Roanoke sees bright rail future

Destination: Freedom ^ | April 5, 2004 | Jim RePass

[Hermann the Cherusker]

Norfolk Southern Corp. could make Roanoke, Va. once again the crossroads of two major rail corridors.

Robert Martinez, Norfolk Southern vice-president for business development, told the Roanoke Times on March 29 the railroad wants to upgrade its tracks southwest of Roanoke in the Interstate 81 corridor. That alone would be a change from the railroad’s focus for the past 15 years.

If the tracks were upgraded, NS could capture more of the business of shipping container freight from the Southeast to the Northeast and possibly slow the growth of truck traffic.

The railroad also wants to improve its east-west corridor through Roanoke. That would give the port of Norfolk a faster connection to Columbus, Ohio, with Midwest markets and transcontinental rail lines.

Two key elements for Roanoke are its location in both corridors and Norfolk Southern’s vision of moving more container freight.

It is the most significant new business idea NS has offered for Roanoke since 1982, when the Norfolk & Western Ry. merged with Southern Ry. to form NS. A few years after that, thousands of NS jobs began leaving Roanoke.

Infrastructure is the obstacle to the vision. Public funding may be the answer, and that’s the new element in the NS business approach.

Container freight is merchandise in truck-size boxes that can be moved by ship, rail, or tractor-trailer. The containers are usually carried by at least two of those modes on a single journey, which is called intermodal shipping.

Trains with containers stacked two high have been moving through Roanoke for about 20 years, but NS hasn’t been able to increase business as quickly as it would like.

Tracks south of Roanoke can’t handle enough trains at speeds needed to compete with trucks. West of Roanoke to Columbus, tunnels and highway overpasses aren’t tall enough for double-stacked freight containers.

Martinez hopes the public funding can come to the railroad through the same program that is being used to widen I-81 to eight lanes.

The funding concept for I-81 is based on a 1995 Virginia law called the Public-Private Transportation Act. In its simplest form, the act enables private money to be lent for transportation projects. Revenues earned from roads repay the investors.

People in Western Virginia know that funding concept as tolls. Tolls have been the hot-button element in I-81 discussions since January 2002, when a builders’ consortium called Star Solutions offered to widen I-81 and collect fees from users.

Martinez hopes an NS track upgrade can ride piggyback on the highway widening because several local governments want the rail lines to be upgraded along with I-81, according to information gathered by the Virginia DOT.

Martinez said the railroad took note of media reports about the local governments’ wishes and about community activists who argued for more rail instead of more highway.

Highway tolls wouldn’t be used to pay for rail improvements, Martinez said. Instead, rail shippers would pay a surcharge on freight movements, thereby reimbursing private investors who would buy bonds that would provide upfront financing for construction.

In the early 1990s, Martinez served as Virginia’s transportation secretary under Gov. George Allen. Martinez said his major accomplishment in that role was writing the Public-Private Transportation Act. The act doesn’t contain a provision for one of the major conflicts that’s sure to arise with the NS proposal.

Any freight that moves through the corridor from Knoxville, Tenn., to Harrisburg, Pa., without paying a toll on I-81 cuts down on revenue the highway would generate.

The Star Solutions consortium has made its concern clear. It wants a contract with Virginia that eliminates competition in the I-81 corridor as much as possible. Wall Street investors will demand that protection, Star Solutions said.

Martinez says Virginia state officials can decide that issue when they weigh the value of rail in the I-81 corridor, he said.

Transportation officials should decide how much it’s worth, in terms of public welfare, to divert 518,000 trucks per year off I-81 and haul their loads by train, Martinez said.

Once Virginia decides what it’s worth, the state could offer NS a contract under the Public-Private Transportation Act allowing bonds to be sold to generate track-improvement funds.

At that point, NS would decide whether the improvements would generate enough profits for stockholders, and whether improvements in the I-81 corridor would be made more cost-effective than upgrades it could do itself at other places on the railroad.

Martinez said the track upgrades NS proposes could allow 12 more trains a day to pass through Roanoke on the north-south corridor.

The railroad has reduced its presence in Roanoke from 5,000 employees in 1987 to about 1,800. The major share of NS’ north-south shipping now follows its Piedmont corridor from Atlanta through Greensboro, N.C., and Lynchburg to Harrisburg.

NS said the Piedmont corridor is its fastest north-south route. Its track in the I-81 corridor is slow, has too many curves and too few sidings.

