Rail Study: Rail Study: Northern Wisconsin & Upper Northern Wisconsin & Upper

Peninsula, MIPeninsula, MI

Institute of Supply ManagementInstitute of Supply ManagementLake Superior ChapterLake Superior Chapter

March 22, 2007 Superior, WIMarch 22, 2007 Superior, WI

PresentationPresentation

Research TeamResearch TeamRail and other transportation trendsRail and other transportation trendsRail developments in the study areaRail developments in the study areaNorthern Wisconsin and Upper Peninsula Northern Wisconsin and Upper Peninsula

of Michigan Rail Studyof Michigan Rail StudyStudy activitiesStudy activitiesConclusions and RecommendationsConclusions and Recommendations

Growing Rail Freight: Tools for ShippersGrowing Rail Freight: Tools for Shippers Research TeamResearch Team

University of Wisconsin – Superior:University of Wisconsin – Superior: Transportation and Logistics Research CenterTransportation and Logistics Research Center

Richard D. Stewart, Ph.D.Richard D. Stewart, Ph.D. Xiubin Wang, Ph.D.Xiubin Wang, Ph.D. William Bajjali, Ph.D.William Bajjali, Ph.D. Libby Ogard, MBA (Prime Focus)Libby Ogard, MBA (Prime Focus)

Michigan Technological University:Michigan Technological University: Dept. of Civil and Environmental Engineering,Dept. of Civil and Environmental Engineering, Railroad Engineering ProgramRailroad Engineering Program

William J. Sproule, Ph.D.William J. Sproule, Ph.D. Pasi T. Lautala,Pasi T. Lautala, Ph.D. candidate Ph.D. candidate

Student ResearchersStudent Researchers from UW-Superior and Michigan Tech from UW-Superior and Michigan Tech

AcknowledgmentsAcknowledgments CN Railroad and short line railroadsCN Railroad and short line railroads Shippers and shipper associationsShippers and shipper associations Wisconsin and Michigan DOTsWisconsin and Michigan DOTs Economic Development Agencies in the RegionEconomic Development Agencies in the Region

Current State of Truck and Rail Current State of Truck and Rail Transportation NetworkTransportation Network

Rail and truck capacity becoming tight for the first time Rail and truck capacity becoming tight for the first time since 1979since 1979

Rate rising for both modesRate rising for both modes Trucking industry is usingTrucking industry is using rail for intermodalrail for intermodal Coal and grain resurgenceCoal and grain resurgence Industrial products are Industrial products are outpacing US GNPoutpacing US GNP Long lead time for railLong lead time for rail infrastructureinfrastructure improvementsimprovements

Transportation TrendsTransportation Trends

1,050

1,100

1,150

1,200

1,250

1,300

1,350

1999 2000 2001 2002 2003

Thou

sand

s of

Cla

ss 8

Tra

ctor

s

Trucks on Road, 1999 - 2003

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000

1,600,000

1,800,000

1960 1980 1990 2000

Class 1 Railroad Cars, 1960-2000

0%

50%

100%

150%

200%

250%

300%

1980 1985 1990 1995 2000

Ton Miles per Mile of TrackTon Miles per Mile of Track

Ton MilesTon Miles

Track MilesTrack Miles

Source: USDOT, National Transportation Statistics

Increase in volumesIncrease in volumes Decrease in:Decrease in:

Infrastructure capacityInfrastructure capacity EquipmentEquipment

0%

50%

100%

150%

200%

250%

1980 1985 1990 1995 2000

Vehicle Miles Vehicle Miles Traveled (VMT)Traveled (VMT)

Lane MilesLane Miles

VMT Per VMT Per Lane MileLane Mile

4,000

5,000

6,000

7,000

2000 2005 2010 2015 2020

Bill

ions

of T

on M

iles

DOTDOT

ATAATA

AASHTOAASHTO

Railroad TrendsRailroad Trends Long period of Long period of

inadequate Return inadequate Return On Investment (ROI)On Investment (ROI)

Record profits and Record profits and investments in 2006investments in 2006

Most capital Most capital intensive industryintensive industry ~15% of capital ~15% of capital

spending for new spending for new capacitycapacity

Raising costsRaising costs Concentration on Concentration on

main corridorsmain corridors

0%

4%

8%

12%

16%

20%

1981 1984 1987 1990 1993 1996 1999 2002

Cost of Capital

Return on Investment

Source: Surface Transportation BoardSource: U.S. Census Bureau; AAR

0%

5%

10%

15%

20%

Rai

lroad

sU

tiliti

esM

iner

als

Elec

toni

csPa

per

Che

mic

als

Prim

ary

Fab.

