Rail Served Intermodal Terminals in Rural Regions: Challenges and Opportunities

1. CLTT Symposium Gulfport, MS, USA February 26-27, 2014 Rail Served Intermodal Terminals in Rural Regions: Challenges and Opportunities Richard D. Stewart, Ph.D., CTL

2. Freight Transportation Demand is Derived • Demand for freight transportation is derived from the requirement of shippers and receivers. • Those who need freight transportation define the benefits they want: reliable, cheaper, better, and faster. • Freight transportation services are purchased by increasingly sophisticated buyers based on total landed cost. • Carriers usually cannot create a demand for transportation. They can however, improve the mode’s attributes to expand market share thru new cargoes or modal shifts of existing cargo.

3. 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 Express1920s-1980s • Truck to Rail- Double stack 1990s-Present Modal Shifts tend to be gradual. There is resistance to change and infrastructure investment

5. Modal Shift Drivers

6. Courtesy NFS and Hub Group

8. Truckload $ Cost Per Ton Rail Intermodal Breakeven Zone in US Rail Carload Rail Unit Train Barge Intermodal Breakeven Zone in Europe Distance in Miles INTERMODAL TRANSPORTATION The European “breakeven” mileage for intermodal versus truck is 250-600 miles; in US it is 500-1000 miles and going down in range.

9. Intermodal Growth 2013 Largest Year Ever Volume quintupled since 1980

10. Intermodal Gains Q3-2013 All Intermodal INTL All DOM DOM-CON DOM-TOFC 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

11. US and Canada Rail Intermodal Network

12. CSX ATL-JAX 347 miles JAX-Tampa 200 miles Short (under 400 miles) Intermodal Routes NFS ATL-Greensborough NC 331 miles Astell GA – Charleston SC 315 miles Charleston SC – Charlotte, NC 208 Miles

13. Future Modal Shift

14. NSF Intermodal’s Channel Partners (2012) 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.

15. 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?

16. Intermodal Rural TerminalsCase Studies • Decatur, IL – Shipper Model • Chippewa Falls, WI – Shipper Inspired • Manley, IA – Short Line Railroad (in development)

17. Decatur, IL • CSX, CN, NS • ADM Facility Expansion • Open to Public • Privately funded Decatur, IL

18. Decatur, IL

19. Chippewa Falls, WI • CN Rail • Initiated by Menards • Backhaul Agriculture • Limited Service Chippewa Falls, WI

20. Chippewa Falls, WI

21. Manley, IA (Proposed) Manley, IA

22. 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

23. 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

24. 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.

25. SECU System: Vessels, Terminals, Rail

26. Final Thoughts • Truck may lack adequate capacity • Energy and labor costs will continue to rise • Highway congestion will continue to grow • Environmental concerns will increasingly shape transportation decisions • Shippers want products delivered in compliance with the 8 Rs of Logistics. They are very open to multi-modal solutions.

27. 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

28. Thank you Questions?