(The following article by Jane Roberts was posted on the Memphis Commercial Appeal website on December 29.)
MEMPHIS, Tenn. — The crossroads of the supply chain intersect in Memphis, bringing a disproportionate amount of train and truck traffic and a windfall of goods to town.
The economic effect is profound, bringing tens of thousands of containers to Memphis, less than a day’s drive from 40 percent of the U.S. population.
It is also one of only three U.S. cities with five Class I railroads and one of the “pearls” on a thread of cities, starting with the ports in Long Beach, Calif., that links the South and Midwest to imports coming from Asia.
“It means you are on the map, literally on the corridor,” said David Dean, president of the River of Trade coalition and former Texas secretary of state.
The 225-member coalition — which includes 30 state legislators — held its quarterly meeting in West Memphis in early December, a nod to the region’s role in supply-chain management and a push to educate people “about where Memphis sits in all of this,” Dean said.
“This trade is a recent phenomenon. We’re not teaching it in schools. We have to let people know the significance.”
The railroads spent the year investing in Memphis, including Canadian National, which now considers it its second most important U.S. city behind Chicago.
CN began a $100 million project in 2006 to expand its freight yard at Johnston Yard off Horn Lake Road in southwest Memphis.
“If you look at a map of CN’s operation, it’s like giant Y, with the east-west route running across Canada and through Memphis on the north-south leg,” said analyst Robert Fay at Canaccord Capital Corp. in Toronto. “That makes Memphis a critical mixing spot for traffic and how it gets distributed east and west.”
CN this year bought 88 acres from Belz Enterprises west of the yard. It is adding more than 70,000 feet of track, a yard tower, car shop and locomotive servicing facility.
By late 2008, when the project is finished, the yard will be large enough to accommodate more than 3,100 rail cars a day.
It’s also expecting an uptick in Memphis in late 2008 after it opens its rail yard in Prince Rupert, British Columbia.
The port is strategically important to shippers because it cuts three days off the Pacific crossing time, getting goods quickly and efficiently into the heart of the U.S.
As soon as the port opens in October, CN expects 75,000 additional containers a year will move in and out of CN-CSX’s intermodal yard at Frank C. Pidgeon Industrial Park in southwest Memphis, bumping up the number of containers coming to the yard by more than half.
“Thirty percent of our traffic from Prince Rupert will go to Memphis and beyond,” said Paul Waite, vice president of CN’s intermodal division.
Burlington Northern Santa Fe is investing in similar infrastructure at its yard at Shelby and Lamar, spending an estimated $100 million by 2008 to more than double the number of shipping containers it can accommodate here.
This year, BNSF estimated it transferred 310,000 containers in Memphis. By 2011, it will have enough infrastructure to handle a million, thanks in part to the construction that is totally altering the landscape at Lamar and Shelby.
“We’ll be adding six 8,000-foot lengths of track next to Lamar,” said Scott Jenkins, head of intermodal operations, pointing across a pocked moonscape that will take millions of tons of fill to level.
The U.S. Department of Transportation expects freight traffic will grow more than 66 percent by 2020.
To meet the demand, railroads are in the midst of their largest capital improvement program since the 1920s, spending in excess of $8 billion this year laying track and improving infrastructure, a 21 percent increase over last year.