A study by NS in 1999 showed $2.3 billion would be needed to upgrade and double-track the line paralleling I-81 from Knoxville to Harrisburg. Martinez said NS has done a new study of the route and the price has come down considerably. The Virginia portion of the infrastructure upgrade would be $306 million, Martinez said.

Part of the line south of Roanoke would gain separate tracks for northbound and southbound trains, Martinez said. Most of the route, however, would remain a single track. It would have more sidings and longer ones, up to 11,000 feet to handle longer trains.

Curves would be improved to allow faster train speeds, and signals would be upgraded to shorten the trains’ wait on sidings, Martinez said.

That level of improvement isn’t enough to satisfy Michael Testerman, a leader among the community activists who favor rail and oppose the eight-lane concept on I-81.

Testerman said he didn’t know the details of Martinez’s proposal, but “of this I am certain: Norfolk Southern is not proposing rail upgrades that will substantially divert enough trucks from I-81 to minimize widening plans or to lower environmental impacts. We’d be lucky to see 1 million truck diversions between Chattanooga and Harrisburg under the NS upgrade scenario.

“Technologically, rail can divert 3 million to 8 million trucks annually between Knoxville and Harrisburg if the investment is made in the infrastructure – about $3.6 billion in Virginia’s segment” of the corridor, Testerman said. His cost figure was based on building double-track along the entire route.

State Sen. John Edwards (D) and a leading advocate for more use of rails, said he hadn’t heard the details of Martinez’s proposal, but he liked it anyway.

Edwards proposed legislation this year to create a rail development authority for Virginia that could guide the development of concepts such as the NS proposal, but it was killed. He said he plans to bring up the legislation again next year, but in the meantime he’s had conversations with Gov. Mark Warner’s staff about issuing an executive order to create a rail commission that would study and refine the plan for rail improvements.

“Roanoke was once a railroad town, and it could become a railroad town again,” Edwards said.

[Hermann the Cherusker]

Things are getting interesting with the I81 Corridor!

Now we'll see if the highway folks are pro-free enterprise, or if they just want a monopoly for themselves. I suspect the latter, and expect vehement objections to the notion of Norfolk Southern getting toll revenue bonding capability, and the ability to toll rail freight on its own tracks.

Please ping others interested in this topic.

[Hermann the Cherusker]

Any freight that moves through the corridor from Knoxville, Tenn., to Harrisburg, Pa., without paying a toll on I-81 cuts down on revenue the highway would generate.

The Star Solutions consortium has made its concern clear. It wants a contract with Virginia that eliminates competition in the I-81 corridor as much as possible.

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[Willie Green]

Please ping others interested in this topic.

Publius is always good for constructive discussion.

[BillF]

FYI.

[Alberta's Child]

My feeling is that the growth potential in east-west freight movements in that area is the bigger prize here. The price tag for the improvements in Virginia seem pretty steep for Norfolk Southern, when you consider that the railroad has some pretty daunting constraints elsewhere in the Northeast that will limit the reach of these north-south trains. That seems like a lot of money to spend just to get containers to Harrisburg. On top of all that, intermodal freight is fast becoming one of the least profitable commodities for railroads to carry -- so I wonder if this additional capacity is even going to be used the way NS claims they will use it.

The route to Columbus is more intriguing, in light of the various phases of the Inland Port project that have been completed in the Columbus area in the last decade. Columbus is well-positioned to serve as a key trucking distribution hub for the entire Northeastern U.S.

[aculeus]

Knoxville to Harrisburg is too short to make this interesting.

Florida to New Jersey would be more viable.

[Hermann the Cherusker]

Ping

[Hermann the Cherusker]

Actually, the impression in the rail industry these days is that Intermodal is finally coming into its own as a significant contributor to the bottom line.

The ~600,000 truck diversions is not overly ambitious. About 850 per day each way, or perhaps 4 double stack trains each way.

I think capacity constraints in the NE depend on where the freight is headed. The major constraints in north Jersey are being dealt with right now by a $125 million Port Authority, CSX, NS joint project to double track and reverse signal various lines, and expand capacity at Port Newark. Next will come new terminals at Wilmington, Jamesburg and Maybrook, and more capacity to New England via Binghamton and Albany.

Not sure how Columbus is well positioned to serve the region east/south of the Appalachians. It certainly can do well with the Pittsburgh-Buffalo-Cleveland-Detroit-Cinci area.

However, you have to consider existing market share to determine potential. Rail already has about 40% of the share from Chicago to the east. It has about 2% from southeast of Charlotte and Knoxville to the northeast. The growth from the west will naturally fall into the railroad's lap without much effort. So effort needs to be expended on north-south traffic, even if there is no overall growth (which there will be).

