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Railroads Redraw the Intermodal Map

The Journal of Commerce (Online)

With a major set of construction projects across the Midwest and along the Atlantic seaboard, CSX Transportation plans to turn its intermodal operations into a sleek network for cross-country container shipments.

Some of the work will take years to complete, and some is wrapped up in sensitive negotiations that could alter the design planning.

However, key parts of the National Gateway corridor system already are taking shape, in particular a big new intermodal hub facility that is months away from opening on the corridor’s western edge in the northwest Ohio town of North Baltimore.

Ocean freight shippers are buying into CSX’s concept that this 185-acre hub will let them bypass congested Chicago container-sorting facilities to take ocean cargoes into Ohio, saving up to two days on cross-country moves from West Coast ports.

Longer-term, CSX looks toward the day when its eastern U.S. container trains can start stacking boxes two high across its entire system, by digging out major remaining obstacles across the densely populated region and raising numerous line clearances across four states.

And for the railroad industry, it’s just one piece of a broader restructuring of the North America rail map to meet what many in the business believe is the changing direction of intermodal transport.

The Canadian National Railway double-stack trains that carry goods to and from the Port of Prince Rupert in Canada’s Northwest, the intermodal centers BNSF Railway is developing outside Memphis, Tenn., and Kansas City, Mo., and the clearances Norfolk Southern Railway is constructing for its own Heartland Corridor are part of a kind of intermodal earthquake that is changing the landscape of rail services.

That is not coming cheaply. CSX estimates the cost for its National Gateway corridor to be about $850 million, including $175 million for its soon-to-open Ohio hub that it says will also serve as «the nerve center of CSX’s nationwide intermodal network.»

One project pending in Washington, D.C., is estimated to cost roughly $160 million. It will square off the century-old, curved-wall Virginia Avenue tunnel running through Capitol Hill, and bring it up to double-track stacktrain standards. The precise cost depends on final design planning, which will come out of extensive meetings rail officials are holding with community groups and local officials.

Other terminals will also be built or enlarged, rail bridges will be revamped or replaced, and in some cases roadway crossings may be redirected to allow the railroad to raise its clearances. CSX expects the work to continue through 2015.

But the railroad sees its corridor plan as something that can ease highway congestion and cut emissions in large sections of the country by putting more boxes aboard trains, and speed freight transits and cut shipping costs as it helps the continent’s whole railroad system run more efficiently. It will also generate new construction and terminal jobs in states along the way, and improve train flows on tracks shared with passenger railroads.

So CSX is looking to the states and federal government to chip in more than half the cost, while the railroad commits $395 million of its own money.

«This National Gateway project not only delivers compelling public benefits, but it also significantly enhances the effectiveness and connectivity of the entire CSX intermodal network as well as its connections with the western railroads,» said Carl Warren, director of strategic infrastructure at CSX.

Governments agree, and are buying in. «We’ve received over $180 million in funding from our state partners,» CSX spokeswoman Lauren Rueger said. The U.S. Department of Transportation gave Gateway $98 million from its $1.5 billion «TIGER» grant pool for projects of special significance, one of the largest such grants from that account in the DOT’s economic stimulus funds.

The money will go into construction to raise track clearances between the new anchor hub south of Toledo, Ohio, moving eastward across that state and into West Virginia and Pennsylvania.

When this Phase 1 is completed, National Gateway will offer a stacktrain hub for western railroads into Ohio, then double-stack service over to a smaller intermodal terminal already operating at Chambersburg, Pa., on north-south Interstate 81 and near east-west I-70, I-76.

Rueger said CSX is trying to arrange funding for the next phases, to extend double-stack service over the I-70, I-76 corridor to Baltimore, and then along the I-95 corridor through D.C., Virginia and into North Carolina.

CSX did not seek a grant in this year’s «TIGER II» round of $600 million in DOT discretionary grants, but Rueger said planners will be looking at other funding streams, including the next multiyear reauthorization of federal surface transportation programs. Another option could be the DOT’s proposed $4 billion a year infrastructure fund that could operate much like the discretionary stimulus grant pool. Congress has yet to approve that fund despite widespread support for the idea.

Company officials say Gateway is designed to aid both the international or marine container shipments and the domestic box business that competes with long-haul trucks. But Warren said the early focus on getting the Ohio terminal open and raising clearances over to Chambersburg means traffic from the West Coast — including marine containers — will benefit early from Gateway’s launch.

