Ports, Rail, & Container on Barge: America's Central Port, TRRA, & Arcosa Weigh In (Video)

Speakers

Dennis Wilmsmeyer Executive Director, America’s Central Port Dennis Wilmsmeyer has served as the Executive Director of America’s Central Port (ACP) since 2010. Prior to that time, he spent 11 years with the Port, six of those as general manager. He joined the Port team in 1999 after 12 years in transportation planning and project management with the East-West Gateway Council of Governments in St. Louis, the City of Kansas City and a private consulting firm in Missouri. As Executive Director, Dennis oversees a staff of 35, as well as manages an annual operating budget of $9 million. He is responsible for the economic development on 1,200 acres of Port-owned or operated land, in which ACP has experienced $300 million in private investment since 2008.

Neal Langdon Executive Vice President, Arcosa Marine Products Neal Langdon currently serves as the Executive Vice President of Sales at ARCOSA Marine Products. ARCOSA builds tank, hopper and deck barges at their various locations, as well as barge covers and marine components under the Wintech and Nabrico name brands. Neal started his career in the Engineering Department at Nashville Bridge Company in 1980. He has held various positions through the years as the company was acquired by Trinity Marine Products and now ARCOSA.

Ron Tindall President, Terminal Railroad Association of St. Louis Ron Tindall is the President of the Terminal Railroad Association of St. Louis (TRRA). Ron came to TRRA from Trans-Global Solutions, where he was the company’s Compliance Officer. Prior to that role, Ron spent over 20 years with Union Pacific where he started as a brakeman/conductor/engineer and rose through the ranks, serving most recently as General Superintendent in the Western Region. Ron is known for leading dramatic turnarounds and reducing costs by developing cultures of accountability, problem solving and risk management.

Be sure to check out more from Freight Week STL, with virtual content posted each day between May 24-28, 2021. See here to learn more: https://freightweekstl.thefreightway.com/

Rail Spurs, Harbors, Grain Bins and More: How America's Central Port Invests In Global Connectivity

Beyond the 900+ jobs, over 75 businesses, and $1B+ in freight transported by river, rail, and road, the Port also plays a major role in global connectivity, connecting manufacturers and freight intensive operators to the rest of the world, all from Granite City and Madison, Illinois.

You'll see it repeated in our marketing collateral that we have access to four U.S. interstates, six of the seven Class-I railroads, and between our two intermodal harbors we are the Northernmost ice and lock free river port on the Mississippi River.

But what does that actually mean?

Consider all the businesses responsible for feeding, clothing, fueling, and sheltering the world's population. These industries all rely on raw materials to produce everything from the beer you drink, to the pet food you buy for your dog, to the steel in the frame of your Chevy Traverse. The supply chain responsible for manufacturing just about everything starts with river, rail, and road access.

For the most part, just about every major location in the United States has some form of access to the U.S. Interstate system. However, river and rail access is a little more exclusive.

When you manage a freight intensive business, such as a manufacturing operation where you are sourcing raw materials in bulk supply or shipping large quantities of finished product to a single customer, river and rail access is an incredible global supply chain advantage due to the economies of scale achieved with each mode of transportation.

An Introduction to Rail Connectivity

Maybe you make pipes, beams, engineered materials, or some other form of manipulated steel that other manufacturers and builders rely on to produce everything from cars and machinery to homes and skyscrapers.

If your facility only had access to the interstate, your option would be to truck everything to and from your land-locked location, using one truck for a single steel coil.

With rail, up to four steel coils can be placed in one gondola railcar.

Steel coils are just one example. Consider lumber, or liquid and dry bulk materials for food grade products or industrial applications. The average calculation for shipping in bulk is for every one railcar you would need an equivalent of three full truckloads. When you ship in bulk and have access to rail, the cost savings you gain are significant to say the least.

Customers at America's Central Port have access to six of the seven Class-I railroads (the railroads that own 70% of the U.S. rail infrastructure), which means they not only gain a cost-effective transportation option, but they also gain access to every major U.S. international port as well as Canada and Mexico.

The Granite City Harbor at America's Central Port has a direct connection to Norfolk Southern, whereas the Madison Harbor and Port industrial park have connections to Terminal Railroad Association, providing additional access to the BNSF, CN, CSX, UP, KCS, & NS railroads.

Everyone likes options. For bulk shippers, having multiple options to ship freight by rail is an incredible supply chain advantage.

