(The following article by Thomas Stauffer was posted on the Arizona Daily Star website on March 2.)
TUCSON, Ariz. — Tucson’s economy could benefit from a price hike Union Pacific Railroad is instituting today that raises rates as much as 100 percent for certain goods shipped to and from Phoenix.
The price increase will pay for much-needed infrastructure at the congested Phoenix yard and may have the effect of prompting some companies to move goods by rail to Tucson, then truck them to Phoenix to avoid the higher rates, said Union Pacific spokesman John Bromley.
That’s good news for Alan Levin, who with his family, built, owns and operates the Port of Tucson, an industrial park and “intermodal” inland port near South Wilmot Road and Interstate 10. The park has its own tracks, roads and 1.6 million square feet of warehouse space that companies use to ship and store goods.
Levin and his sons started moving shipping containers intermodally – from rail cars to truck beds and vice versa – last April. They were instantly busy, as Union Pacific closed the state’s only other intermodal yard in Phoenix a month after the Port of Tucson opened.
“We basically took over the Phoenix facility and everything came down here, so the volume was already here,” Levin said. “Since then, we’ve been picking up business with Mexico. We were already exceeding what UP (Union Pacific) thought we would be doing by now, and this will only make things busier.”
Even after the infrastructure improvements have been completed in Phoenix, companies may continue to use the Port of Tucson intermodally, and some may simply opt to move to Tucson altogether, Levin said.
“I think there will be companies that see opportunities in relocating from Phoenix to Tucson,” Levin said. “A lot of companies could be giving Tucson a second look because it has a lot to offer as far as location on the main line, the interstate and proximity to Mexico.”
While Phoenix has a huge population advantage that makes it the choice of many companies as a regional distribution hub, Tucson has a unique and distinct advantage in that it lies along UP’s main rail line, while Phoenix is served by a branch line, or “spur,” off that main line.
“Rail is what put Tucson on the map in the first place,” Levin said. “We have the rail and we have I-10, and there have always been opportunities here. It’s just that nobody really did anything with that opportunity.”
The Port of Tucson has a working relationship with Union Pacific to handle all intermodal traffic through the private ramp Levin built at the 300-acre site, said Levin’s son, Matt.
While Union Pacific continues to load goods from train to train, the port now loads all goods to and from rail to trucks as a subcontractor for Union Pacific’s customers and is the only such facility in the state doing so, Matt Levin said.
The railroad has gotten out of the intermodal business and now works with private companies like Levin’s to serve its customers, said Jason Fata, operations manager at the Port of Tucson.
“The sense we have is that UP just wants to focus on its core competency, which is just going over the rail long haul, and they don’t want to mess with the last mile,” said Fata, who managed Union Pacific’s intermodal facility in Phoenix. “I think they want that last mile in the hands of people like Alan who know how to handle it, so everyone is doing what they’re best at.”
Bromley said the price increase for Phoenix freight is driven by “enormous growth in Phoenix and Arizona in general.”
“What’s happening is the customers’ own facilities aren’t large enough to house the number of cars they’re ordering, so they’re leaving them at the yard, and that’s adding to the congestion,” he said.
Price increases range from 8 percent for finished steel shipped from Houston to 22 percent for salt shipped from Los Angeles to 100 percent for scrap paper shipped out of Phoenix.