(The following article by Christopher Dinsmore was posted on the Virginian-Pilot website on February 20.)
NORFOLK, Va. — The Virginia Port Authority is developing plans to double its on-dock rail capacity at Norfolk International Terminals to meet growing demand.
Direct-to-rail movements of international shipping containers grew twice as fast as the port’s overall cargo growth of 9.9 percent last year. And the rail growth is expected to continue to outpace containerized cargo growth again this year.
It’s a business that ties together two of Hampton Roads’ largest transportation entities – the port and Norfolk Southern Railway Co., which is headquartered here. Cargo containers are unloaded from ships in the port and carried inland by the railroad, or delivered by the railroad to the port for export.
The two have shared interests in adding capacity to each other’s infrastructure. Both are lobbying Congress, for example, to fund the Heartland Corridor. The $266 million project would increase the capacity of Norfolk Southern’s rail lines through the West Virginia coal fields, its most direct route to the Midwest.
“Norfolk Southern is obviously our bread-and-butter railroad in the port,” said Thomas D. Capozzi, the port authority’s senior managing director of marketing services.
Norfolk Southern handles the vast majority of the port of Virginia’s rail cargo, but CSX Transportation Inc., its Jacksonville, Fla.-based rival in the East, has a small but growing rail ramp in Portsmouth, Capozzi said.
The shipment of containers and truck trailers by rail, known as “intermodal,” is an important and fast-growing business for Norfolk Southern, accounting for $1.5 billion of its $7.3 billion in revenue last year.
The railroad reported in January that its overall intermodal business saw volume grow 17 percent last year. Its movements of international shipping containers, the largest piece of its intermodal business, grew 15 percent last year.
“The numbers tell the story,” said Charles. W. “Wick” Moorman, president of Norfolk Southern Corp., the railroad’s parent. Intermodal is “a fifth of our revenues. It is a business that is the fastest-growing part of our business.”
The growth at the port and the railroad can be attributed to several trends in international and domestic shipping.
As global manufacturing consolidates in Asia, more and more goods are being imported into the United States. With congestion growing at West Coast ports, shipping lines are adding more direct services to the East Coast from Asia.
Cargo volume is also growing to and from South America.
“Both of those are moving a lot of cargo inland by rail,” Capozzi said.
The Port of New York & New Jersey is also experiencing congestion, he said.
“We happen to be the available gateway that’s still fluid,” said Greg Edwards, the authority’s managing director of marketing. “Everybody looks at the entire system and says, ‘Where can I find an available entry that’s not congested?’ ”
A nationwide trucker shortage and growing highway congestion are also pushing more cargo on to railroads as shippers seek alternatives.
The port’s economic development efforts are paying off, too, as more and more retailers locate distribution centers in Virginia. Last year was the first full year of operation for a Home Depot Inc. distribution center near the port authority’s Virginia Inland Port in Front Royal.
As a result, the inland port’s rail volume doubled last year to 28,401 containers. In all, the port shipped out 208,574 containers by rail in 2004, up from 174,241 the previous year.
And cargo growth hasn’t slacked off. The port hit its first 4,000-container week just six months ago, but now that many rail moves are routine. Two weeks ago, about 4,800 containers went in and out of the port by rail.
“With the amount of rail that we’re handling, we need to increase our capacity on the terminal,” Capozzi said.
In the past several months, the Virginia Port Authority has developed plans to increase its rail capacity and improve the operations of what it calls the Intermodal Container Transfer Facility at NIT.
The project will be completed in several phases as more capacity is needed and the money is available, said Jeff Florin, the authority’s chief engineer and director of port development.
It would more than double NIT’s rail capacity to 600,000 units a year.
The state port agency plans to replace two large, aging warehouses behind piers 1 and 2 with as many as 14 lines of tracks for loading containers onto rail cars. Parts of the warehouses have already been razed.
NIT now has three rail ramps, where cranes pluck containers off trucks and place them on rail cars lined up at the ramps. It primarily uses two ramps on both sides of the two warehouses that are being torn down. The third ramp, closer to Hampton Boulevard, is used sparingly because of its proximity to the Lochhaven neighborhood.
Moving trains and loading and unloading containers is a noisy business.
The project would fill in the space between the two primary ramps with rail lines, creating a large on-dock rail terminal.
