Midwest rail service widens door to Virginia share gains

Midwest rail service widens door to Virginia share gains

The new service from Virginia grants access to Pittsburgh and points beyond.

The Port of Virginia is tapping into the growing Midwest market for its shippers with new, daily, double-stack intermodal service to Pittsburgh via CSX Transportation.

The addition strengthens Virginia's intermodal connectivity to markets outside of the state. Even as the rate of growth for intermodal business at the top US East Coast ports has decelerated over the past five years, Virginia’s intermodal business growth has outpaced competitors, and the port has gained a larger market share of international intermodal volume, a barometer of reach beyond its local market.

The new CSX service will offer access directly into western Pennsylvania and northwest Ohio, helping to expand an important and growing market, according to port CEO and executive director John Reinhart.

“We are the east’s leading rail port. We’re moving 36 percent of our volume by rail and continuing to reduce our dwell times for rail containers. The goal is to continue growing our rail capabilities and offerings, and expanding service in that region is critical to the effort,” Reinhart said in a statement.

Double-stack trains traveling between the port terminal in Norfolk, Virginia, and Pittsburgh will move along CSX’s National Gateway route to the rail carrier’s new $60 million Pittsburgh Intermodal Rail Terminal, which officially opened on Sept. 7.

The Pittsburgh terminal is the last piece of CSX’s National Gateway Initiative, an $850 million project aimed at building a network of double-stack rail and intermodal terminals connecting East Coast markets to consumers, manufacturers, and businesses in the Midwest.

Total intermodal volume growth at East Coast ports has decelerated over the past half-decade. Between 2012 and 2016, the top four US East Coast ports altogether increased their total rail lifts 39.1 percent, from 1.2 million in 2012 to 1.7 million last year. The rate of that growth, however, started to slow in 2015. After intermodal rail lifts at the top four ports swelled 12.7 percent between 2014 and 2015, the rate of growth dropped to just 3.3 percent between 2015 and last year.

Virginia has been able to keep its railed business growing at a stronger rate than the regional average, and it has largely kept it balanced between import and export. In fiscal year 2017, from July 1, 2016 through June 30, 2017, the port moved 569,000 containers by rail, a roughly 11 percent increase in volume year over year.

Meanwhile, Virginia’s share of the top four ports’ intermodal lifts increased from 28.4 percent in 2012 to 30.3 percent in 2016 — behind New York-New Jersey at 32 percent and ahead of Savannah at 22.2 percent and Charleston at 15.5 percent.

Virginia’s proximity to the US Midwest, a 24-hour train ride away, as well as its connections to double-stack capacity via both CSX and its rival Norfolk Southern Railway, have given it some advantages over other ports in this regard. It is something port officials peg on Virginia’s success building direct and discretionary business thanks to its proximity to population centers in the Midwest.

“All of our capital plans anticipate continuing to grow,” Reinhart told JOC.com roughly a month ago. “We are running 37 percent of our volume in and out of this port by rail. The highest percent of anyone on the East Coast. Our strategic plan is to continue to grow our rail product to go above 40 percent.”

Contact Reynolds Hutchins at reynolds.hutchins@ihsmarkit.com and follow him on Twitter: @Hutchins_JOC.