Woo

dM

achi

nery

Food

Tran

sp.

Coa

l

Declining Rail Car CapacityDeclining Rail Car Capacity

Class 1 Railroad CarsClass 1 Railroad Cars 1960 – 1,658,292 1960 – 1,658,292 1980 – 1,168,1141980 – 1,168,114 1990 - 658.9001990 - 658.900 2000 – 560,1542000 – 560,154 Net loss 1,098,138 carsNet loss 1,098,138 cars

Short Line Railroad CarsShort Line Railroad Cars 1960 – 32,114 1960 – 32,114 1980 – 102,1611980 – 102,161 1990 - 103,5271990 - 103,527 2000 – 132,4482000 – 132,448 Net Gain 100,334 carsNet Gain 100,334 cars

Overall the rail industry has lost 997,904 rail cars in past 40 years. (BTS 2003)

New rail cars have more capacity per car, 1 rail car > 3 Semi-trucks.

Railroads have improved use of cars… but fewer cars = less system versatility and resilience to handle smaller markets

Source: AAR

U.S. Railroad Performance: 1964-2002U.S. Railroad Performance: 1964-2002(Index 1981 = 100)(Index 1981 = 100)

0306090

120150180210240270300

'64 '66 '68 '70 '72 '74 '76 '78 '80 '82 '84 '86 '88 '90 '92 '94 '96 '98 '00 '02

Revenue

Volume

Productivity Increases

Price

Staggers Act Passed Oct. 1980

Two Scenarios:Two Scenarios:1) Downward Spiral1) Downward Spiral

Rail Carriers Shippers

Lower rail volumes

Service deterioration

2) Upward Spiral?2) Upward Spiral?

Higher rail volumes

Increased investments and service

DOTEDA

Others

Rail Carriers ShippersCo-operation

Research

MRUTC

Univ.

Northern Wisconsin and UP Michigan Northern Wisconsin and UP Michigan Rail Study - BackgroundRail Study - Background

Federally funded rail study Federally funded rail study Initiated by regional shippers and economic Initiated by regional shippers and economic

development agenciesdevelopment agencies Dissatisfaction and concern for continuing rail Dissatisfaction and concern for continuing rail

service in the regionservice in the region Transfer from regional to national carrierTransfer from regional to national carrier Commodity mixCommodity mix Shipping quantitiesShipping quantities Diversion of rail traffic to other modesDiversion of rail traffic to other modes

Objectives and Methodology Objectives and Methodology Objectives: Objectives:

Find methods to increase regional Find methods to increase regional shippers’ use of rail servicesshippers’ use of rail services

Create potential for regional economic Create potential for regional economic benefits and growthbenefits and growth

Methodology: Methodology: Practical approach Practical approach

Collect stakeholder input Collect stakeholder input Encourage cooperation between groupsEncourage cooperation between groupsIdentify and develop beneficial tools and processesIdentify and develop beneficial tools and processes

Growing Rail FreightGrowing Rail Freight Study Study: Action Plan: Action PlanI.I. Evaluate rail infrastructure and hold Stakeholder meetingsEvaluate rail infrastructure and hold Stakeholder meetings

Assess the current rail service and condition of rail lines Assess the current rail service and condition of rail lines Share ideas for addressing concerns – communicateShare ideas for addressing concerns – communicate

II.II. Shipper/carrier/government associationsShipper/carrier/government associations Develop new or expand existing associationsDevelop new or expand existing associations