[philetus]

Railroads are 178 years old.

Isn't the only way they ever make a profit, is when the Gov. pours in more money to prop it up?

[Publius]

This idea has been building for the past 4 years. What started as a Harrisburg-to-Chattanooga rail project has morphed into a New York-to-Laredo rail project.

In 2000 the Norfolk Southern offered Virginia a choice: The state could spend $5+ billion to widen I-81 or give the railroad $2.3 billion to double-track and straighten out its right of way from Harrisburg to Chattanooga. (The price for the Virginia segment has gone down to $306 million since then.) The idea was to move the trucks through Virginia by rail and take them off I-81. This would free up the interstate for more car traffic, insofar as each truck takes the space of 4 cars. It would also solve the diesel emissions problem on I-81 that gives the Shenandoah Valley the worst air in the state.

It would also fix the maintenance problem. The equation of damage done to a highway by vehicle weight is not linear, but exponential to the fourth power. Trucks cause massively more damage to a highway than cars. Moving trucks off I-81 would give Virginia back some significant maintenance dollars.

The large interstate trucking companies recognized the possibilities. If a truck is being hauled by train, there is no long distance crew. A short haul crew drops the truck off at one railhead, and another short haul crew picks it up at another. Only the first and last parts of the journey would be done by truck and driver. A truck hauled on a train would not require diesel fuel. It would not pay state tonnage fees if the tires of the truck did not touch pavement in its passage through a state. As long as the Norfolk Southern didn’t gouge the companies, there were opportunities for significant cost savings. Since 1974, the Burlington Northern Santa Fe has been hauling J. B. Hunt’s trucks from Los Angeles and Seattle to Memphis, and that relationship has been a huge success for both parties.

Enter Tennessee. It needed to get the trucks to Memphis for interchange, not Chattanooga. Tennessee wanted to branch off the Steel Interstate –– the name Virginia had given the project –– at Knoxville and get the trains to Memphis paralleling I-40. Tennessee has the same problem with I-40 that Virginia has with I-81, and the $6+ billion widening cost is prohibitive. Putting the trucks on rail made sense. Tennessee had rail-banked the old Tennessee Central, so an expenditure of $405 million could rebuild that line from Knoxville to Nashville. From there, a lesser expenditure would permit the CSX to double-track its Nashville-to-Memphis line and provide a direct Harrisburg-to-Memphis connection.

But dumping all those trucks on the interstates of Georgia and Alabama out of Chattanooga was regarded as an act of war by both states. For defensive reasons, they asked to join the project. For similar defensive reasons, Mississippi and Louisiana also joined. The goal now is to connect with the Trans-Texas Corridors at Houston and run the Steel Interstate all the way to Laredo, the largest international rail port of entry (and exit) in the country. By now, all the states involved understood that a federal commitment would be necessary to make this work, and that tied in perfectly with the work of Republican freight rail activist Gil Carmichael of Mississippi, proponent of the Interstate II concept.

Enter Pennsylvania and New Jersey. They understood that the issue was the truck traffic out of the Port of New York/New Jersey, and the Steel Interstate had to begin there, not Harrisburg. Both state DOT’s are poring over World War I-era maps to find active and abandoned rail rights of way to get the trucks from the ports to Harrisburg without using Amtrak’s Northeast Corridor, which is saturated with high-speed intercity passenger trains and commuter trains. In its initial concept, the Steel Interstate would have begun in North Jersey.

But the Port of New York/New Jersey had a different idea. They suggested tunneling from Greenville Yard in New Jersey all the way to Brooklyn and an old Long Island Railroad right of way now under the control of the NY Transit Authority. This line connects to the Hell Gate Bridge and the Hunts Point produce terminal. Congress is about to authorize this project, and the appropriations battle will begin next.

This project has grown by leaps and bounds over the past 4 years. It is attempting to recreate the great privately-owned railway network this country had before government began building highways on a massive scale after World War I. (I’m involved in two similar projects in Washington State, the Cascade Foothills Corridor and the Trans-Cascade Corridor.)

[foreverfree]

bump

[SedVictaCatoni]

Railroads are 178 years old.

Isn't the only way they ever make a profit, is when the Gov. pours in more money to prop it up?

You are seriously ignorant.

[Publius]

Besides Post #12, I should add one other thing.

I helped host the author, Jim RePass, at a reception at the Woodmark Hotel in Kirkland, WA in July 2001. I pulled in some business writers from the Seattle papers and a couple of influential state legislators. It was a great party.