“We decided to consolidate all of our rail in one place,” Florin said.
The first phase calls for tearing down the remainder of one warehouse by the end of this year and adding two sets of two lines of tracks in the space that opens up, Florin said. He estimated that would cost between $7 million and $8 million.
“It really depends on money, but we’ll build at least two sets of tracks,” Florin said. “We’d like to be building tracks soon and have it in operation within two years.”
The plan must be approved by the port authority’s board of commissioners. Funding would come from the latest bond offering.
Now, most intermodal trains arrive via a line that parallels Terminal Boulevard, and most depart NIT via a rail line near its Greenbrier Avenue entrance.
The Virginia Department of Transportation plans to solicit bids in August to create a bridge on Hampton Boulevard over the rail line at Greenbrier Avenue, Florin said. The grade separation will take 31⁄2 years to build.
A project is being planned for the intersection of Hampton and Terminal boulevards, which is bisected by the rail line into NIT. But it hasn’t been funded by VDOT.
The two projects will make it easier to run trains in and out of NIT without disrupting busy Hampton Boulevard.
The port of Virginia is Norfolk Southern’s busiest intermodal port, said Jeff Heller, assistant vice president-international marketing in the railroad’s intermodal group.
It has been since well before Norfolk Southern’s 1999 merger with Conrail Inc., which gave it access to New York. Local port officials feared then that Norfolk Southern might shift its focus to the larger Port of New York & New Jersey, but those fears proved unfounded.
“We serve the ports, and the shippers decide where to put the ships,” Heller said.
While New York remains the port of Virginia’s biggest rival for Midwest cargo, the local port’s Midwest traffic continues to grow rapidly. And the port remains an important focus for Norfolk Southern because the railroad has additional capacity on its lines between the port and Chicago, its biggest destination, Heller said.
Recognizing the importance of its international business, Norfolk Southern added the phrase “serving every major container port in the eastern United States” to how it describes itself in press releases in mid-2002.
The railroad runs six intermodal trains a day into and out of NIT – three in and three out.
Containers from or going to other terminals are switched at its Portlock intermodal terminal in Chesapeake.
One train runs north to the railroad’s large yard in Rutherford, Pa., near Harrisburg, Pa., stopping at the Virginia Inland Port in Front Royal. From Rutherford, containers can be shipped west to Detroit and Chicago. The trains can carry two containers stacked on top of each other, known as double-stack, the most efficient way to move containers. Another train runs the same route in reverse.
Another double-stack route heads west to and from Knoxville, Tenn., offering connections to Kansas City, St. Louis, Cincinnati and Chicago.
And, finally, Norfolk Southern runs a single-stack train between NIT and Chicago, stopping in the retail distribution hub of Columbus, Ohio.
That is its fastest train on the most direct route to the Midwest. Containers loaded aboard it on a Tuesday, for example, are available for pick up first thing Thursday morning in Columbus and Friday morning in Chicago.
That route to Chicago is 1,000 miles, 200 miles shorter than the other two. But it is restricted to single-stack containers because it passes through the West Virginia coal fields and numerous low-clearance tunnels designed for coal hopper cars.
Both the railroad and the port are lobbying Congress to help change that by funding the Heartland Corridor, which would increase clearances in 28 tunnels along that route to allow double-stack trains.
“We need more capacity for speed to serve some of our points in the hinterland,” Heller said. “As intermodal volume grows, this will become more important.”
The Heartland Corridor also includes the Western Freeway Rail Corridor in Portsmouth, which would relocate a rail line to the median strip of Interstate 664 and State Route 164 from where it runs through several neighborhoods in Portsmouth and Chesapeake. The new rail corridor would support operations at the APM Terminal in Portsmouth, scheduled to open in 2007, and the state’s proposed fourth terminal at Craney Island.
Both projects have a significant rail component that would further boost Norfolk Southern’s intermodal volume from the port of Virginia.
“If we ever get the Heartland Corridor, the rail volume would really take off,” Florin said. Norfolk Southern welcomes the port authority’s plans to add capacity at NIT. What’s good for the port is good for the railroad, and vice versa.
“We’re really in lockstep on a lot of our infrastructure issues,” Heller said. “We design our services around each other’s capacity. … They’re building for the future and they’re very fortunate they can, because not all ports have the capacity to do that.”