Richard D. Stewart, Ph.D., CTL

Rail Served Intermodal Terminals in Rural Regions: Challenges and

Opportunities

CLTT SymposiumGulfport, MS, USA

February 26-27, 2014

Freight Transportation Demand is DerivedFreight Transportation Demand is Derived

1.1. Demand for freight transportation is derived Demand for freight transportation is derived from the requirement of shippers and from the requirement of shippers and receivers. receivers.

2.2. Those who need freight transportation define Those who need freight transportation define the benefits they want: reliable, cheaper, the benefits they want: reliable, cheaper, better, and faster.better, and faster.

3.3. Freight transportation services are purchased Freight transportation services are purchased by increasingly sophisticated buyers based on by increasingly sophisticated buyers based on total landed cost.total landed cost.

4.4. Carriers usually cannot create a demand for Carriers usually cannot create a demand for transportation. transportation. They can however, improve the They can however, improve the mode’s attributes to expand market share thru mode’s attributes to expand market share thru new cargoes or modal shifts of existing cargo.new cargoes or modal shifts of existing cargo.

Historical Modal Shifts• Canal to Rail 1840s-1870

• Rail to Plane - Mail 1930s-1960

• Truck to Plane - Fed Ex 1970s-2000

• Truck to Ship - Container 1954-Present

• Rail to Truck-Railway Express 1920s-1980s

• Truck to Rail- Double stack 1990s-Present

Modal Shifts tend to be gradual. There is resistance to change and infrastructure investment

Factors Influencing Modal ShiftsI. Accessibility

Close to origin and destinationII. Reliability

On Time, Right Place, Right ConditionIII. Cost

Lowest total cost = lowest landed costIV. Velocity

Overall time from origin to destinationV. Shipper Flexibility

Sunk and fixed costs create limitations for shippersVI. Ease of Use

Right attitude, easy to access, responsive to needs, reliable transmission of information, security

Modal Shift Drivers

Courtesy NFS and Hub Group

200 400 600 800 1000 1200 1400 1600 1800 2000

$ Cost Per Ton

Distance in Miles

INTERMODAL TRANSPORTATION

Truckload

Rail Intermodal

Rail Carload

Rail Unit Train

Breakeven Zone in Europe

Barge Intermodal

Breakeven Zone in US

The European “breakeven” mileage for intermodal versus truck is 250-600 miles; in US it is 500-1000 miles and going down in range.

Intermodal Growth

Volume quintupled since 1980

2013 Largest Year Ever

Intermodal Gains Q3-2013

Q3 2013 marks the first time seasonally adjusted domestic intermodal shipments exceeded international shipments.

This milestone was achieved after a decade of domestic intermodal service improvement and five years of accelerated volume gains.

Q3 2013 Intermodal Market Trends & Statistics from Tara Mullen at tara@intermodal.org

DOM-TOFC DOM-CON All DOM INTL All Intermodal

US and Canada Rail Intermodal Network

Short (under 400 miles) Intermodal Routes

NFS

ATL-Greensborough NC• 331 miles

•Astell GA – Charleston SC• 315 miles

•Charleston SC – Charlotte, NC

• 208 Miles

CSX •ATL-JAX

– 347 miles

•JAX-Tampa– 200 miles

Future Modal Shift

IMC (26%) Intermodal Marketing Companies leverage Norfolk Southern’s shared container fleet. From our intermodal terminal, IMCs deliver “the final mile” using their own truck fleet, or may contract each leg to a local drayage company.

Truckload (25%) Trucking lines move their own container fleets on Norfolk Southern’s rail network to remove over-the-road miles. Instead of one long-haul truck move,

these companies move freight locally to and from each market’s intermodal terminal.

Premium (9%) - Due to special service and equipment needs, handlers of premium freight like refrigerated or parcel goods use their own trailers and containers on Norfolk Southern’s intermodal network, and also arrange pickup at the terminals.

International (40%) Steamship lines each have their own inventory of 20’ and 40’ containers. Over the road, ocean carriers contract directly with local trucking companies.

NSF Intermodal’s Channel Partners (2012)

Research Questions• Will the expansion of domestic intermodal

service lead to the development of more terminals?

• Will these terminals serve domestic and/ or international markets?

• Will these terminals be built in rural areas?• Are there examples of rural terminals?• What will rural terminals need to be

successful?

Intermodal Rural TerminalsIntermodal Rural TerminalsCase StudiesCase Studies

• Decatur, IL – Shipper Model • Chippewa Falls, WI – Shipper Inspired • Manley, IA – Short Line Railroad (in development)

Decatur, IL Decatur, IL

• CSX, CN, NS

• ADM Facility Expansion

• Open to Public

• Privately funded

Decatur, IL

Decatur, IL Decatur, IL

Chippewa Chippewa Falls, WI Falls, WI

• CN Rail

• Initiated by Menards

• Backhaul Agriculture

• Limited Service

Chippewa Falls, WI

Chippewa Falls, WI Chippewa Falls, WI

Manley, IA (Proposed) Manley, IA (Proposed)

Manley, IA

A Domestic Terminal will need

• A value added rail transportation network between intermodal terminals with minimal drayage

• Catchment areas for the intermodal terminals that provide inbound and outbound cargo – market proximity

• A sufficient volume for frequent service on a regular basis, ideally lane/load balance

• Dedicated shippers using the facility

A Domestic Terminal will need

• An educated and reliable workforce

• Community support – Leadership!

• Collaboration coupled with accurate timely transportation information allowing lane balancing opportunities.

• The system must be financially viable for all parties as an ongoing operation.

• Class 1 Rail participation early on

Overweight Intermodal lanes

Each Stora Enso Container Units (SECU) is 13.8 meters long by 3.6 meters wide ( 44.9 feet long x 11.7 feet wide)

and can hold up to 80 tonnes (176,368 lbs) of cargo.

SECU System: Vessels, Terminals, Rail

Final ThoughtsTruck may lack adequate capacityEnergy and labor costs will continue to

riseHighway congestion will continue to growEnvironmental concerns will increasingly

shape transportation decisionsShippers want products delivered in

compliance with the 8 Rs of Logistics. They are very open to multi-modal solutions.

Final Thoughts

– Collaborative partnerships between shippers and modes will be essential

– Take a systems approach when growing transportation markets!

– Reliability more critical than price

– Freight Flows Like Water = Following the Path of Least Resistance

Thank you

Questions?