The plan to build a major rail hub in central North Carolina stands to be a logistic game changer for the entire region. In January, CSX, the State of North Carolina and Johnston County jointly announced plans to develop a rail hub in Johnston County. The new hub is to be located near the town of Selma about thirty miles east of Raleigh, one of the Southeast’s fastest growing metropolitan regions. The $272 million intermodal rail terminal, named the Carolina Connector or CCX, represents a massive investment in infrastructure that will influence logistics throughout the region. In a week competing for ink with the Carolina Panthers’ playoff run, the announcement was perhaps overshadowed, nevertheless the Carolina Connector could very well be an economic “game changer” for the region.
Infrastructure Funding The CCX project is a cornerstone of Governor Pat McCrory’s “25 Year Transportation Vision” designed to use infrastructure building as a vehicle for economic growth. North Carolina’s infrastructure funding mechanism, Strategic Transportation Investments (STI) law, is key to making the CCX project possible. The basic idea of the law is to establish a basis for public-private funding for new infrastructure projects that contribute to economic growth, and the CCX project, which was two-years in the making, is a poster child for this type of investment initiative. Under the deal with Jacksonville, Florida-based CSX, the railroad is committed to investing $150 million of the estimated $272 million needed for the project. CSX and the Upper Coastal Plain Regional Planning Organization in turn have submitted the project for $100 million STI funding from NCDOT. The balance needed is to be raised by other investment programs. STI uses a data-driven system called the Strategic Mobility Formula for allocating available revenues that allow NCDOT to direct financing decision-making. One component is what the project will do economically for the region, and in this case, the rail terminal is forecast to produce more than $329 million in public benefits for the state over a 30-year period. During the construction phase, the building is expected to create 250-300 short-term and eventually, 1,500 long-term jobs. Site Selection CSX has reportedly begun the process of searching for property east of Selma, in Johnston County, close to Interstate 95. The region is nearly surrounded by CSX and Norfolk Southern rail lines with the aforementioned access to the interstate highway system. It’s easy to understand how CSX and North Carolina state officials settled on the Johnston County site. As Paul Cozza, CEO of the North Carolina State Ports Authority, pointed out, “From a CSX point of view, Johnston County fit their operational consideration in how it [the region] fit into their overall rail network, and the land availability. “From the State perspective [it worked] as to the geography [adjacent to Raleigh-Durham region and connecting this into the Port of Wilmington and other strategic public and private assets].” CSX already has a well-established track record as the railroad has constructed similar terminals in North Baltimore, Ohio and Chambersburg, Pennsylvania. The economic boost these terminals have given to their respective regions is a key reason for North Carolina’s support of the terminal. Speaking About Hub and Spoke Although the terminals are to be located in “central” North Carolina, the Port of Wilmington stands to be a very big winner from the CCX project. Cozza said, “Selma is about 150 miles rail-wise from the Port.” While this might not be a long distance in railroad terms, it’s an important distance for a port – especially the Port of Wilmington. “It might seem, nebulous [the importance of the distance] but what the link to the terminal does is akin to how Atlanta works for Delta. You are going to have this huge hub and spoke system around this site, with multiple trains moving through their hub – this is our [Port of Wilmington] avenue into the middle of that hub and spoke. Our traffic will explode into their network really efficiently (because they already have the base loads). “We’ll be able shoot around the US, [reach] which we’ve never really had before and frankly none of the Southeast ports have.” This reach into the US hinterland could make the rail hub a logistics game changer when the terminal opens in 2019. While the hub isn’t envisioned as an extension of the port or inland port, it’s easy to see how boxes traveling to-and-from DCs (Distribution Centers) located near the rail hub could move in bond. The rail service from Wilmington connects to the CSX mainline services in Pembroke. One advantage for shippers is that the rail lines all have double stack clearances (this enables the railroad to place one container atop another for greater efficiency). Another advantage is it will take trucks off the road and enable shippers to move overweight containers via rail – an important aspect given North Carolina’s weighty cargo mix. While the new terminal is the big news for the Port, a rail service between the Port of Wilmington and Charlotte is expected to be announced soon.