CARGO LENS

INLAND TRANSPORTATION

TAKING TO THE TRACKS

Enhancing Eastern US Rail Freight Infrastructure

BY LORI MUSSER

Fort Worth and Western Railroad.

CREDIT: AMERICAN SHORT LINE AND REGIONAL RAILROAD ASSOCIATION

Some U.S. rail operators are all smiles. Society’s surging sustainability aspirations favor rail over truck, and new technology and supply chain strategies are unlocking benefits for customers. Add to that US$66 billion of new federal funding for rail infrastructure, and new freight projects, and customers, may be just around the corner.

U.S. railroad infrastructure projects convey important socioeconomic benefits, but capital expenditures by railroads are rarely capacity projects; railroads typically report that more than three-quarters of their investment dollars are used simply to maintain a state of good repair.

Railway economist Jim Blaze’s outlook for 2022-2023 rail capital programs across North America, as published in his February 2022 Railway Age report, predicted average to above-average growth in railroad capital expenditure for bridges and key rail structures, with investments largely triggered by “aging of bridges and structures, plus some bottleneck fixes,” and, the prospect of joint passenger/freight rail funding largely related to the U.S. Bipartisan Infrastructure Law.

Chuck Baker is president of the American Short Line and Regional Railroad Association, or ASLRRA. Referring to the new five-year funding for the Consolidated Rail Infrastructure and Safety Improvements (CRISI) Grant Program, he said: “We are over the moon about it. There is a total of about US$1.3 billion available for short lines to compete for – four times what it has been in previous years.”

Short line projects may also be eligible for other major transportation infrastructure grants.

“Also, there is a new grade separation grant program with US$600-plus million per year guaranteed for five years,” Baker said.

While rail grant programs help, Baker said

Chuck Baker

ASLRRA

INLAND TRANSPORTATION

to Breakbulk there is more than US$12 billion in needed infrastructure upgrades, primarily because “a large chunk of short line track is not able to handle the 286,000-pound modern heavy freight rail car, and there are literally thousands of bridges that need to be rehabilitated and maintained.”

The nation’s 600 short lines are mostly light density, rural, or first/ last mile facilities, often with spurs off Class 1 railroads, Baker said. Modernized short lines may be a major opportunity for breakbulk and project cargo shippers. “They are known for their white glove service, willingness to ‘go beyond,’ and for working with customers to grow business,” he said.

SHORT LINE OPTIMISM

Watco owns and operates a diverse network of short line railroads, terminals, ports and mechanical shops. Marc Massoglia, senior vice president of sales for Watco Terminals and Ports, said: “Watco is excited about the funding opportunities available for our short line railroads and ports.” He said Watco has about five short line projects in the works, mostly focused on modernizing track infrastructure to handle 286,000-pound railcars. “This will meet customers’ expectations as well as build resiliency and efficiency into our lines while increasing safety,” Massoglia said to Breakbulk.

Nicole Brewin is senior vice president of government and public affairs with the Washington, DC-based trade association Railway Supply Institute. She said that the Bipartisan Infrastructure Law secures historic investments in rail, modernizes key programs, preserves balanced regulations, and creates and maintains industry standards.

“It represents the largest federal investment in our nation’s rail infrastructure in history,” Brewin said to Breakbulk.

It will help U.S. rail entities “repair and replace aging fleets, rebuild core infrastructure, expand service, and improve safety and accessibility,” Brewin said. It also contains provisions to strengthen American competitiveness, improve supply chain security, and enhance safety. There are new restrictions on the foreign-stateowned content on freight cars, and the law “also re-establishes the One Federal Decision policy, which should expedite rail permitting. That’s critical for contractors, railroads and suppliers,” Brewin said.

Nicole Brewin

Railway Supply Institute

Short Line and Regional Railroads of the U.S.

Source: Short Line Statistics 2014

Class II and III Railroads Number of Class II Railroads 21 Route-miles operated by Class II Railroads 10,335 Others Number of Class III Railroads 539 Route-miles operated by Class III Railroads 32,776

ACQUISITION ROUTE

Not all rail investments are construction projects. Railroads grow organically and through acquisition.

In November 2019, for example, Class 1 operator CP announced the acquisition of CMQ, with about 481 miles of rail lines primarily in Quebec and Maine. That transaction extended CP’s reach into the Northeast U.S. and Atlantic Canada, giving customers seamless access to the deepwater ports of Searsport in Maine and Saint John in New Brunswick via Eastern Marine Railway Co. and New Brunswick Southern Railway.

