SPECIAL ISSUE 2020
Short-Haul Intermodal: Its Present and Future
Short-haul intermodal has in recent months shown signs that it might be poised for growth in North America.
Among those signs are that in May, Canadian National Railway announced a new 263 km (163-mile) intermodal rail service between New Brunswick and Nova Scotia. The service, created in collaboration with the Halifax Port Authority, stakeholders, ocean carriers and customers, offers integrated solutions through CN’s Moncton yard aimed at easing congestion at the port, along with offering flexibility to manage traffic and enhance growth going forward.
"This intermodal service will play a key role in overall integrated solutions that drive value and support growth in the Atlantic region," CN President and Chief Executive Officer JJ Ruest said in a statement.
"We will continue working with CN, terminal operators and ocean carriers to find new ways of developing a more sustainable supply chain," added Halifax Port Authority President/CEO Capt. Allan Gray.
Another boost to short haul came in July, when work was completed on a two-year project to modernize the CSX DeWitt Rail Yard in Syracuse, New York.
Prior to refurbishing, the inland port was a wheeled operation, requiring shippers to use the rail terminal’s chassis for containers entering and exiting the yard. CSX began the upgrade in 2018 with the help of a $19 million grant from the state of New York.
While the Port Authority of New York and New Jersey was not directly involved in the upgrade, its completion now allows the PANYNJ to move more freight through its $600 million ExpressRail on-dock rail system. The DeWitt Yard will provide weekday intermodal service between Syracuse and the port’s ExpressRail Millennium Marine Rail terminal in Elizabeth, New Jersey, which is operated by APM and Maher Terminals LLC.
Freight moving through terminals other than Elizabeth will also be able to use the new service because Elizabeth’s on-dock rail site has outside truck gates.
PANYNJ officials said that not only does the service give cargo owners more trip options, but it also offers an alternative to the 245-mile truck haul between Syracuse and the port, plus it reduces truck traffic through the region’s largest marine terminals.
Between 200 and 400 containers a week move via truck between Elizabeth and Syracuse, some of which could be converted to rail, according to Port Authority Manager of Intermodal Rail Development Cory Wyatt.
In light of the above developments and others, Intermodal Insights spoke with some experts to gather their opinions on the current state of short-haul intermodal.
"We absolutely see short-haul rail gaining further momentum in North America, specifically from the Midwest and Southwest to the Southeast, and throughout the Southeast region to East Coast ports," South Carolina Ports Authority spokeswoman Liz Crumley said.
"Companies want a fast, reliable and cost-effective way to move cargo to and from well-run ports. Short-haul rail offers these benefits to cargo owners," she added. "The growing e-commerce trend and the number of new distribution centers coming online will only increase the demand for short-haul rail and inland ports. The booming Southeast market also propels the need for more short-haul rail."
South Carolina is home to multiple successful short-haul rail operations, including Inland Port Greer and Inland Port Dillon, and could add two more – one at a commerce park and another at a planned intermodal facility – in the coming years.
Port of Long Beach Deputy Executive Director of Administration and Operations Noel Hacegaba said that although trucking has traditionally been a more cost-effective option for short-haul, as demand for short-haul grows and rail equipment becomes available to meet this demand, short-haul rail has the potential to grow in certain key markets.
"In order for short-haul economics to pencil out, the railroads also need partners that are willing to make the infrastructure investments needed to support and expand short-haul opportunities," he explained.
Hacegaba said that the Port of Long Beach plans to invest $1 billion in on-dock rail projects in the coming years that will enable greater velocity in the movement of cargo through the harbor and allow terminals handling the biggest ships to move cargo faster.
Today, about 25% of the Port of Long Beach’s cargo moves by on-dock rail, but the port is looking to increase that to at least 35% in the coming years.
"On-dock rail projects make up the lion’s share of our capital improvements over the next 10 years," Hacegaba said. "Our rail projects are designed to improve cargo flow, reliability and efficiency, allowing our railroad partners to optimize and maximize their operations."
Among the projects underway that the port hopes will help get it to 35% on-dock rail usage are:
- The $870 million Pier B On-Dock Rail Support Facility project, aimed at dramatically improving rail movement throughout the port complex by reconfiguring, expanding and enhancing an existing rail facility. Construction is planned to commence in 2022.
- The Pier G-J Double Track Access project, which would add a 9,000-foot second rail line between Piers G and J. Construction of the $25 million project is underway.
- The Terminal Island Wye Realignment Project, to reduce switching conflicts by adding a new lead track on Pier T and two new storage tracks on Pier S. The $40 million project is scheduled for a 2021 start.