Recognizing this opportunity, America's Central Port has invested millions of dollars into the construction of multiple rail spurs and new rail infrastructure projects. These investments ensure as many of our industrial properties as possible are equipped with rail access, giving manufacturers and freight intensive operators the transportation edge they need.

Moving On To River Connectivity

Beyond rail, let's say you manufacture animal feed and want to expand into the Brazilian cattle feed market. America's Central Port provides a gateway to the Gulf of Mexico, allowing manufacturers to ship in bulk by barge straight to South American markets.

Water transportation is the most energy-efficient and cost-effective method for moving freight. One common 15-barge tow has the same cargo capacity as 216 rail cars, or 1,050 large semi tractor-trailers.

In terms of logistics advantages unique to America's Central Port over other terminals, the Granite City Harbor is the northernmost ice-free port on the Mississippi River, whereas the Madison Harbor is the northernmost lock-free port on the Mississippi River.

Why does that matter?

Anything north of St. Louis tends to freeze during the winter months, blocking navigation, whereas the terminals at America's Central Port are open year round.

As the northernmost lock-free port, America's Central Port delivers the highest per mile efficiency for shipping bulk commodities to the Gulf of Mexico. From the Madison Harbor, shippers gain access to free-flowing water all the way to the Gulf Coast. Whereas if you start in Minneapolis, you have to cross through 29 locks heading South, where each takes an average of 30 minutes to pass through, and that's assuming you aren't waiting in line or delayed by scheduled maintenance.

If we come back to steal fabrication, America's Central Port brings in an average of 350 steel coils each month from Southeast Asian markets like Japan and South Korea. Other common imports include dry and liquid fertilizer from Russia and Morocco.

On the outbound side, about 60% of exports leaving America's Central Port consist of agricultural commodities, such as corn, soybean, and other grains. There's even a dedicated terminal for non-GMO exports. Other outbound shipments include a newly activated container-on-barge service, as well as other bulk and general cargo shipments.

The combination of six of the seven Class-I railroads, as well as two multi-modal harbors, both undergoing constant infrastructure advancements, continue to advance the region's ability to help the United States feed, shelter, and fuel the world.

As part of the recent U.S. Department of Transportation BUILD grant awarded in 2020 to America's Central Port and SCF Lewis & Clark, $15.8 million will be used to make some considerable improvements at both the Granite City and Madison Harbor.

The improvements to the rail infrastructure at the Granite City Harbor, as noted above, will increase total agricultural commodity throughput from the current 5,000 rail car capacity to 10,000 rail cars annually.

The current system at the Madison Harbor only allows for rail or trucks to load at one time. Once the new grain bins are installed, unit trains from six of the seven Class-I railroads, as well as trucks from regional farms, will be able to load multiple types of product simultaneously, significantly increasing the throughput capacity for the Madison Harbor.

When we talk about what makes America's Central Port so great, our rail and river access definitely take the cake, but what brings it all together is we also have incredibly close access to four U.S. interstates and are the grantee of Foreign Trade Zone 31, making the Port an excellent location for warehousing and distribution as well.

We Can't Forget U.S. Interstate Connectivity

Similar to our investments in rail and river infrastructure, the Port regularly pursues opportunities to improve last-mile efficiencies through resurfacing projects and upgrades for development-ready sites.

It might not look like much when you drive by on Illinois Route 3, but behind the gates at America's Central Port lies a massive infrastructure investment helping lead the Greater St. Louis region in global connectivity.

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If you're interested in learning more, check out the following panel discussion featuring America's Central Port, Terminal Railroad Association, and Arcosa Marine Products.

Are You On The Right Track?

It’s Time to Think Rail

Manufacturers want options. They want less touches and any efficiency they can get their hands on. Access to rail can provide those advantages.

If you manufacture anything that requires the transportation of bulk materials, there’s a good chance rail logistics is included in your plans to scale your business. If not, it should be. The key cost-saving benefits come in the form of fuel efficiency for long haul deliveries, as well as economies of scale when needing to ship or receive large quantity orders. For example, if your manufacturing plant needed petrochemicals for the production of your goods, U.S. freight railroads, on average, move one ton of freight more than 470 miles per gallon of fuel. Freight trucks on the other hand can only move one ton of freight just over 134 miles per gallon of fuel, thus creating a 350% fuel-saving advantage for rail users. In addition, on average, one rail car filled with product is equivalent to three freight trucks. Market conditions contribute to the equation as well, but when shipping bulk products regionally or to and from international markets, rail plays a critical role in providing manufacturers with a cost-effective alternative.