The CMQ deal provided CP with five short line connections, and access to 10 new transload locations. Now CP plans to invest up to US$90 million in upgrading CMQ’s infrastructure, a CP spokesperson said to Breakbulk.

Rail infrastructure improvements are helping supply chains reduce carbon emissions. Baker said. “It is a great environmental story – any given ton of freight that moves by rail versus truck reduces GHG emissions 75 percent. On average, railroads can move one ton of freight 480 miles on one gallon of diesel.”

Customers want to deal with companies that use fuel efficiently, invest in emissions reductions and combat climate change.

Norfolk Southern has been recognized for its green bond investments that help reduce supply chain emissions. Projects such as locomotive fuel efficiency improvements and investing in terminals to further promote the shift of freight from trucks to trains has led NS to a 7 percent improvement in fuel usage, saving 47 million gallons of fuel, and avoiding more than 470,000 tonnes of GHG in the last two years.

LEANING INTO SUPPLY CHAIN

Railroad investments are about having capacity in the right place, at the right time. Delving more deeply into the supply chain has been a rail growth strategy. Watco, for example, is teaming up with Crowley to support the development of the U.S. offshore wind energy. The partners are creating a single-source terminal and supply chain management solution.

Similarly, many railroads have invested in pop-up cargo yards that have been a successful solution to recent U.S. intermodal supply chain issues. The yards have also created value for breakbulk industries, if only to release the pressure on mixeduse port storage space.

Some railroads’ logistics divisions even help companies that aren’t rail-served. Arthur Adams, senior vice president of

Arthur Adams

CSX

PLETHORA OF GRANTS AVAILABLE FOR RAIL FRIEGHT

The U.S. Consolidated Rail Infrastructure and Safety Improvements (CRISI) Grant Program aims to reduce congestion, improve short line and regional railroad infrastructure, relocate rail lines, enhance multimodal connections and facilitate connectivity. In 2021, the FRA announced US$362 million for projects that assist freight and passenger rail.

In the funding announcement, FRA Deputy Administrator Amit Bose said: “CRISI is an opportunity to invest in safety and economic progress across the rail networks that support and connect America.”

In the 2020 round of CRISI funding, selected eastern U.S. projects included: • US$47.6 million to the North Carolina DOT for the Southeast Corridor Acquisition Project (a right-of-way project along CSX’s lines that will, in part, improve freight capacity, reliability and resiliency on CSX’s A-Line). • US$16.9 million awarded to the Springfield Terminal Railway Co. for Pine Tree Corridor capacity and safety improvements (replacing about 75 miles of rail, upgrading crossings, and strengthening five bridges in central Maine). • US$13.67 million awarded to the Buckingham Branch Railroad Co. for corridor improvements between Charlottesville and Clifton Forge, Virginia (including 70 miles of new rail, 14 crossings, five railroad bridges, tunnel drainage and tunnel clearances).

Most 2020 CRISI projects addressed safety, including: • US$2.3 million in Florida for dynamic envelope pavement markings in rural environs on crossings owned by CSX and South Central Florida Express. • US$2.5 million to rehabilitate rail in Maryland on the Chestertown freight line. • Nearly US$1.8 million to replace the 103-year-old East Mountain Road Bridge on the Pioneer Valley Railroad’s mainline in Massachusetts. • A US$13.1 million project in North Carolina along the Aberdeen, Carolina & Western Railway. • US$7.9 million in projects for rail telematics in Pennsylvania. • The US$4.6 New Hampshire Northcoast Railroad project.

• US$2.2 million Cumberland River Bridge rehabilitation and automation project in Tennessee by R.J. Corman Railroad Group.

In late 2021, USDOT announced US$241 million in awards under the Port Infrastructure Development Program, including US$86 million for six railrelated projects. Morehead City, North Carolina’s Radio Island Rail Improvements Project was awarded about US$1.7 million to replace existing tracks to meet Class 1 track-safety standards.

