Rail improvements could spark intermodal shipping boom at Port Milwaukee

Even in a challenging international trade environment, Port Milwaukee continues to hit its benchmarks for annual shipping tonnage, has helped open new trade markets for its tenants and remains a net-positive revenue source for the City of Milwaukee.

At the Wisconsin International Trade Conference in May, the port was again recognized as a winner of the Saint Lawrence Seaway Development Corporation’s Pacesetter Award. The award is presented to ports that register annual increases in international cargo tonnage.

But in his first year as port director, Adam Schlicht has even bigger things in mind. The port launched a $3.7 million project to replace aging railroad tracks. With those improvements underway, Schlicht hopes to entice a major railroad to resume ship-to-rail intermodal container service at the port.

And when that happens, the port will be poised for significant growth and greatly increase efficiency for Southeastern Wisconsin companies that use intermodal shipping. Today, those companies typically must ship or receive intermodal containers through the Chicago suburbs. That means a full day for a truck and its driver to deliver or pick up only one shipment – adding costs and more regulatory red tape for companies and more highway congestion for everyone else.

“The current intermodal paradigm is not a value proposition for container access in the state of Wisconsin,” says Schlicht, who became the port’s director in August 2018. “That is not a cost savings proposition. That is not a time efficiency proposition.”

What if that same driver could instead make multiple trips to Port Milwaukee in one day?

“We’re talking about doubling the efficiency of container activity in the state of Wisconsin, just by offering service here at Port Milwaukee,” Schlicht says. “And that lines up perfectly with the port’s mission of adding value to the regional economy.”

Today, most overseas shipping is done through intermodal containers, which greatly increase efficiency because they are stackable, have standard sizes and

keep cargo loads sorted and separate. Port Milwaukee offered truck-to-rail intermodal service until 2012, when Canadian Pacific eliminated service from the port as part of a broader effort to streamline its operations.

We’re really optimistic that with so much modern infrastructure coming into the Port of Milwaukee, that area manufacturers, suppliers and growers are going to give us a second look.

Recently, the port has been in discussions with both Canadian Pacific and Union Pacific about returning the intermodal service.

“We believe that one of the two will step forward in the near future and make a commitment,” Schlicht says.

The demand appears to be there. In 2017, the port partnered with the MMAC’s World Trade Association for a survey of companies that might use intermodal shipping at Port Milwaukee if it returned. The survey indicated significant demand.

“We went out to the business community, and came back with four-, five-fold what our typical annual usage was over the previous 25-year period here,” says Peter Hirthe, the port’s senior trade development representative.

And that survey was taken before the Foxconn project announcement, so any intermodal shipping needs generated by Foxconn’s arrival would add even more demand.

“The survey results suggested to the port that there exists state-based capacity for containers in Southeastern Wisconsin exceeding 2012, even prior to the Foxconn announcement,” Schlicht says. “As the debate continues, including questions about Foxconn’s ultimate footprint in the region, we have every confidence that the

return to the intermodal container service here at the port will thrive – inclusive or exclusive of Foxconn.”

A subsequent survey by Wisconsin Manufacturers and Commerce projected a 121 percent increase in international container exports and 15.6 percent increase in international import container volumes over the next five years. Almost half of the state volume of containerized exports would originate in Southeastern Wisconsin, and 73 percent of imported containers would terminate here.

The Fednav vessel Federal Yukina arriving in the Port of Milwaukee carrying its Falline liner service cargo from Europe.

As a March 2019 report by the Wisconsin Department of Transportation’s Intermodal Subcommittee concluded, “The volume of containerized shipments to and from Wisconsin indicates a strong and sustained demand by the state’s businesses for use of intermodal freight. Many businesses seek enhanced opportunities to access the efficiencies inherent in containerized freight shipping, including decreased shipping costs, greater predictability of delivery times, and reduced roadway congestion. Looking forward, Wisconsin’s public and private sector partners will need to overcome existing geographic and market factors before containerized freight services will be improved, especially in the eastern part of the state.”

To prepare for the potential increase in rail activity, the port is spending $3.7 million – a $3 million grant from the Wisconsin Department of Transportation and $700,000 from the port.

Using these infrastructure improvements to prompt a return of intermodal service would be the next big step for the port, but other efforts are underway. The port currently has 20-plus tenants who shipped 2.4 million tons of cargo last year, in line with its five-year average.

“We’re really happy with the consistency of the Port’s tonnage throughput, given that so much of our work is impacted by international trade and tariffs,” Schlicht says.

To help mitigate the impact of tariffs, the port has helped companies expand to new markets, including agricultural shipping to Tunisia.

“Traditionally, Western and Northern Europe has been a sweet spot for Port customers utilizing our direct export capability,” Schlicht says. “However, the retaliatory European Union tariffs on the United States have created a bit of a tension in the Port’s ability to ship Wisconsin agribusiness to its typical markets, specifically in corn and soy exports. That doesn’t mean the Port stops looking for other export markets. Port staff stay vigilant, working with our tenants, hoping that they can develop new trade patterns and trade opportunities. Tunisia is a really good example of finding a niche market in a developing economy where Wisconsin agribusiness was able to find a home.”

While enticing a return of intermodal rail shipping is a significant goal, the port hopes its infrastructure improvements will benefit all kinds of shipping and attract new tenants.

“We’re really optimistic that with so much modern infrastructure coming into the Port of Milwaukee, that area manufacturers, suppliers and growers are going to give us a second look,” Schlicht says.