As U.S. Northeast ports enhance their capabilities, CSX and Norfolk Southern railroads look to play growing roles in efficiently getting freight from increasingly large containerships to consumers in the Midwest and beyond, as well as closer destinations.
The two major east-of-the-Mississippi Class I railroads, as detailed in separate interviews with the American Journal of Transportation, are combining to invest billions of dollars in intermodal networks as they seek to convert to rails from roadways more of the containers arriving en masse at East Coast seaports.
Not only have CSX and NS been engaged in public-private partnerships advancing respective corridor projects to carry double-stacked containers far into the nation’s interior via expanding inland intermodal hubs, they also have been seeking to establish strongholds in shorter-haul lanes.
One such shorter-haul example is the service begun by Norfolk Southern from the Port of New York and New Jersey to Buffalo, N.Y., following the NS acquisition last September of a portion of the Delaware and Hudson Railway (D&H) through Southern New York and Pennsylvania.
“That was very much in response to what we saw as a market demand from our customers,” said Chris D. Luebbers, Norfolk Southern Corp.’s group manager for intermodal marketing. “The ocean carriers were looking for an alternative to truck in that lane.”
While the highway route between New York and New Jersey docks and the Buffalo metropolitan area is fewer than 400 miles, NS is finding it profitable to put many of the containers bound for Western New York onto trains.
“NS has always been in the forefront of trying to find those opportunities where there’s sufficient demand and there is market competitiveness that allows us to be competitive against the over-the-highway moves and still provide a positive financial benefit for our company,” Luebbers said.
“We’ve really tried to go out there and target those types of markets and we continue to, but it’s a little harder to do those because of the touchiness of the financials,” he continued. “It makes it more challenging to be competitive.”
Luebbers said that, whereas fuel costs are a significant part of the equation, he anticipates that driver capacity and availability issues will represent an increasing factor, as will port congestion, commenting, “Getting in and out of the gates with a truck is very difficult at times and challenging, and that just drives up the price of trucking.”
Wesley Ann Barton, director of intermodal marketing at CSX Corp.’s CSX Transportation unit, said truck-to-rail conversions have been a priority for CSX and should substantially help Northeast ports in handling greater container volumes. “Significant infrastructure development is needed and under way at East Coast ports, and efficient rail connectivity will be a key factor to success,” Barton said. “CSX is working with ports up and down the East Coast and in the Gulf as they expand and improve their infrastructure.
“Over the past five years, CSX has invested more than $700 million in its intermodal network, aimed at capturing a share of the estimated 9 million truckloads in the East that are good candidates for intermodal conversion, and supporting potential volume increases in international cargo,” she added.
Barton said that, as CSX builds “the intermodal network of the future” to reach the nearly two-thirds of American consumers who live on the CSX network, “We are investing in network flexibility that can quickly and nimbly adapt to changes in the market environment, including any potential shifts in freight flows as the global economy continues its interlinkage.”
A critical link for the $850 million National Gateway corridor – a public-private undertaking between mid-Atlantic docks and Midwest consumption centers – is the Virginia Avenue Tunnel in Washington, where construction of a two-tunnel passage for trains with double-stacked containers got started in May 2015 and is on target for 2018 completion.
“CSX’s strategy combines the efficiency of a corridor strategy for high-density lanes with a hub-and-spoke model anchored by our Northwest Ohio Intermodal Terminal which creates capacity and enables greater flexibility in port connectivity,” Barton said.
That hub facility, which CSX opened in 2011 in North Baltimore, Ohio, is to be augmented in 2017 by the Pittsburgh Intermodal Rail Terminal being built in Stowe Township and McKees Rocks, Pa., which CSX officials see as a gateway for freight entering East Coast ports bound for the Midwest, and as a way to connect Western Pennsylvania shippers to the global marketplace.
Meanwhile, the Valleyfield Intermodal Terminal, opened by CSX in late 2014 in suburban Montreal, provides steel-wheel connectivity between Eastern Canada and markets of the Ohio Valley and Midwest.
Norfolk Southern’s Luebbers pointed out that NS has for many years enabled shippers via the Port of New York and New Jersey to reach Montreal and Toronto areas through service offered in conjunction with Canadian Pacific Railway.
Chicago continues to be the largest of 13 major intermodal markets for NS westward from New York and New Jersey, according to Luebbers, who noted that such markets extend from Pittsburgh as far west as Kansas City.
Norfolk Southern has had on-dock presence at the Elizabeth Marine Terminal in New Jersey since its takeover of a portion of Conrail in 1999 and since 2007 has offered on-dock service at the New York Container Terminal, known also as GCT New York, on Staten Island. As an alternative, Midwest markets also are served by NS via the Heartland Corridor extending inland from the Port of Virginia, while the Crescent Corridor project in which NS is involved is slated for 2020 completion paralleling Interstate highways from New York and New Jersey to New Orleans and Memphis. The latter corridor alone is anticipated to take more than 1.3 million long-haul trucks a year off busy highways.
Luebbers pegged the NS investment in network improvements targeting intermodal at more than $1.5 billion since 2005.
Luebbers added that a new intermodal container transfer facility being developed by the Port Authority of New York & New Jersey and Global Container Terminals Inc. should facilitate additional on-dock rail access to mega-containerships calling marine terminals on the New Jersey side of the port.
“We think that’s going to be a great asset to the port and are excited about what that means for volume growth at the port,” he said.
Currently, much of Norfolk Southern’s Port of New York and New Jersey traffic goes to Croxton, N.J., and other nearby NS yards, with the expansive NS yard in Harrisburg, Pa., being a primary destination for reworking of blocks and assignment to intermodal trains taking freight to final destinations.
Noting that a reliable operation with efficient port linkage is critical to intermodal’s success, Luebbers commented, “We have always worked with our port partners up and down the East Coast to not only look at [overall] capacity, but also in terms of rail capacity and practices and operational procedures to make sure that everything is flowing smoothly and that we have good communications with all the port areas. We expect that to continue.
“Certainly, the densification of discharges at any port is very concerning from a port capacity standpoint, from an ability to move that traffic off the port, whether it’s trucks out of the gate or over to the rail, and then finally at our inland terminals,” Luebbers went on to say.
“We have been looking at how a wave of traffic coming off the ship is going to turn into a wave of traffic coming into our terminals by train, so we need to make sure we have the processes and capacity at our inland terminals as well to ensure that, once a train comes in, that box can get down and go out the gate as quickly as possible,” he said. “We’re looking at it from a holistic perspective from beginning to end, trying to ensure that we work with all the pertinent parties to keep that flow moving.”
Luebbers said that, for the foreseeable future, Norfolk Southern’s international traffic from the Northeast will continue to land at the appropriately named NS Chicago Landers Terminal – one of four NS Chicago terminals – on Chicago’s South Side.
CSX’s Barton said longer trains are a part of the intermodal strategy at CSX as efforts proceed to move more boxes off containerships and onto rails.
“As demand for intermodal services increases,” Barton said, “we are well-positioned to service that demand through strategic resource deployment that creates additional capacity, including deploying longer trains.
“We are continuing to evolve our operations to deliver train length improvements that further improve efficiency and wisely use resources while delivering the high level of service our customers need and expect,” she said. “On average, our overall system train length increased about 15 percent in 2015 over the previous year, as we focused on improving train lengths on our scheduled network, including intermodal.”