With two major double-stack corridor projects under way, eastern rail giants Norfolk Southern Railway and CSX Transportation plan to offer shippers their most efficient intermodal networks since the rise of containerization. Those sprawling projects will bring the region’s stacktrain operations several big steps closer to those that now define intermodal transport in the western United States.
The multibillion-dollar projects, built through a combination of corporate investment and state and federal funds under a series of multiyear construction programs, will restructure the economics of moving containers or truck trailers east of the Mississippi River, the railroads say.
Although some observers caution the projects may do little more than marginally increase the number of new truck or ocean loads the railroads capture, there is widespread agreement the eastern rail system that emerges will be vastly more efficient for a broad range of cargoes, from coal and lumber to intermodal.
At their core, the two projects look to capitalize on different freight markets: CSX’s National Gateway primarily aims to capture more cross-country ocean container import business that now lands on the West Coast, while NS’s Crescent Corridor will strengthen the railroad’s network in the Southeast and Northeast, making it a viable alternative to trucks in dense regions marked by congestion.
With a projected $850 million price tag or more, CSX’s National Gateway will combine a north-south rail route along much of the mid-Atlantic, with an east-west lane running from Baltimore to Columbus, Ohio, and up to a major new terminal near Toledo.
The route forms an inverted “L,” with connections and projects across six states. Pushing off the mainline on the corridor’s map are connections to the Atlantic ports of Wilmington, N.C., and Hampton Roads/Norfolk, Va., and to Baltimore at the top of the Chesapeake Bay.
NS’s even bigger Crescent Corridor is reshaping tracks and raising clearances in an arc spanning 2,500 track miles. It starts in New Orleans and Memphis, Tenn., moves on parallel tracks eastward through the South and up into the Northeast toward New York. Total cost of the project: $2.5 billion, NS says.
The railroad already has expanded its “local-east” container and trailer-on-flatcar business in recent years, in addition to the cross-country handoff loads it handles in connection with western rail lines. The program will leave NS in better shape to offer shippers longer double-stack lanes bristling with major new rail-truck intermodal hubs, upgraded signals and speed-enhancing double tracks and sidings.
Some intermodal experts doubt the corridors can reshape the basic market forces that favor truck-hauled traffic in the East, where shorter distances between major cities than the West often make truck delivery the preferred mode.
“Do I believe these corridors will have a significant impact on diverting international or domestic traffic? No,” said Thomas Finkbiner, senior chairman of the University of Denver’s Intermodal Transportation Institute. But “I believe it does help at the margins.”
Likewise, Rosalyn Wilson, a senior business analyst at transportation consultant Delcan and author of the Council of Supply Chain Management Professionals’ Annual State of Logistics Report, said on a Stifel Nicolaus conference call she doesn’t think rail projects will lead to a big, permanent modal shift by shippers.
The Crescent Corridor project, in particular, is removing barriers to double-stack service in the East and will help ease highway congestion, Wilson said, but she expects only “a tiny shift” in freight because of it. Trucking, she said, “will still be the mode of choice in many circumstances.”
But Finkbiner thinks the whole idea of packaging a series of long-term capital spending projects into “corridor” concepts has been an important way for the railroads to win state and federal infrastructure funding. State officials, he said, believe the strategy “will divert some traffic (off busy roads) and it will employ some people, so it’s an easy thing to say ‘yes’ to.”
For the railroads, touting the public benefits of job creation and congestion relief can leverage taxpayer investments into what otherwise would be part of the carriers’ own private capital spending plans.
“If the investment was important enough to the railroads for their business model, they would have done it themselves even without the federal or state aid,” Finkbiner said. The companies might not have done it as quickly, he said, “but they certainly would have done it.”
While western carriers that operate across vast empty spaces have long been able to carve out double-stack routes to get the most loads onto a train, the eastern rails faced different challenges. Their networks grew out of a hodgepodge of smaller lines that were saddled with sometimes centuries-old route maps and facilities designed for another era, where tracks and tunnels and expansion clearances often were hemmed in by cities and industrial facilities.
As a result, western unit trains can pull 250 containers or more, while eastern lines may manage half as much in most lanes and have fewer long-haul options.
But as these ambitious corridor projects unfold, CSX and NS essentially are rebuilding large parts of their main lines to take bigger loads or run trains at faster average speeds. That allows them to haul commodities, machinery or other cargoes more efficiently, but the railroads emphasize the corridor work means they can grab more intermodal business than ever.
With such a focus, CSX can argue its upgrades will capture more global trade as eastern ports prepare for the opening of larger Panama Canal locks in 2014, which will allow larger container ships from Asia to deliver goods directly to the East. And NS can point to growth in its domestic intermodal business to show how it’s taking more loads away from stressed highway infrastructure.
