Intermodal growth prompts metro Atlanta expansions

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A number of factors including a national truck driver shortage, restraints of highway infrastructure and a desire for companies to be more environmentally friendly is fueling increased demand for intermodal transport, industry experts say.



Intermodal transport involves using two or more modes of transportation—such as rail, ship and truck—in conveying goods. In 2014, intermodal transport showed record growth with $16 million in U.S. transactions according to the industry trade association, Intermodal Association of North America (IANA), and every year, nearly 25 million containers and trailers are moved using intermodal transportation. In fact, intermodal transport is growing faster than any other mode of transportation in America, IANA says.



That growth is why intermodal is featured in panel discussions at the Georgia Logistics Summit, an annual event put on by the Georgia Department of Economic Development's Center of Innovation for Logistics that draws around 2,000 attendees.



"We have seven market drivers or revenue drivers within railroad, but over the last 15 years or so intermodal has taken on the charge of taking on the fastest-growing commodity segment that the railroad has," said Jeff Heller, vice president of intermodal and automotive marketing for Norfolk Southern, which operates two intermodal facilities in Atlanta—Inman Yard close to downtown and its newer, more technologically advanced Whitaker Yard in Austell. Since being built in 2001, the Austell site has expanded multiple times, including an $11 million investment in 2006, due to double-digit growth in intermodal freight.



"We've expanded Austell since it was built and we'll continue to expand that site as we need to," Heller said. "In terms of our intermodal network, we spent over $2 billion last year in capital improvements, and we're about an $11 billion company so that's a big chunk of our revenue."



The increase in intermodal transport nationally is driven by a number of factors, Heller said, including constraints in the highway infrastructure—with not enough room for more trucks to run on highways, a national truck driver shortage, the cost of fuel and an increase in intermodal service making it more predictable than in the past.



"Intermodal is also a much more environmentally friendly way to move cargo," Heller said. "On some of our international trains we can move up to 300 containers on one train with two locomotives and that would normally be 300 trucks on the road. Obviously, from an environmental and a fuel consumption point of view you get some big leverage there."



More companies are exploring intermodal as a way of reducing pollution from shipping, said Page Siplon, immediate former director of the Center of Innovation for Logistics and recently named CEO of Alpharetta-based Team One Logistics, a fleet recruiting and staffing agency.



"Primarily from the use of rail in the movement, which only emit approximately 5.4 pounds of carbon dioxide per 100 ton-miles, whereas trucks emit approximately 19.8 pounds," Siplon said. "Railroads move one ton of freight an average of 405 miles on a single gallon of gasoline. And according to the Environmental Protection Agency, railroads account for just 9 percent of total transportation-related nitrogen oxide emissions."



According to IANA, Georgia is home to 36 intermodal facilities—the majority of which are located either in Atlanta or near the Port of Savannah. That link to the Port is one of the key elements to Georgia's intermodal growth, Siplon said, particularly in light of both the recent dockworker strikes on the West Coast and the expansion of the Panama Canal, widely expected to create more business up the East Coast.



"Flexibility is especially important to shippers in Georgia. Our overall balance of trade—imports versus exports—flowing through the Port of Savannah creates a great opportunity to get full loads in both directions," Siplon said. "Georgia is a logistics hub, and has a large volume of freight moving in, out, and through it every minute of every day."



Kevin Zweier, vice president of transportation practice for Chainalytics, a multi-national logistics data analytics company founded in Atlanta, sees additional forces driving intermodal success in Georgia.



"I think it's a combination of infrastructure and the fact that it's centrally located," Zweier said. "It doesn't matter what mode of transportation it is. All of them have easy access. You have obviously the airport, tons of interstate highways, lots of warehouses, it's got the whole infrastructure footprint and the fact that there's a lot of logistics talent that has located there for that reason."



Despite the intermodal growth, about 75 percent of U.S. freight is shipped via truck, Siplon said.



"You'll never be able to ship everything intermodal because there's just stuff that needs to get there faster than intermodal can deliver or with less variability than intermodal can deliver and those are the things that will continue to go truck," Zweier said.



What's Fueling, Challenging Intermodal Industry?

Jeffrey R. Brashares, senior vice president of sales and national accounts for TTS LLC, a third-party provider of transportation and logistics management services in Dallas, who serves on the board of directors of the Intermodal Association of North America, will serve as moderator for the intermodal discussion session at this year's Georgia Logistics Summit at the Georgia World Congress Center March 31-April 1.



Brashares said factors are fueling intermodal growth nationally as well as in Georgia include:



1. A national highway truck driver shortage

2. Continued growth of highway driver federal and state regulations

3. Intermodal fuel efficiency which allows a growing savings as the distance shipped becomes greater

4. Intermodal dray drivers are at home at night; highway drivers, not so much.

5. Intermodal pricing tends to be lower than highway the greater the distance.



Brashares said potential challenges to the future growth of intermodal include:



1. Ability of the rails to handle the volume due to their rail capacity

2. Ability to have enough equipment at the right time and place

3. Terminal size

4. Highway congestion in and out of the terminals