All three of these short haul-related projects, Hacegaba said, would provide a boost to intermodal container movement. The adjoining Long Beach and Los Angeles ports currently handle nearly 20 million TEUs annually, and cargo forecasts show a doubling of cargo over the next 25 years. Connecting the ports to the national rail system near downtown LA is the Alameda Corridor 20-mile railroad express line.
Michael Leue, CEO of the Alameda Corridor Transportation Authority, which owns the line, said that the feasibility of short-haul rail in Southern California has been studied for nearly 20 years, and that shifting financial factors have added to its economic viability.
"Warehouse centers continue to expand eastward from the ports; traffic congestion continues to worsen; fuel costs will inevitably rise; recent legal challenges to the ‘owner-operator’ model for truckers might cause labor costs to increase," Leue explained.
"These factors combined with the massive quantities of cargo moving through Southern California make this gateway one of the most promising opportunities for short-haul rail," he said. Crumley added that short-haul rail provides myriad benefits.
"Short-haul rail alleviates some challenges from the truck driver shortage. It also enables truck drivers to have one-day trips rather than long-haul trips," she explained. "Short-haul rail provides environmental benefits: air emissions caused by long-haul truck trips significantly decrease when cargo is instead moved by short-haul truck and short-haul rail."
"A reduction in truck miles also prevents additional wear and tear on roadways, as well as reduces congestion for drivers," she added. "We anticipate that short-haul rail and inland ports will continue to be in demand as cargo owners require both speed and proximity to growing markets."
Other regions throughout North America have also invested in on-dock rail, including the Port of Prince Rupert in British Columbia, which in July granted regulatory approval to terminal operator DP World for an expansion of the Fairview container terminal that will include, among other things, on-dock rail.
Also, the Port of Los Angeles in February received an $18.2 million grant from the U.S. Dept. of Transportation for construction of an intermodal railyard expansion and modernization project at Fenix Marine Service’s marine terminal facility at the port.
The project will entail expansion of an existing Fenix Marine on-dock railyard, adding five new working tracks north of, and parallel to, the terminal’s existing railyard. The 11,500 feet of new track is expected to enable more cargo to load trains via the on-dock railyard, instead of via off-dock railyards located as far as 27 miles away.
The project is expected to increase the terminal’s on-dock rail capacity by a projected 520,000 TEUs, plus reduce cargo dwell and transit times by as much as two days, and result in 2,000 fewer truck trips per day.
"These investments will ensure ever-increasing levels of service both on the rail and road," Fenix Marine General Manager for Terminal Development Scott Schoenfeld said.
The ports of Long Beach and Los Angeles are among industry leaders in on-dock railyard development, Leue said, adding that they continue to invest in the port rail network connecting the on-dock yards to the Alameda Corridor.
"The Alameda Corridor has ample capacity to support any cargo volume the ports can throw at it," he said. "The inland railyards are the final piece of the puzzle, but with the need for off-dock intermodal capacity and lack of land near Los Angeles, the best opportunities for the railroads to develop are coincidentally desirable for the inland short-haul rail head."
Up the coast at California’s third-busiest seaport after LA and Long Beach, the Port of Oakland, they’re not quite as bullish on the future of short-haul. Currently, there are various ongoing discussions with regard to short-haul rail at the port, spokesman Mike Zampa told Intermodal Insights. He added though, that most are still in the discovery phase.
"There has been periodic interest over the years for short-haul intermodal. However, there are many challenges to overcome in order to establish short-haul intermodal," Zampa said.
"On dock rail for short haul can only be successful if shippers support it week in and week out," he added. "The determination of the support is in large part dependent on dynamic trucking prices and the integrity of the service – both of which no single party in the supply chain can control."
Regarding if he thought there were any factors that could help short-haul gain market share in the goods transport industry, Zampa mentioned two: governmental regulations that will require cleaner air, and prolonged spikes in oil prices. Hacegaba added that market demand, rail equipment availability, short-haul economics and infrastructure development are also key factors that could drive short-haul rail growth.
Port congestion and increasing use of on-dock rail lend themselves to increasing the use of short-haul, Hacegaba said.
"Mega ships, bigger alliances and e-commerce growth are some of the recent trends that have driven the need for enhanced velocity, predictability and reliability at ports," he explained. "The massive increase in container vessel capacity introduced into the supply chain in recent years alone has improved waterside economics. In order to improve the economics across the entire supply chain, landside economics also need to be enhanced."
This, he remarked, requires operational enhancements that drive efficiencies as well as infrastructure developments that enable those efficiencies.
"The ability to move more containers, with greater velocity and reliability," he said, "is a way to drive landside economics."