However, for rail to be a relevant answer for your operation, it is essential to have access to Class-1 railroads that serve your buyer and/or supplier network. Below is an illustrated map showing an overview of key cities and coastal ports served by the Class-I railroads.

Three Emerging Opportunities in Rail

1. Bulk Sourcing

If your business model requires a bulk supply of inputs in order to manufacture your product, rail can be an incredible asset to help you scale. The types of inputs typically more cost effective to ship in bulk supply by rail include plastic pellets, petroleum and chemical products, lumber and building materials, steel and other metallic alloys, minerals and aggregates, and agricultural inputs. Some example business models include:

• A manufacturer that uses dried distiller grains (DDGs) in the production of cattle feed, where one railcar can carry approximately 90 tons of DDGs.

• A building materials supplier that sources lumber and other materials in bulk for regional distribution needs, where one box car can hold approximately 204,000 lbs of lumber, and a centerbeam railcar can hold 223,000 lbs of dimensional product.

• A plastic manufacturer sourcing liquid petrochemicals or plastic pellets in the production of their final product, where one railcar can hold approximately 28,500 gallons of chemicals or 6,000 cubic feet of space for plastic pellets, depending on the type of railcar used.

• A steel processing manufacturer sourcing steel coils in the production of fabricated steel, where trucks are limited by highway weight restrictions and only allow one steel coil per truck, whereas rail gondola cars can hold up to 4 steel coils at a time.

(Capacity approximations provided by Port Harbor Railroad, a Class-III shortline railroad providing switching services to BNSF, CN, CSX, KCS, NS, & UP at America’s Central Port.)

2. Bulk Distribution

If your business produces a product that is shipped in bulk on a regular ongoing basis, rail can be an incredible advantage for your bottom line. The United States rail network comprises nearly 140,000 miles of rail, stretching from coast to coast, providing access to Canada and Mexico, and connecting major cities and buying centers across the United States. With every major coastal port having direct access to at least one Class-I railroad, rail users around the country gain the benefit of being able to transport their goods to these destinations at a more cost effective rate, thus opening the door to more effectively target international markets. Some examples of manufacturing industries that would benefit from access to rail for bulk distribution include the chemical, petroleum products, plastic pellets, wood products, steel products, and animal feed industries.

3. Toll Manufacturing & Co-Packing

Consider all of the multinational companies that need partners to sub-contract aspects of their manufacturing process. For example, a toll chemical manufacturing company might receive a product from a customer that requires a bulk shipment of liquid petroleum, which then requires further treatment, blending, or additives. Once the required additions have been made, the product is then shipped back to the manufacturer that requested the service, or to other entities, such as a liquid terminal, that exist throughout the manufacturer’s supply chain. In this instance, having direct access to rail can be an incredible asset to land multinational clients, as they know you can both receive and ship their product by rail when needed, thus providing them with a more cost-effective and scalable option.

These opportunities however only exist if you can find rail-served real estate. Now, if you hop on Loopnet, “rail-served” doesn’t quite mean what you might think. You might have a main line adjacent to the site you are looking at, but that means you’ll need to add your own spur, and keep in mind rail construction costs on average around $1.3 million per mile. You also need to convince the Class-I railroad that owns the line to serve your facility, which will cost additional time and capital.

The actionable opportunities in rail for small businesses are in locations with real estate options where rail spurs are already in place, and service is provided either directly by a Class-I carrier, or a short line operator.

Going back to the idea that smart business owners know the value in having options, the more Class-I railroads your facility has access to, the more competitive your business can be. Illinois has a unique advantage over the rest of the United States in that we have multiple locations served by rail, with access to more than one Class-I railroad. Chicago, home to various logistics parks and facilities with rail-served real estate, has access to all seven. In concert with Terminal Railroad, America’s Central Port, a multimodal facility with warehousing and shovel ready sites located in Granite City, IL, just ten minutes from downtown St. Louis, has access to six, as do multiple sites and facilities in the surrounding Southwest Illinois region. Milano Railway Logistics Services out of Mount Vernon, IL has access to four, as does the Tazewell & Peoria Railroad (TZPR) located in Peoria, IL.

The access to suppliers, buyers, and international markets that these industrial corridors provide make for incredibly valuable and strategic locations for small manufacturers, providing a unique opportunity to locate manufacturing operations throughout the State of Illinois.

Originally published in "The Illinois Manufacturer: Fourth Quarter 2020 Edition."

https://ima-net.org/wp-content/uploads/2020/11/Fourth-Quarter-TIM-2020-1.pdf