CSX eyes next National Gateway milestone in late 2015
Freight railroad CSX could begin double-stack intermodal service between the Port of Virginia and the Midwest by the end of 2015 under some scenarios for the second phase of its National Gateway infrastructure overhaul, Chip Dobson, director of strategic transactions, told American Shipper.
Jacksonville, Fla.-based CSX last month announced first-phase completion of its $850 million National Gateway initiative to connect Mid-Atlantic seaports - primarily Baltimore, Virginia and Wilmington, N.C. - with consumers and manufacturers in the Midwest by clearing obstructions and improving tracks for the use of double-stacked container trains. Stacking containers and using dedicated intermodal terminals to transfer boxes to and from trucks allows railroads to operate much more efficiently.
CSX raised, or notched out, the top of seven tunnels, created three open passes by removing the tunnel and the surrounding mountain terrain, and replaced old bridges to allow the taller intermodal trains to operate between its existing terminal in Chambersburg, Pa., and a new, ultra-modern intermodal hub in North Baltimore, Ohio.
The major restriction on service between Chambersburg and the Port of Virginia is the Virginia Ave. tunnel in the District of Columbia, where CSX trains pass every day on a single track within hundreds of yards of the U.S. Capitol.
The Federal Highway Administration is in the process of conducting an environmental impact review of the tunnel-expansion project and CSX anticipates a record of decision by the end of the year, with construction starting in early 2014, Dobson said.
Two of the three alternative designs for the project have about a three-year construction period, but double-stack intermodal service conceivably could begin on a single track when the project is only half to two-thirds completed, he said. At full build-out the route will have double-track capacity.
FHWA is expected to signal its preferred alternative when it issues the Environmental Impact Statement, which will provide more clarity about the construction period. CSX currently expects to finish work on the Virginia Avenue tunnel in 2017, Dobson said.
Construction under the third design option would take longer than three years and single-track, double-stack service possibly could begin about three-quarters of the way through the project, he added.
CSX services the APM Terminal in Portsmouth, Va., via connector service provided by the Commonwealth Railway. CSX moves cargo to Charlotte and points south on double-stack trains, but currently can only run low-profile trains up to Maryland, Pennsylvania and points west.
Virginia officials are eager to open more rail capacity between the port and the Midwest as the competition among East Coast ports remains high to attract the new generation of containerships, which are three-times or more the size of the standard workhorse vessel. Port authorities are targeting the second half of 2015 to complete infrastructure upgrades because that is when a new set of Panama Canal locks wide and deep enough to handle 14,000-TEU vessels from Asia is expected to begin operations and big-ship traffic could increase. There are questions about when and how the canal expansion will actually increase the amount of cargo flowing to the East Coast by pulling from West Coast arrivals. More likely, many analysts say, is that cargo will be concentrated on bigger vessels, which will call at fewer ports.
Some large 9,000-TEU vessels already reach the East Coast via the Suez Canal.
The Port of Virginia is a top contender for becoming a gateway for container services from Asia because it is one of only two ports at the moment with a 50-foot channel that large vessels can transit fully loaded. But it needs efficient truck and rail operations to quickly whisk the sea containers inland or to nearby distribution centers to keep the marine terminals fluid.
The Norfolk Southern has already completed a similar clearance project between the port and its main terminal in Columbus, Ohio, called the Heartland Corridor. It serves the APM Terminal and the Norfolk International Terminal.
The National Gateway project has received contributions from states and the federal Department of Transportation in the form of a TIGER grant.
The state of Virginia has invested $43.1 million from its Rail Enhancement Fund in the National Gateway Project, including $24 million for the Virginia Ave. tunnel, $4 million to help build a connection from the Commonwealth Railway to CSX's marshaling yard in Suffolk and $11.4 million to upgrade the yard.
Over a 30-year period the National Gateway will deliver almost $950 million in public benefits to Virginia, including $70 million in savings from highway maintenance costs because of fewer truck trips, a 3 million ton reduction in carbon dioxide emissions and $550 million in logistics savings, according to the Virginia Department of Rail and Public Transportation.
At a ceremony hosted by CSX on Tuesday at Washington's historic Union Station to commemorate the completion of Phase I of the National Gateway, Virginia Gov. Bob McDonnell said the project is a "phenomenal investment" for the state based on its 36-to-1 rate of return.
"We think that with the widening of the Panama Canal, the opportunity for East Coast ports, particularly Baltimore and Norfolk, that are situated within 500 miles of two-thirds of the population of the United States is going to be vastly improved because ships will be able to come in a more cost-effective way," he said.
Another key chokepoint in CSX's network is the Howard Ave. tunnel in Baltimore. CSX is planning to build a new intermodal terminal south of Baltimore so its trains don't have to go directly through the city. CSX is currently seeking public approvals for an intermodal facility at its Mount Clare Yard, southwest of the city. CSX currently builds local trains at a facility at the Seagirt Marine Terminal in the Port of Baltimore. Once the new terminal is in operation, international boxes will still have to be moved by truck or single-stack trains to and from Seagirt.
The lynchpin to CSX's intermodal strategy is its ultra-modern, truck-rail transfer facility in Northwest Ohio, which is unique in the rail industry for its hub-and-spoke role in the network. Traditional intermodal operations involve point-to-point moves.
The intermodal facility, which opened in 2011, was designed as a place to avoid congested Chicago for interchanging cars with western railroads. It has enabled CSX to attract business on lanes it could not economically serve before. Prior to North Baltimore, the railroad had to create a block of 40 cars before it could add a destination to justify all the train maneuvering and coupling in a yard. CSX can now serve new destinations with as few as five containers because of the efficiency of the overhead, rail-mounted gantry cranes and sophisticated software used at the North Baltimore facility.
"We're constantly looking at ways to evolve the infrastructure to serve tomorrow's traffic so another intermodal terminal in the south is something we would look at," Ellen M. Fitzsimmons, CSX's executive vice president of law and public affairs, said when asked by a reporter after the event about whether the railroad is looking to underpin its network in the southeast with another hub-and-spoke facility.
"The hub strategy has been very successful for us," Wilby Whitt, president of CSX Intermodal Terminals, said in a phone interview. Without it, the railroad would be limited to straight-through service between the port in Hampton Roads, Va., and Chicago. CSX now has greater market reach into the Northeast, Mid-Atlantic and Midwest, he said.
CSX, for example, opened service to Louisville, Ky., in early 2012 with expectations of lifting 15,000 to 20,000 units per year. This year it will transfer between 50,000 and 55,000 units because of the increased market demand and the railroad's ability to effectively provide customer service, Whitt said.
Meanwhile, CSX is nearing completion of an end-of-line terminal in Winterhaven, Fla., about 25 miles south of Lakeland between Orlando and Tampa. The facility is expected to open in the second quarter of 2014. It's being outfitted with the latest high-tech cranes that cross over multiple tracks. Lakeland has a heavy concentration of distribution facilities serving Central Florida, but Whitt said Winterhaven could also serve the South Florida market because it is away from the congested Orlando area and truck drivers could make the trip south and back in a single day.