Not long ago, the argument against rail cargo investment focused on the fact that it was slow and unreliable. Today, significant investments by US rail providers – all private companies – has helped combine the long-haul efficiencies of rail with the short-haul flexibilities of trucks, resulting in a cost-effective and reliable mode of freight transportation. As a result, demand for such transportation in the US is expected to nearly double, from 19.3 billion tonnes in 2007 to 37.2 billion tonnes in 2035, which will in turn attract investment in ancillary services such as distribution parks, warehousing centres and even manufacturing.
Over the past five years, US-based transportation company CSX Corporation has invested more than $500m on expanding and enhancing its intermodal network. In 2013, its affiliate, CSX lntermodal Terminals, completed expansions of its facilities in Worcester, Massachusetts and Columbus, Ohio. Other expansions are under way in Atlanta, Georgia and Louisville, Kentucky, and a new 360,000-square-metre intermodal rail terminal is under construction in the city of Salaberry-de-Valleyfield in Montreal, Quebec.
“We believe this new terminal will provide immediate and long-term benefits to Quebec and to Salaberry-de-Valleyfield,” says Michael J Ward, CSX’s chairman, president and CEO. “The terminal will provide an anchor for the development of new business, helping boost the economy and create jobs, while [also] helping the environment and reducing congestion on the highways.”
In anticipation of the increased demand expected when the newly widened Panama Canal opens in 2015, significant infrastructure developments are under way at many east coast and Gulf coast ports, including port dredging, investing in on-dock terminals and ensuring reliable connectivity. Efficient rail connectivity will be key to meeting this increased demand, and CSX has been working with ports as they expand and improve their infrastructure.
The company has made a number of significant investments, including a $850m investment in National Gateway, a public-private partnership aimed at boosting the capacity of existing CSX freight rail corridors between mid-Atlantic ports and midwest distribution points by rebuilding bridges and tunnels, allowing trains to double-stack their rail cars.
“The National Gateway will [generate] more than $10bn in its first 30 years of operation,” estimates Melanie Cost, a CSX spokesperson. “That’s $36 in public benefits for every $1 of public money invested – and, it will create more than 50,000 jobs.”
CSX is not the only US railroad company making sizable investments. Norfolk Southern’s $2.5bn 'Crescent Corridor' project represents the largest expansion of the private rail company’s service in more than a decade. The expansion spanned 11 states and included the creation new terminals in Birmingham, Alabama and Greencastle, Pennsylvania.
Today, the Crescent Corridor provides service along more than 30 new intermodal lanes between the north-east and south-east of the US. It also offers interline services with Union Pacific (in Los Angeles) and Kansas City Southern Railway (in Dallas and Mexico). Its goal is to remove several hundreds of thousands of trucks from the interstate highways by running a 28-train daily service.
“While the Crescent Corridor’s primary focus is domestic freight, the capacity expansion and improved flow of freight through our network benefits the ports we serve to the extent that the ocean carriers need efficient rail access to inland destinations,” says Robin C Chapmen, a Norfolk Southern spokesperson.
Doubled and tripled
In addition to the Crescent Corridor, Norfolk Southern completed another project in 2010, the Heartland Corridor, which is a $190m public-private partnership between Norfolk Southern, the US Federal Highway Administration and three states, which saw approximately nine kilometres of tunnels modified to accommodate double-stacked trains. Now, a new, shorter routing reduces travel times between the ports of Virginia and Chicago by one to three days.
Both the CSX and Norfolk Southern projects represent significant investments in central Ohio. According to Jeff Zimmerman, director of the Columbus Region Logistics Council, the effect of the CSX and Norfolk Southern investment creates a “clustering” attraction for shipping companies and distribution operators who need this infrastructure to operate predictably and efficiently.
Meanwhile, in the west of the country, Burlington Northern Sante Fe (BNSF) railroad has been improving and expanding its intermodal capabilities. To date, BNSF has 30 intermodal facilities nationwide. “We have the highest capacity intermodal routes in the world, with more double- and triple-tracked corridors than any other railway,” says Katie Farmer, BNSF's group vice-president.
BNSF's future expansion and efficiency projects focus on capacity expansion, such as the completion of its Kansas City Intermodal Facility. Adjacent to the facility is a 3.8-square-kilometre industrial park, dubbed the Centrepoint-Kansas City Southern Intermodal Centre. The centre is located in designated enterprise and foreign trade zones in the North American Free Trade Agreement trade corridor.
Rail investment in the US contrasts sharply with that in Europe, where companies face infrastructural barriers and higher costs for rail transport.
“The former state-owned railway companies used their own systems [security packages on locomotives, different electrical tensions, etc...] and, therefore the interoperability of crossborder rail traffic is still limited,” says Christian Stoll, head of intermodal at Germany-based logistics firm DB Schenker. “Although the common approach of all involved parties [railway infrastructures and railway undertakings] is improving strongly, it takes time to have a competitive solution compared to the deregulated road traffic.”
While EU directives call for an increase in rail freight movements to curtail carbon dioxide emissions and alleviate growing truck traffic, the European Intermodal Association reports that the thresholds set by the European Commission for newcomers and initiatives in the intermodal market are high. Low-quality infrastructure, such as railways and terminals in eastern Europe, and a rising market share of trucking firms in central Europe, are also negatively impacting investment in European rail. Nevertheless, numerous companies are moving ahead.
DB Schenker Rail, the UK rail branch of DB Schenker, which serves more than 240 destinations in some 30 countries, is currently looking to improve cargo flows from the EU to eastern Europe. Its Mazovia liner train, which commenced operations in January, offers connections from Germany and the Czech Republic to central Poland and the port of Gdansk, via the hub at Poznań. The company is also exploring links from Belarus to Russia and Kazakhstan.
Meanwhile, DB Schenker's parent company, Germany-based Deutsche Bahn, recently won the right to run passenger trains between London and Germany, through the EuroTunnel, which is currently the only land link between continental Europe and the UK. The company's bid was approved by the Anglo-French intergovernmental commission, Groupe Eurotunnel, which operates the tunnel. Deutsche Bahn's services are expected to commence in 2016.
It is not just networks that are starting to grow, but hubs are also developing around new and improved rail connections. Czech railway operator Metrans, a subsidiary of Hamburger Hafen and Logistics, opened its most modern container terminal in Ceska Trebova, Czech Republic. The hub will provide better rail connections between central and eastern Europe and Germany’s ports of Hamburg and Bremerhaven. Meanwhile, expansions are under way at Delta 3, a multi-modal transport terminal in Lille-Dourges, France, where 35 square kilometres of warehouse space is available with rail access.