In July 2021, USDOT announced awards totalling US$905 million for 24 highway and rail projects of regional and national economic significance, in Infrastructure for Rebuilding America, or INFRA, discretionary grants. Palmetto Railways, a division of the South Carolina Department of Commerce, was awarded US$25.0 million to build about 22.7 miles of new track and related facilities to connect a commerce park to the CSX rail network, and the South Jersey Port Corp. was awarded US$9 million to rehabilitate a waterfront facility and refurbish its rail connection.

sales and marketing at CSX, said his company has specific targets in modal conversion: “We work with customers to get their entire supply chain.”

CSX’s TRANSFLO division is a value-added services platform that includes transloading and warehousing and leverages CSX’s heavy investment in a network of more than 45 terminals and counting. “TRANSFLO gets us into dimensional freight, carload quantities. In Atlanta, we repurposed Brownfield space and built a destination transload facility. Freight that was trucked from the Pacific Northwest to Atlanta is now railed and trucked only the last mile into Atlanta,” Adams said.

“Customers are truly reimaging their supply chain … government incentives have helped companies to think through their supply chains in that regard,” Adams said.

He added CSX’s industrial development program even goes into a brown or greenfield site and does pre-engineering, sharing expertise and working with municipalities and others so customers “don’t have to strategize from ground zero.”

“We are leaning in and making sure that we are agile and flexible to meet customer needs. That is going to make us the premier service,” Adams said.

Rail technology investments are also helping unlock the power of Big Data, artificial intelligence, robotics and automation to add value for customers, enhance infrastructure maintenance and help rapidly address shifting market demands.

GROWTH MINDSET

Railroads in the eastern U.S. are investing broadly to best serve breakbulk, project cargo and other supply chains.

While the cost of rail improvements, unlike roadway infrastructure, has been largely borne by the railroads themselves, there is some federal funding on the table to help. Nevertheless, the rail industry will continue to rely heavily on reinvesting revenues, and deploying strategic controls and technological advancements, as well as supply chain integration to position the industry for greater growth and enrich societal and environmental benefits.

“Customers are truly reimaging their supply chain … government incentives have helped companies to think through their supply chains in that regard.” – Arthur Adams , CSX

Wind turbine blades move by U.S. railroad.

CREDIT: AMERICAN SHORT LINE AND REGIONAL RAILROAD ASSOCIATION

CSX Transportation is a Class I freight railroad operating 21,000 route miles in the eastern U.S. and parts of Canada. Tom Tisa, CSX head of business development, said that Tom Tisa CSX has invested heavily over CSX the past several years in projects designed to add capacity and serve breakbulk and project cargo customers more efficiently.

A US$466 million expansion project will provide vertical clearance improvements at the Howard Street Tunnel and 21 other locations between Philadelphia and Baltimore. The 127-year-old tunnel is being reconstructed to add 18 inches of clearance for trains moving to and from the Port of Baltimore.

Tisa said that the extra inches “will expand opportunities for shipping large dimensional cargo moving through the Port of Baltimore, such as heavy machinery and power plant and alternative energy equipment.” He said that CSX is committed to continued capital investment in rail infrastructure to support increased capacity and more efficient service across its network for all customers, including breakbulk and project cargo shippers.

“Our double-stack clearance projects … have specifically benefitted dimensional shipments, which can take advantage of new rail service lanes. Also, siding projects across the network support more efficient handling of train-meets and are benefitting commodity unit trains and dimensional loads moving through key corridors,” Tisa said.

Regarding new business opportunities, “we are excited about handling large cargo loads related to alternative energy projects, which represent a promising source of business growth for CSX and the rail industry,” Tisa said to Breakbulk. BB

Based in the U.S., Lori Musser is a veteran shipping industry writer.

EMERGING MARKETS

COUNTING ON INDIA’S CORRIDORS

Trillion-dollar Program Promises Project Lift

BY THOMAS TIMLEN

In the government’s own words, the “National Industrial Corridor Development Programme (NICP) is India’s most ambitious infrastructure program aiming to develop new industrial cities as ‘Smart Cities’ and converging next-generation technologies across infrastructure sectors.”

Officials have said that the project will provide integrated connectivity for the movement of people, goods and services from one mode of transport to another. It also aims to create “last-mile” infrastructure and reduce travel time for people and goods.

Putting its money where its mouth is, the Indian government has dedicated US$1.4 trillion towards the completion of 11 industrial corridors with 32 projects to be developed in four phases through 2025, promising project cargo moves for domestic and international movers and handlers for at least the next three years.

However, where the funding will come from is not yet clear, as Prime Minister Narendra Modi has not specified how the government plans to raise the funds needed for the project.