III.III. Survey to ascertain rail issuesSurvey to ascertain rail issues Examine possible solutions and recommendations based on findingsExamine possible solutions and recommendations based on findings

IV.IV. Develop data base of supply chain providers and other Develop data base of supply chain providers and other support businesssupport business Catalog and disseminate companies and education programsCatalog and disseminate companies and education programs

V.V. Create Model of Rail Development GIS SystemCreate Model of Rail Development GIS System Stimulate future and expanded rail usageStimulate future and expanded rail usage Regional economic developmentRegional economic development

Shipper MeetingsShipper Meetings Preceded by interviews with Rail and ShippersPreceded by interviews with Rail and Shippers

Shippers, Rail, Government Agencies active participantsShippers, Rail, Government Agencies active participants

9 meetings at 8 locations 9 meetings at 8 locations

Research team an impartial facilitatorResearch team an impartial facilitator

Power Point presentationsPower Point presentations

Questions & answersQuestions & answers

Open dialogOpen dialog

171 participants total171 participants total Well receivedWell received

Public environment to present viewpoints Public environment to present viewpoints Presentations enabled to validate trendsPresentations enabled to validate trends Direct communication between Carriers, DOTs, EDAs and Direct communication between Carriers, DOTs, EDAs and

shippersshippers Benefits for research teamBenefits for research team

Adjusting and reprioritizing study activitiesAdjusting and reprioritizing study activities Encouragement to participate in shipper surveyEncouragement to participate in shipper survey Organizing additional communication opportunitiesOrganizing additional communication opportunities

Immediate outcomes in log transportationImmediate outcomes in log transportation More focus on railroads in transportation More focus on railroads in transportation

discussiondiscussion

Stakeholder Meeting OutcomesStakeholder Meeting Outcomes

FindingsFindings Inadequate dataInadequate data

Current rail facilitiesCurrent rail facilities Future demand & supplyFuture demand & supply

Challenging to motivate stakeholder Challenging to motivate stakeholder participationparticipation

Limited understanding of rail industry Limited understanding of rail industry and operationsand operations

Only negative publicity sees daylightOnly negative publicity sees daylight Need to improve communications and Need to improve communications and

information transferinformation transfer Education – Rail User Tool KitEducation – Rail User Tool Kit

Question 24: If you are unable to provide a back haul shipment for the Question 24: If you are unable to provide a back haul shipment for the carrier carrier making a delivery to you, do you making a delivery to you, do you coordinate with other local coordinate with other local companies to provide a companies to provide a back haul for the carrier?back haul for the carrier?

19%

58%

23%26%

68%

16%8%

58%

34%

0%

10%20%

30%

40%

50%60%

70%

80%

% YES % NO % NORESPONSE

Perc

ent o

f Res

pond

ents

All Respondents Rail Users Non-Rail Users

Action Item III:Action Item III: Survey to ascertain rail issuesSurvey to ascertain rail issues

43 Companies Responded43 Companies Responded

Action Item IVAction Item IVDevelop tools and database of supply chain Develop tools and database of supply chain managers and other transportation support businessmanagers and other transportation support business

1.1. Catalog and disseminate third party provider Catalog and disseminate third party provider companies and education programscompanies and education programs

2.2. Work with extension offices to set up programsWork with extension offices to set up programs

3.3. Provide model of rail costing decision tool for Provide model of rail costing decision tool for shippersshippers

Resulted in the “Rail User Tool Kit”Resulted in the “Rail User Tool Kit”

Rail User Tool KitRail User Tool Kit Includes information on:Includes information on:

Getting startedGetting started Equipment and investmentsEquipment and investments ResourcesResources Case study of a new userCase study of a new user

Copies available:Copies available: In the printed reportIn the printed report On the CD-ROMOn the CD-ROM Online: Online: www2.uwsuper.edu/transwww2.uwsuper.edu/trans

Action Item VAction Item VCreate Model of Rail Development GIS SystemCreate Model of Rail Development GIS System

I.I. Stimulate future and expanded rail usageStimulate future and expanded rail usage

