Economic Development

Making the Grade

May 1, 2010
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Rail is the linchpin for economic development in the Midwest.

Public agencies and private companies are combining to build intermodal facilities throughout the Midwest. The move means that large parcels of real estate designated for manufacturing facilities and warehouses will have access to highway, rail, and air cargo service to help keep logistics costs down.

An important part of intermodal facilities is access to Class I rail lines to get product to and from ports in the most efficient manner.

“If you look at current trends on how product is moved, rail infrastructure is becoming much more competitive for cost advantages, efficiencies, and the fact that rail can move more freight on a tank of gas [than trucks],” says Chris Gutierrez, president of KC SmartPort, an economic development organization of the Kansas City, Missouri metro area. “It’s much more efficient than truck or barge traffic. It is becoming the prevalent mode of transportation for imports and exports.”

Kansas City metro's rail advantage

The Kansas City metro area has the distinction of having five of the seven Class I North American rail lines-Union Pacific, Burlington Northern Santa Fe, Kansas City Southern Railroad, Norfolk Southern, and Canadian Pacific-running through its region. That means companies can move their product from any port on any coast in North America to warehouses in the metro area, Gutierrez says.

“It’s a great economic advantage for companies considering an expansion to the Kansas City area,” he says.

Last year, the metro area strengthened its rail attractiveness when Kansas City Southern Railroad and Kansas City Southern de Mexico launched a dedicated, intermodal service between Kansas City, Dallas, and several Mexico destinations. The service is the beginning of a key lane within the growing KCS International Intermodal Corridor and an alternative to the more congested Chicago gateway for traffic between the Northeast U.S., Midwest, and Mexico. In addition to market competitive transit times and rates, the service allows for a fast and efficient border crossing.

Kansas City International Airport, with the largest air cargo facility in a six-state region, is also expanding with the development of its KCI Intermodal BusinessCentre, a $232 million, 800-acre development south of the airport’s main runways. The first phase calls for the construction of four buildings containing about 1.8 million square feet of multi-use space, and it is in one of the nation’s largest Foreign Trade Zones with easy access to four interstate highways.

Plans call for the project’s second phase to include an extension of roads and utilities to about 200 contiguous acres that has more than 4,000 linear feet of frontage along KCI’s main runways. Long-term plans include mixed-use commercial, retail and other development.

The land developed will have access to Class I rail lines, Gutierrez adds.

The logistical infrastructure and its location on the “edge of the wind belt”-Texas, Kansas, Nebraska, and Iowa-is giving the metro area an advantage in attracting companies looking for a site to manufacture and assemble wind towers.

“The significant rail infrastructure is a plus for these companies, because they have big components that have to move on rail,” explains Gutierrez.

New development in former military base

Regions that are home to former military bases, shuttered in recent years by the Department of Defense, have an advantage in creating intermodal facilities. In many cases, these former bases are being transformed into industrial properties.

CenterPoint Properties is creating what will eventually be the site of the largest inland port in North America, connecting the manufacturing, distribution, and agricultural communities in the Midwest to the global marketplace.

CenterPoint Intermodal Center-Elwood is the redevelopment of the former Joliet Arsenal in Elwood, Illinois. The project brought together many levels of government, more than a dozen public agencies and private industry to create one of the largest private developments ever undertaken in the country, encompassing 3,900 acres and a total investment of $2 billion.

At full build out, the project is expected to create more than 8,000 jobs and eventually increase property tax revenue by as much as $27 million per year. This state-of-the-art intermodal and industrial business park features a 770-acre intermodal yard, BNSF Logistics Park-Chicago, and has the capacity for up to 12 million square feet of industrial and distribution facilities.

Significant improvements have been made to the area infrastructure and the region’s environment. Through $35 million in grants, new water and sewer systems have been constructed to clean up contaminated water in the community and serve park tenants and area residents. Similarly, $125 million is being used for essential roadway components of the development and other infrastructure.

CenterPoint Intermodal Center-Joliet, a state-of-the-art integrated logistics center and inland port, is situated on 3,600 acres 2 miles north of Elwood.

Construction on a 1,000-acre Class I railroad intermodal facility is underway, and the site is zoned for a third Class I intermodal facility. The park will also feature as much as 20 million square feet of industrial facilities, as well as container/equipment management yards.

CenterPoint’s total private investment in Joliet is expected to exceed $2 billion, including $180 million of new infrastructure, and could eventually generate more than 14,000 new jobs. Additionally, CenterPoint is employing a number of ‘green’ development initiatives to make this inland port the most environmentally-friendly, modern integrated logistics center in the nation, according to the company.