Despite that lack of specificity, historically India has been successful in obtaining assistance with the funding of infrastructure projects, as illustrated by Japan’s agreement to provide funds for the Mumbai-Ahmedabad High Speed Rail project. In March 2022 Modi announced that Japan had agreed to increase funding for the project by Yen5 trillion over the next five years.

Phase one of the NICP is already well underway while the subsequent phases are taking shape. On the sidelines, stakeholders in the project cargo transport sector have good reason for optimism.

MULTIMODAL DEVELOPMENT PLAN

India’s plans are aimed at regions in all corners of the country, which also call for projects with roads, railways and airports to keep them all connected.

Logistics companies already engaged with project cargo transport in India could very well be moving cargoes related to projects that are part of the NICP without knowing it, as the tenders would focus on the items to be moved, with no need to indicate any relation to the related NICP project.

TOP: The Indian government has dedicated US$1.4 trillion towards the completion of 11 industrial corridors to be developed by 2025. CREDIT: SHUTTERSTOCK

EMERGING MARKETS

India’s energy sector has proven to be a consistent driver of demand for project cargo transport as well as heavy-lift operations. Mining activity, support of wind farm operations and the petroleum sectors have all drawn upon the services of project cargo carriers and heavy-lift providers, including heavy-lift air transport.

Today’s attention is on India’s ambitions to comprehensively improve and expand its national infrastructure, initiatives that go far beyond the sole support of the energy sector to cover all aspects of commercial activity. While the energy sector remains a key factor, new initiatives are aimed at an ambitious infrastructure expansion and enhancement that will also involve highways, railways, airports and so-called “industrial corridors” within which electronics manufacturing, pharma facilities, mega food parks and agro-processing centers, electronics manufacturing clusters, textile clusters and corridors of clusters to accommodate defence goods and services.

The maritime sector will also see cargo throughput volumes boosted as capacities at seaports and inland waterways are expanded. The expansion of ports and inland waterways also has the potential to boost project cargo transport as well as heavy-lift operations, as the construction itself will lead to demand for new port equipment including ever-larger, gantry cranes.

CONNECTIVITY IMPROVEMENTS PLANNED

In October 2021, Modi announced the launch of the National Master Plan for Multimodal Connectivity. Modi also explained that the related “Gati Shakti,” a new digital platform, will bring 16 ministries including railways and roadways together for integrated planning and coordinated implementation of infrastructure connectivity projects.

The number of projects involved make it easy to understand why a digital platform is needed to shore up planning and coordination. The digital platform is also open to industry stakeholders, further easing compliance with regulatory requirements and securing tenders.

The Gati Shakti platform has been designed to address past inefficiencies through institutionalizing holistic planning for stakeholders for major infrastructure projects.

Instead of departments planning and designing separately in silos, the projects will be designed and executed with a common vision. This will incorporate the infrastructure schemes of various ministries and state governments like Bharatmala, Sagarmala, inland waterways, logistics centers and seaports.

Economic Zones like textile clusters, pharmaceutical clusters, defense corridors, electronic parks, industrial corridors, fishing clusters, and agricultural zones will be covered to improve connectivity and make Indian businesses more competitive. It will also leverage technology extensively including spatial planning tools with Indian Space Research Organization imagery developed by the Bhaskaracharya National Institute for Space Applications and Geoinformatics.

The infrastructure initiatives have also been wrapped up under the NICP. The NICP identifies the specifics regarding the development of 11 industrial corridors that together involve 32 projects.

FINANCING NEEDED

While planning ambitious projects is one thing, seeing them come to fruition is another. Absent of adequate financing the prospects for completion would not be promising. India has so far committed US$1.4 trillion to the work found within the NICP program.

There is also a degree of support from Chinese industry. A spokesperson for Sany, a Chinese manufacturer of construction equipment including excavators that already commands a significant share of the Indian market, sees the infrastructure initiatives as potential drivers for additional equipment demand. The increased volume of equipment such as excavators will, in turn, boost demand for project cargo transportation services.

While Chinese equipment manufacturers welcome potential increases in sales volumes, the Chinese government has sought to provide financing for India’s infrastructure plans. Such offers have been on the table previously, however, political consequences

A Sany SY800 machine fitted with a ripper arm at Lignite Mines, Tadkeshwar, Gujarat.

CREDIT: SANY GROUP