That has helped both railroads garner hundreds of millions of dollars in federal grants and state aid, in part to get more traffic off potholed and congested highways and to cut fuel use and pollution.
When Transportation Secretary Ray LaHood in February 2010 unveiled the winners of $1.5 billion in so-called TIGER grants out of the economic stimulus bill, NS got the largest one for its Crescent Corridor, while CSX picked up the third-largest for National Gateway.
NS is splitting half its $105 million TIGER grant between two intermodal terminals it began building this year for the Crescent Corridor at Birmingham, Ala., and Memphis. The federal money covers about half the cost of each.
CSX is applying its $98 million grant to track and bridge clearance projects across Ohio and Pennsylvania. When done, they will make for a partially cleared National Gateway route from its big new Northwest Ohio terminal to a smaller one at Chambersburg, Pa., that CSX expanded in 2007.
NS’s Crescent Corridor projects follow close on the heels of its Heartland Corridor program, an engineering masterpiece that took a winding commodities-focused route through rugged Appalachian Mountains and revamped it into the fastest way to move containers from Hampton Roads, Va., to Columbus.
Heartland, which took three years of construction and opened in September 2010, still hauls the commodities that were the staple of the predecessor route, while its intermodal traffic is built around the ocean containers moving between Norfolk-area docks and the huge consumer goods distribution centers at Columbus and Chicago.
But even as crews were carving out tunnels and straightening tracks in the Blue Ridge Mountains of Virginia and West Virginia, NS already was working on and planning its more ambitious project: a group of rail superhighways angling from the Mississippi River Delta into the consumer-rich Northeast.
NS planners saw up to 1 million truck hauls that could be converted to rail, if the service were good enough to compete.
The Crescent Corridor arcs across 13 states, with a program to upgrade and add new facilities along NS routes that already connect many of the South’s largest cities to consumer and manufacturing centers in the Northeast.
The corridor’s western branches at New Orleans and Memphis also are the major east-west gateway cities on the NS map, where the carrier hooks up with the continent’s other major rail lines that can feed NS with containers or take its handoff traffic elsewhere around the continent.
From there, one track takes traffic to Birmingham, Ala., Atlanta and Charlotte, N.C., some of the region’s top commercial centers, before heading up central Virginia to Manassas at its northern end. The line coming east from Memphis runs through Huntsville, Ala., Chattanooga and Knoxville, Tenn., before tracking along the Interstate 81 route to Front Royal, Va., and beyond.
NS announced the plan in 2007 and got to work soon after. As early as January 2009 Charles Moorman, NS chairman, president and CEO, was telling analysts the railroad was picking up former all-highway truck loads from initial Crescent projects.
Last fall, NS broke ground on a $95 million intermodal hub in Greencastle, Pa., further up the I-81 route and meant as a key final hub as the corridor hooks over toward New Jersey. It also plans to build a major box terminal at the Charlotte Douglas International Airport. Each serves as a regional ramp for truckers to hand off boxes to put on trains.
Today, NS has corridor projects under way or planned through 2013 in four states for which it is expects to spend $242 million, matched by $256 million in public money.
CSX also saw a chance to rebuild key parts of its network, improving average train speeds in addition to raising the roof — literally — on some big obstructions.
Its largest East Coast impediment is the aged Virginia Ave. railroad tunnel in Washington, D.C., just outside the windows of the Association of American Railroads and down the street from the U.S. Capitol Building, Surface Transportation Board and the Department of Transportation.
That tunnel’s low ceiling means CSX can’t stack two containers on a well car, so trains operating for hundreds of miles haul single boxes on each well to pass through. CSX has been developing plans to open the tunnel, but it’s a sensitive project amid a Washington neighborhood as well as important office buildings.
Another roadblock to stacktrains is a tunnel connecting CSX tracks to containers unloading at the Port of Baltimore. CSX planners say the costs of rebuilding that port-area tunnel are too great, so they plan to erect a new intermodal hub south of the tunnel. There, crews would dismantle stacktrains arriving from the South or Midwest, putting some boxes on trucks and moving others in single-stack train rides to and from the port.
At the outset CSX wanted public partners — federal and state agencies — to pay more than half the Gateway program’s estimated $850 million cost. But the railroad didn’t get as much federal grant money as hoped, and a new budget-cutting mindset at federal and state levels makes transportation project money tougher to come by.
In mid-May, Michael J. Ward, president, chairman and CEO, said CSX was committing an extra $160 million of corporate capital to get the projects done. That would have CSX paying $575 million while public contributions total $280 million.