For decades, international commerce has dictated the rules of engagement in the U.S. intermodal industry. Seagoing containerized imports were offloaded at U.S. ports of entry, transloaded onto railroads, and moved inland.That business is hardly going away. However, the days when domestic intermodal operations were viewed strictly as a "bolt on" to international service that involved a prior or subsequent ocean freight movement are fast becoming history. Today, the four U.S. Class I railroads are putting greater emphasis than ever on the domestic market as they look for ways to fuel intermodal growth. In so doing, they will try to move beyond their comfort zone of near 2,000-mile hauls and muscle in on the short- to intermediate-distance markets dominated by truckload carriers.To be sure, it isn't a zero sum game. Collectively, the trucking industry is the country's largest intermodal user and has for years relied on the service to cut its linehaul costs. UPS Inc., known to many as a ground carrier, is also the single biggest intermodal customer.However, there are still many shippers who will not use intermodal service and depend exclusively on truck, a fact that railroads know all too well. For example, the Burlington Northern Santa Fe Railway (BNSF) estimates its customers use intermodal for only about one-quarter of their total transport needs.The railroads believe U.S. businesses may be ready for a change, especially as trucking costs escalate, road congestion intensifies, and fears of a driver shortage persist. The rails maintain that the speed and reliability of their domestic intermodal service has now improved to the point where they can offer a compelling price-service solution on shorter stage lengths.A wide-open opportunityIf rail industry estimates are accurate, there is plenty of incentive to focus on the domestic business. Omaha, Neb.-based Union Pacific Railroad Co. (UP) says 11 million truckloads are up for grabs in its service territory, while Fort Worth, Texas-based BNSF puts its potential market at 7 million. In 2010, BNSF handled between 2.25 million and 2.5 million domestic intermodal loads, while UP handles, on average, about 2 million a year.Jacksonville, Fla.-based CSX told analysts recently that of the 14 million truckloads that normally move in the Eastern United States each year, about 5.1 million have already been converted to intermodal, leaving a potential market of somewhere around 9 million. CSX said it handles about 40 percent of the 5.1 million loads that have already been converted.Senior rail executives recognize the potential bonanza that awaits them should they convince shippers that they can deliver on their intermodal service commitments and continue to do so at lower rates than truckload. "We have a unique opportunity, and the opportunity is huge," says Steve Branscum, BNSF's group vice president, consumer products marketing.To capitalize on this opportunity, the rails are building out their intermodal networks. Norfolk Southern's "Crescent Corridor," a 2,500-mile joint public-private project linking New Jersey with Louisiana, is expected to divert 1 million trucks per year from 10 interstate highways when the work is completed in 2013. Executives for the Norfolk, Va.-based railroad were unavailable for comment.Earlier this year, CSX opened an intermodal facility in the Northwest Ohio town of North Baltimore. The facility serves as the pivot of a hub-and-spoke operation where freight arriving from nationwide points is transferred to double-stack trains for delivery throughout the East. It enables shippers to bypass the notorious "choke point" of Chicago, and thus can reduce transit times by up to two days between West Coast ports and distribution centers in the Ohio Valley, CSX officials say."It is our gateway to the West," says Michael Rutherford, director of intermodal marketing for CSX Transportation.Out west, UP has upgraded eight of its 10 primary corridors to enable intermodal to better compete with truckload, according to Matt Gloeb, the railroad's assistant vice president of domestic intermodal. The two remaining lanes, Los Angeles–Seattle and Los Angeles–Houston, are expected to reach service parity by year's end, Gloeb says.UP has raised tunnel clearances at Donner Pass, 90 miles northeast of Sacramento, Calif., to accommodate double-stack container trains, according to spokesman Tom Lange. The railroad has built intermodal terminals in Chicago, San Antonio, Dallas, and Salt Lake City. It is also laying a second track on its Los Angeles–El Paso "Sunset Route"—a move that will double train capacity on the heavily used intermodal corridor by allowing two trains to operate over it at the same time, Lange says.
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This, I feel, is probably one of the most important things that we can do with regards to our railroad infrastructure. Unlike high speed rail (or roads), these lines can generally pay back their capital investment costs through the increased revenue alone, without resort to considering a financial estimate of external benefits (as a result, I disapprove of the use of capital grants instead of low or no interest loans to aid in their construction). These also have, by far, the best external benefits per dollar invested in rail infrastructure and operations and make the greatest reductions in carbon emissions and oil consumption. Consider, for instance, the Crescent Corridor. It costs $2.2 billion dollars, yet has an anticipated benefit:cost ratio of 16:1. With this comes claimed CO2 reductions of 1.875 million tons per year and a claimed 170 million gallons of diesel saved annually (compare to CAHSRA's expectations of 5.4 million metric tons and 533.4 million gallons at more than 15 times the expense and quite a few years down the line).
That is not, however, to suggest that I think projects like Steel Interstates are a good or worthwhile endeavor. Such projects do not merely take a good idea such as railroad electrification or aiding railroad modal capture and run with it, but engage in a baton race with the Flash, taking things far beyond a good or worthwhile end. Fanciful ideas ought to be avoided as they quickly become fodder for ridicule and easily derided, as they ought to be, while clouding and overshadowing the more important and worthwhile investment concepts which they took root from.
At the same time, I do not mean to take away from the need for passenger rail investment including, where appropriate, high speed rail. It is however, secondary to that of freight in its benefits (especially relative to investments) with certain well-planned local transit and commuter rail exceptions. Happily, freight generally requires a great deal less government investment than does passenger rail, which itself often helps bring public attention and willingness to fund to rail, so the two may peacefully coexist in governmental investment budgets.