include monies in the surface transportation reauthorization legislation, says Ward.
"The new Administration also has talked about the need for an economic stimulus package and transportation could be part of it," he says. "This seems to be a pro-rail and pro-infrastructure Administration."
Although transportation is a bi-partisan issue, it helps that President-elect Barack Obama has roots in Chicago and understands transportation's role from the perspective of one of the world's largest cities, says Ward.
"Obama comes from the largest rail hub in the world," he says.
While CSX tries to draw attention to the National Gateway at the federal and state levels, at least the Class I won't be competing with Norfolk Southern Corp., which is attempting to solicit similar support for its Crescent Corridor intermodal route between New Jersey and Louisiana. The two PPP projects are different, says Ward.
"Our corridor isn't going through coal fields," he says. "The gateway involves multiple ports and different routing."
CSX can make a strong case for the gateway by stressing rail's advantages: a train can move one ton of freight 423 miles on one gallon of fuel and carry the same amount of cargo as about 280 trucks, says Ward. If enough federal and state policymakers recognize the value of those advantages, the Class I will meet its goal of completing the gateway in time for the opening of the expanded Panama Canal — and a heavier flow of East Coast-bound container ships — in 2015.
"More and more, the nation is becoming aware of the tremendous safety, economic and environmental benefits that railroads create," says Ward. "The National Gateway leverages those benefits to the fullest."