(The following story by Randolph Heaster appeared on The Kansas City Star website on March 13.)
KANSAS CITY, Mo. — Several key moments have punctuated Kansas City Southern’s quest to develop a NAFTA-driven rail corridor from Kansas City to Mexico’s Pacific coast, but no milestone may have been as long awaited as today’s.
This morning, Kansas City Southern and its partners will hold a ribbon-cutting ceremony to launch operations of its rail-truck, intermodal hub at the former Richards-Gebaur Airport. Business and civic leaders see the center as the first step in developing an international freight distribution hub at the former airport, with companies eventually occupying warehouses and storage facilities there.
The official opening of the CenterPoint-KCS Intermodal Center has been a long time coming for Kansas City Southern chairman and chief executive officer Mike Haverty.
Haverty said he initially inquired about building a freight facility at Richards-Gebaur when he joined Kansas City Southern in 1995, but he was told the operation’s lighting would be detrimental to planes flying into the airport. A few years later, after a commission recommended closing Richards-Gebaur as an airport (which happened in 2000), civic leaders approached Kansas City Southern about the possibility of building a freight hub there. Warren Erdman joined the railroad in 1997 and has been its point man in working with the city and developers to make the center a reality.
Haverty said this development would help bring more prominence to the area as a key transportation center.
“I don’t think Kansas City is fully developed as a distribution hub in spite of all the rail and truck activity that come here,” he said in an interview Thursday. “But in the last year, more and more people are starting to look at Kansas City as a place to put their distribution center. Kansas City is being recognized more and more as a transportation hub in the United States.”
Through an intermodal contractor, Kansas City Southern will begin loading and unloading containers and trailers with trucking companies, moving the goods to their final destinations. Operations at the new center will begin Monday as Kansas City Southern moves its intermodal operations from the East Bottoms.
The new 340-acre center has 11,340 feet of rail track, gate security, access to two major highways, and room for growth. But Kansas City Southern’s involvement is just the first phase. CenterPoint Properties of Chicago is the lead developer of the $200 million project and is demolishing unusable buildings to make way for the construction of industrial buildings to be leased by shippers.
CenterPoint acquired parts of the former air base from the Kansas City Port Authority last year. It initially plans to build 5 million square feet of freight storage space on 970 acres.
“We are encouraged by the early pace of the redevelopment efforts, which is moving forward as anticipated,” CenterPoint chief executive officer Michael Mullen said in a statement. “At the industrial park, we will be ready to develop new industrial buildings by the end of 2008, in response to market demand.”
Hunt Midwest Enterprises Inc. also is involved in the project to develop an underground industrial park at the site. But that project, expected to create as many as 4,500 jobs and 18 million square feet of storage space, remains about 10 years away from development.
The CenterPoint-KCS center is one of several intermodal facilities Kansas City Southern is building or expanding along its north-south route from Kansas City to the port of Lazaro Cardenas, Mexico. In addition to Kansas City, the railroad is building new intermodal centers that will open later this year or early next year in Lazaro Cardenas, Mexico City and Rosenberg, Texas. Kansas City Southern also is adding to existing intermodal facilities in Dallas and Jackson, Miss.
It’s all part of the railroad’s strategy to encourage companies and ocean carriers to ship goods from Asia to Lazaro Cardenas and on into the United States, said Rick Paterson, transportation analyst at UBS. The route would be an alternative to the more established route of Asian-made goods being shipped to ports in Southern California.
“To make this work, Kansas City Southern needs to create a whole chain of intermodal terminals along its route,” he said. “More than two-thirds of intermodal shipments are consumer goods. They have to convince the Wal-Marts, the J.C. Penneys and Home Depots to use the Mexico-U.S. corridor.”
Paterson said most of the current shipments from Asia into Lazaro Cardenas are goods for use in Mexico. Kansas City Southern’s challenge will be to increase the mix of goods that continue into the U.S. to places like Kansas City and the Southeast.
“The longer the haul, the better the margins and the greater the revenues for Kansas City Southern,” he said.
Haverty added that the new intermodal facilities would also generate more traffic for the railroad in trade between the U.S. and Mexico.
For civic leaders and economic development officials, Kansas City Southern’s new intermodal center is the initial step in building Kansas City’s potential as an inland international port and a freight-transportation hub in the middle of the country. Another big intermodal hub is being developed by BNSF Railway in Gardner, and Kansas City International Airport also is promoting commercial development.
“We’ve been talking about a lot of these things for years, but Kansas City Southern is the first to turn dirt and open,” said Chris Gutierrez, president of Kansas City SmartPort Inc. “We’re the Show-Me State, and this will show prospective clients that we’re finally getting going as a freight hub. It’s going to be an exciting 2008.”