II.II. Regional economic development toolRegional economic development tool

III.III. Modeled on proven systems in other statesModeled on proven systems in other states Pennsylvania Rail Freight Properties DirectoryPennsylvania Rail Freight Properties Directory Online at: Online at: http://www.dot.state.pa.us/

Rail DevelopmentRail Development Geographic Information System (GIS)Geographic Information System (GIS)

Purpose:Purpose: Identify properties along or near existing railroads that Identify properties along or near existing railroads that

have the potential to be rail servedhave the potential to be rail served Act as a central storehouse – so all parties could easily Act as a central storehouse – so all parties could easily

access pertinent informationaccess pertinent information Present the relevant information in an easy-to-use, Present the relevant information in an easy-to-use,

convenient, and graphic-rich wayconvenient, and graphic-rich way Internet-based GIS system was selectedInternet-based GIS system was selected

Reach the largest possible audienceReach the largest possible audience Ease of use, familiar online toolsEase of use, familiar online tools Utilize the latest IT methodsUtilize the latest IT methods

GIS Focus Area:GIS Focus Area: 3 GIS base maps were used as a starting point

– 2 commercial ones, and WisDOT data

Teams of student researchers went out in the field to verify what rail sidings and spurs actually existed or did not exist

About 120 sites were identified and examined

Over 60% of the sidings & spurs in this area were found to have significant discrepancies compared to base maps

Ashland SubdivisionAshland Subdivision

Ladysmith - to - Rhinelander sectionLadysmith - to - Rhinelander section

How Bad Can It Be…?How Bad Can It Be…?

The only useable track in The only useable track in the whole areathe whole area

Example: Example: Town of MellenTown of Mellen

We found that these two sidings no longer exist at all…

Base maps indicate the purple-shaded track:

…and these sidings and spurs do exist, but are not shown at all on the base maps.

Rail Study: an Education Process Rail Study: an Education Process

Student involvements:Student involvements: Graduate student at Michigan TechGraduate student at Michigan Tech

PhD candidate studying railway issuesPhD candidate studying railway issues Undergraduates at UW SuperiorUndergraduates at UW Superior

More than 10 undergraduate students in the new More than 10 undergraduate students in the new Transportation and Logistics major were involvedTransportation and Logistics major were involved

Students learned GPS and GIS applications, data Students learned GPS and GIS applications, data analysis, and general transportation planning and analysis, and general transportation planning and operation in relation to regional economyoperation in relation to regional economy

Students participated in work report preparation, Students participated in work report preparation, editing, and field toursediting, and field tours

Research Teams in the FieldResearch Teams in the Field

ConclusionsConclusions Stakeholder meetings effective forum to Stakeholder meetings effective forum to

educate and discuss issueseducate and discuss issues Importance of multi-way facilitated Importance of multi-way facilitated

communications communications New as well as current customers vital to rail New as well as current customers vital to rail

health - health - Rural areas with natural resource based Rural areas with natural resource based

economies dependent on rail serviceeconomies dependent on rail service Rail service in Northern Wisconsin and UP Rail service in Northern Wisconsin and UP

Michigan can not be taken for granted Michigan can not be taken for granted

RecommendationsRecommendations1.1. Improve communications – Long and short term plans for Improve communications – Long and short term plans for

carriers and shipperscarriers and shippers

2.2. Rail Carriers expand outreach to seek customer inputRail Carriers expand outreach to seek customer input

3.3. Tools are needed to support Supply Chain ManagementTools are needed to support Supply Chain Management

4.4. Support shipper’s and rail carriers interaction with Support shipper’s and rail carriers interaction with regional communitiesregional communities

5.5. Formally recognize the external costs of transportationFormally recognize the external costs of transportation

6.6. Explore the feasibility of adding Transload CentersExplore the feasibility of adding Transload Centers

7.7. Shortline or regional railroad optionsShortline or regional railroad options

8.8. Promote economic development by enhancing rail Promote economic development by enhancing rail accessaccess

Thank You!Thank You!Questions?Questions?UW-Superior Website: Tool Kit and StudyUW-Superior Website: Tool Kit and Study www2.uwsuper.edu/transwww2.uwsuper.edu/trans