«Obviously, that’s not going to have an immediate impact on the mid-Atlantic ports,» Rueger said, «but that is going to be helpful for domestic and international traffic that needs to get into the eastern United States, into the mid-Atlantic specifically, for consumption.»

Shippers were quick to see those benefits, and have already shifted some business. Hyundai Intermodal transferred the eastern leg of its cross-country container business to CSX from rival Norfolk Southern on June 1, shifting at the start of a contract period so it would be in position to take advantage of the first Gateway piece when the Ohio terminal opens early next year.

That’s because CSX plans to handle Ohio-bound trains in partnership with the western railroads, leaving those trains intact at Chicago but exchanging CSX crews for the run to North Baltimore and back. With such procedures, the dwell time at Chicago can shrink dramatically for West Coast stacktrains heading into Northwest Ohio.

One Hyundai official said containers bound for particular inland terminals sometimes wait an extra day or two on the West Coast for enough other boxes to arrive from Asia in order to fill up a cross-continental train. Hyundai estimates it can make up that time just by using CSX through North Baltimore, and its train-planning and handoff procedures with western rail lines.

Corridor plans that seek public money to line up with railroad capital investments have become a major vehicle for large-scale infrastructure programs in the rail industry.

Norfolk Southern is completing its three-year Heartland Corridor project to cut a double-stack path through Appalachian mountains in Virginia and West Virginia, on the way to a modern intermodal terminal at Columbus, Ohio.

NS planned it back in the heyday of international box shipping when ocean lines wanted more East Coast rail options if they were to sail from Asia past the West Coast ports where Union Pacific and BNSF had operational and pricing control over cross-country train service.

The Heartland Corridor begins at ocean terminals around Norfolk, Va., and by angling directly toward Columbus saves up to a day in transit compared to current NS routes that run far to the north and south. Making the stacktrains faster allows the railroad’s eastern service to compete more effectively against trucks except with customers who need the faster highway delivery after a ship unloads.

Earlier this year, NS officials warned Heartland might take awhile to rev up in the wake of the global recession, but lately they’ve been saying its September activation could soon produce good volume.

Meanwhile, NS recently launched a new Crescent Corridor plan to increase clearances on its lines from the Mississippi Delta, up the I-81 corridor through Virginia and eventually into New York. When Transportation Secretary Ray LaHood announced his TIGER grants on Feb. 17, the Crescent Corridor got the single largest one at $105 million, which NS will use to help build new container terminals at Memphis, Tenn., and Birmingham, Ala.

The single largest corridor-type plan is also the rail industry’s highest priority, the Chicago Region Environmental and Transportation Efficiency program that is facing a multibillion-dollar tab for dozens of pricey construction projects to sort out the city’s jangle of freight and passenger rail lines, local roads, terminals and highways.

The railroads are chipping in, and both the city and Illinois are putting money into it. CREATE got a $100 million TIGER grant, some other federal money is going into it, and more is expected through future grants.

But the CREATE and Gateway programs also complement each other, CSX says.

«We did a tour with some Pacific Northwest port officials, in Chicago, of CREATE a few weeks ago,» Warren said. «And we talked about northwest Ohio and the complementary impact that (the new CSX hub) would have on CREATE, and with what CREATE does with those routes across Chicago . . . to help with the flow of traffic off the West Coast. They actually work pretty well together.»

But the CSX National Gateway still has some challenges ahead. Company officials say they’ve already had 35 meetings in D.C. with local officials and the community to discuss the Virginia Avenue tunnel makeover.

Some neighborhood groups are concerned about the construction, and some about the potential impact from heavier intermodal traffic it would bring. CSX spokesman Robert Sullivan insists people in the area show support for the Gateway project overall. So «it’s less an issue, I think, right now of opposition than of interest and concern, and making sure that we are recognizing the concerns they have… We are making every possible effort to do exactly that.»

But Warren said project planning is moving along, so that CSX can quickly begin work once the area impact process is done to wrap up final design and start construction. That will remove a double-stack chokepoint for the entire I-95 corridor.

CSX also plans to build a new intermodal yard south of Baltimore, outside a constricted tunnel serving the port that limits trains to single stacks.

The yard would serve as the axis for stacktrains coming east from Ohio or up from North Carolina, and then local drayage or one-layer container trains would move boxes to and from Baltimore’s docks nearby.