Combined, the Joliet and Elwood operations will create the nation’s largest inland port with more than 6,000 acres, multiple 1,000-acre Class I railroad intermodal facilities, hundreds of acres for container/equipment management yards, and more than 30 million square feet of industrial facilities.

“Our intermodal center is a proven economic engine that will create thousands of new jobs,” said Mike Mullen, CEO of CenterPoint.

In the middle of this massive complex sits BNSF Logistics Park-Chicago, operated by Burlington Northern Santa Fe, which is located next to its rail routes between Chicago and Southern California and between Chicago and the Pacific Northwest.

Last year, BNSF began offering an express international container service from the high-capacity ports of Seattle and Tacoma, Washington to Chicago and BNSF’s intermodal facilities in Memphis, Tennessee.

In recent years, BNSF has undergone a major expansion of Logistics Park-Chicago. The expansion includes completing a 20-acre wheeled parking area, a 50-acre public container yard and a fourth 8,000-foot track. In addition, five 5,500-foot support tracks, 90 car spots, 10 checkpoint lanes, six more cranes for lift capacity and two cranes for groundstacking have been added.

A more efficienct East Coast-Midwest connection

The Heartland Corridor, a public-private partnership between the Norfolk Southern Railway and the Federal Highway Administration, also aims to improve railroad freight operations. The $150 million project is expected to facilitate more efficient travel on Norfolk Southern rail lines between the Norfolk, Virginia port region and Chicago.

When fully operational, containerized freight moving in double-stack trains will be able to eliminate about 200 miles and up to a day’s transit time between the East Coast and the Midwest. Currently, double-stack trains must take longer routes by way of Harrisburg, Pennsylvania or Knoxville, Tennessee. The Heartland Corridor crosses Virginia, goes through southern West Virginia and north through Columbus, Ohio and then into Chicago.

One of the project’s goals is to increase usage of double-stack freight cars, using intermodal cargo containers. This is expected to increase capacity of rail lines and reduce tractor-trailer traffic on the interstate highways. New shipping terminals for intermodal connections are also planned for several locations.

Construction on the project, which began in 2007, is expected to be complete by September, says Rudy Husband, director of public relations for Norfolk, Virginia-based Norfolk Southern railroad. Intermodal trains have been moving on the route since 2008.

One of the completed parts of the Heartland project is the $68.5 million Rickenbacker Intermodal Terminal, near Columbus, which will allow Norfolk Southern to significantly expand its intermodal business in Central Ohio by providing customers with improved service and increased capacity. The terminal is part of the Rickenbacker Global Logistics Park.

In its initial phase, Rickenbacker Intermodal Terminal occupies about 175 acres and has the capacity to handle more than 250,000 containers and trailers annually. The terminal was designed with significant expansion capability as traffic volumes grow, and also has adjacent property potentially available for ancillary operations such as container yards.

Rickenbacker utilizes the latest in gate and terminal automation technology and accommodates delivery of overweight containers to nearby customers. Six trains-four between Rickenbacker and Chicago and two between Rickenbacker and Norfolk-serve the terminal daily.

Columbus officials expect the intermodal facility to generate 20,000 new jobs during the next 30 years.

The Great Lakes region

Meanwhile, the Great Lakes region continues to be an economic engine for the Upper Midwest. Often referred to as the “fourth seacoast” of North America, the lakes-Erie, Ontario, Michigan, Huron, and Superior-are home to U.S.-flag and Canadian-flag fleets, and dozens of other international vessels that regularly travel through the Great Lakes during a typical 10-month shipping season.

The U.S.-flag fleet includes more than 60 carriers and tankers, as well as dozens of smaller tug and barge units. These vessels haul upwards of 125 million tons of cargo. Iron ore, coal and limestone are the primary commodities carried. Other cargoes include cement, salt, sand, grain and liquid-bulk products.

Several Great Lakes ports are closer to European markets than East Coast or Gulf ports, saving companies time and money, according to the Great Lakes Commission. For example, to travel from Baltimore to Liverpool, England, is 3,936 miles. Via the Great Lakes-St. Lawrence Seaway, ships can reach Detroit by covering only 3,673 miles.

Shipping on the Great Lakes also provides many jobs for the region. More than 60,000 U.S. and Canadian jobs are directly dependent on cargo movements, as well as hundreds of thousands of other jobs, many in the manufacturing sector. wt

Ken Krizner is a freelance writer based in Cleveland, Ohio, where he writes often on economic development and technology issues.

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