[Diddle E. Squat]

Actually all the Class I freight railroads have been profitable since Conrail turned around in the 80's. In fact until recently they've stayed pretty far away from any public funding proposals, scared that such participation would get the govt's nose under the tent and eventually lead to 'open access'(access of other carriers to their trackage, which right now each company owns exclusively.) Consider that railroads own their own right-of-way(and are heavily taxed on such) while trucks operate on govt funded pavement(this truck-financed toll road proposal being an exception, gas tax receipts do NOT cover the total cost of road building and maintenance), it is pretty impressive that the freight RR's have been able to profitably compete without govt handouts/subsidies. (Though passenger rail is a completey different matter.)

[Diddle E. Squat]

With the I-81 truck tollway going to take place and all the states needed to be involved, I don't see how this proposal is viable in the short term. Especially if it will require large amounts of federal dollars(and everything I've read suggests that it will.) Given how that Alaskan crook Sen. Young is about to bust the bank with a pork Christmas, and the ever-growing demands for transit and metro mobility road projects, freight corridors without direct passenger transport benefits will likely fall too far down the pecking order to have any shot at funding. Toll roads have a better shot because not only can they argue that they'd take trucks off local roads(like the RR is arguing) but voters can also envision themselves using those toll roads.

TX Gov. Perry's Trans-Texas Corridor is visionary, but on a 50-year time frame. It also offers many fringe benefits/selling points, such as:

1) Freeing up track space in 4 fast-growing metro's (by diversion of freight traffic from lines that penetrate the urban core) that can eventually allow much cheaper implementation of commuter rail and high-speed intercity rail, if the public will develops for either or both of those.

2) Creating the intercity corridor ROW and much of the infrastructure for a relative cheap implementation of intercity passenger rail, should the market and public will eventually demand such service.

3) Consolidating into grade separated corridors most or all freight traffic from numerous rail lines that bisect small towns and urban areas.

4) As a result removing much of the potential danger in those populated areas from accidents, sabotage, and collisions at road crossing.

5) Removing much or all of the noise nuisance from those existing lines.

In the short-term, I don't see the I-81 corridor proposal offering anywhere near such a bundle of benefits that could be used to sufficiently persuade the public of the project's value. So IMHO it will probably be another generation (until we can get control of and start to reduce the accumulation of the Baby Boom generation's legacy debt) before this project takes place. Now if it is financially viable without fed funding, that's another story.

Perhaps a wise short-term goal would be to create some type of statewide corridor easements/'overlay district' in each state, something that would designate exactly what land was needed for implementation. Some way to either prevent development/improvements in these districts or lock in future purchase prices at current market value(I can already hear the keyboards clicking as some rush to label me a communist, but the corridor need not be more than 75-100' wide, most of which would already fall into railroad owned land.) Sticky legal issues, I know.

[Hermann the Cherusker]

Federal Money isn't needed. That's the idea behind tolling. Say you surcharge $50 per container and $100 per carload. You are looking at annual "toll" revenue of around $60 million to payback a $300 million investment. Payback would take 6-7 years depending on the interest rate. If its spread over 20 years (more likely), the toll could be half that level - $25 per container and $50 per carload. If the corridor also runs to Harrisburg and Knoxville and branches to the DC-Charlotte-Atlanta line at Front Royal (there is capacity and less need to rebuild beyond those points), lets say you double the price. $50 per container and $100 per carload is nothing. Essentially an 7-8% surcharge on going rates, when using rail will probably save the shipper 25-50% prior to the surcharge.

NS has already worked out a similar project in Delaware to rebuild a major moveable bridge in Wilmington. The price is $5 per car for 20 years or until the project is paid back if sooner.

The project won't shift to CSX through Tennessee and the Tennessee Central. Much more likely to go all NS to Meridian (Kansas City Southern interchange), New Orleans (BNSF and UP interchange) and Memphis (BNSF and UP interchange). This means a route from Knoxville to Chatanooga, then either Huntsville-Memphis, or Chatanooga-Birmingham-Meridian-New Orleans, because a single railroad move is much more efficient.

If NS can pull this off, they may yet best CSX in size, especially if they can also reel in D&H and Guilford, as is looking more and more likely. They're even looking at snatching up KCS.

[BfloGuy]

Railroads are 178 years old. Isn't the only way they ever make a profit, is when the Gov. pours in more money to prop it (sic) up?

No. Passenger railroads, yes. Freight, no.

[philetus]

Thanks for the good info. I'm not a railroad buff and just thought all railroads were subsidised.

SedVicta,

I appreciate the info but it didn't help in the railroad dept.