(The Press-Enterprise posted the following article by Adam Eventov on its website on March 27.)
RIVERSIDE, Calif. — Matthew K. Rose believes that the future of the Inland Empire is tied to the rails.
As president, chairman and chief executive officer of Burlington Northern Santa Fe Corp., Rose can’t predict when or where his railroad will expand. But he knows that the changing economy and traffic congestion will eventually push business toward the railroads.
Rose visited his company’s facilities in Redlands on Wednesday to meet with workers and get their feedback on the way the railroad is run. Burlington Northern Santa Fe employs roughly 400 workers in San Bernardino and Redlands and 2,300 in Southern California.
During his visit, Rose said increased highway traffic, congestion at the ports of Los Angeles and Long Beach and a growing need to move imports from Asia will force the railroad to eventually add at least one rail yard and expand rail capacity.
“The ports have been successful in finding creative solutions to expand their physical plant, but at some point in time there is a physical limitation,” said Rose, who believes an Inland port to help distribute cargo will be needed. “Looking at different options, we, being a rail road, will play one part or an other.”
Rose can foresee a time when a dedicated rail line between the ports and the Inland Empire could be economical, although no such line is being planned.
The railroad’s expected future expansion bodes well for developer Hillwood, who is working with the railroad to create a 200-acre rail yard south of the former Norton Air Force Base in San Bernardino. Texas-based Hillwood is developing AllianceCalifornia, a cargo trans portation center that allows cargo to be moved by air, rail and road.
“We’re a big believer in rail, and believe the future is rail,” said John Magness, a Hillwood senior vice president. Hillwood hopes that rail mixed with other modes of transportation will at tract companies to AllianceCalifornia by offering flexibility as business models change.
In fact, one reason the railroad has seen its business grow in recent years has been a shift from manufacturers making goods domestically to importing goods from Asia, and China in specific, Rose said.
Also, manufacturers are keeping fewer components in inventory and are relying on buying parts as they need them. The shift to so-called just-in-time buying has increased the need for integrating truck and rail, Rose said.
The company recently opened its Logistics Park Chicago in Joliet, Ill. The center is the destination for many of the goods passing through Southern California, he said.
While the long-term outlook for the region’s railroads is healthy, short-term projections are not so bright because of rising fuel prices. The company will spend $80 million to $85 million more this quarter than it did a year ago on fuel, even with the company buying futures and hedging diesel prices, Rose said.
Burlington Northern and other railroads are hurting more than most cargo carriers be cause they have long-term con tracts with shippers that usually prevent them from adding fuel surcharges. The Texas-based executive also wasn’t very optimistic about the nation’s economy.
“The economy was in trouble before we got in the war. I’m afraid it’s going to be in trouble when we get out of the war,” Rose said.