Mid-Continent Transportation Research Forum, Madison, WI, August 17-18 2006

Transmodal Rail Operations Transmodal Rail Operations and the Thruport Conceptand the Thruport Concept

Jean-Paul Rodrigue, Hofstra University, New YorkJohn Zumerchik, Mi-Jack Products Inc.

“There’s no business like flow business”

Email: ecojpr@hofstra.eduPaper available at:http://people.hofstra.edu/faculty/Jean-paul_Rodrigue

Integrated Transport Systems: From Fragmentation to Coordination

Factor Cause Consequence

Technology Containerization & IT Modal and intermodal innovations; Tracking shipments and managing fleets

Capital investments Returns on investments Highs costs and long amortization; Improve utilization to lessen capital costs

Alliances and M & A Deregulation Easier contractual agreements; joint ownership

Commodity chains Globalization Coordination of transportation and production (integrated demand)

Networks Consolidation and interconnection

Multiplying effect

Value Per Ton of U.S. Freight Shipments by Transportation Mode, 2002

$667

$4,892

$611

$88,618

$37,538

$1,480

$775

$241

$198

1 10 100 1,000 10,000 100,000

All Modes

Multiple modes

Single modes

Air (incl. truck and air)

Parcel, U.S.P.S, or courier

Truck and rail

Truck

Pipeline

Rail

Integrated Transport Systems

■ Resurgence in rail transportation (competitive advantages)• Substantial growth in international trade:

• Particularly imports from Asia (China).• Interface between global supply chains and national distribution; national

gateways.• Growth in long distance shipments at the international and national levels.

• Rail productivity:• Decrease in rail freight rates (35% decline between 1980 and 2000).• Increase in trucking transport costs (wages, fuel, insurance, congestion).

• Capacity constraints at gateways:• Containerization growing rapidly.• Large volumes at gateways create capacity constraints.• Intermodal rail offers a shipping alternative to the capacity constraints of

trucking.

Cargo Handled by the Top 5 US Container Ports, 1984-2005 (in TEUs)

0

5

10

15

20

25

30

35

40

45

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

Mill

ions

40%

42%

44%

46%

48%

50%

52%

54%

56%

58%

60%

New York/New Jersey

Seattle

Oakland

Los Angeles

Long Beach

Total

Top 5 share

Freight in North America: Between a Gateway and a Hard Place: Major Maritime and Land Gateways, 2004

Port of Miami

Port of Tacoma

Port of Seattle

Port of Houston

Port of Oakland

Port of Beaumont

Port of Portland

Port of New York

Port of Savannah

Port of Baltimore

Port of CharlestonPort of Long Beach

Port of New Orleans

Port of Morgan City

Port of Los Angeles

Port of Philadelphia

Port of Jacksonville

Port of Norfolk Harbor

Port of Corpus ChristiPort of Port Everglades

Port of Huron

Port of Blaine

Port of Laredo

Port of Hidalgo

Port of El Paso

Port of Pembina

Port of Detroit

Port of Nogales

Port of Sweetgrass

Port of Calexico-East

Port of A lexandria Bay

Port of Otay Mesa Station

Port of Brownsville-Cameron

Port of Champlain-Rouses Pt.

Port of Buffalo-Niagara Falls

Land Gateways

$54 billion

Exports

Imports

Port Gateways

$69 billion

Exports

Imports

Integrated Transport Systems

■ Transshipments• Between (intermodal) modes and within (transmodal) modes.• Benefits accrued at the terminals.• ITS expanded the demands on intermodal and trans-modal

transportation alike.• Trans-modal component of growing importance.

■ The geography of transshipments• Connect different parts of the transport system (ITS).• Enabling different freight markets and forwarders to better

interact.• Conventionally at load break locations; gateways.• Now at “logistically suitable” locations (plus added value).

Time Dependant Transport Transshipment Flows

Integrated Freight Transport System

Intermodal operations Transmodal operations

Road DCs / CD

Rail Thruport

Maritime Ship-to-shipIn

term

od

al T

erm

inal

Transmodal Transportation

■ Why transmodal shipments take place?• Market fragmentation.• Supply chain fragmentation.• Ownership fragmentation.• Requirements for a high throughput trans-modal facility

■ Thruport concept• Coined by an intermodal equipment manufacturer (Mi-Jack).• “Seamless transfer of freight”.• Reduce handling and the number of container movements.• Analogy with air transport hubs:

• Consolidation and redistribution.• Passengers “reposition” themselves.

Transmodal Transportation and Market Fragmentation

■ Market fragmentation• Mainly retail / consumption

related.• National distribution and global

production.• Single origin; through a gateway

and several destinations (DC).• Thruport: reconcile the high

volume requirements of markets with the time sensitive requirements of distribution.

Thruport

Gateway

Markets

Transmodal Transportation and Supply Chain Fragmentation

■ Supply Chain fragmentation• Contemporary supply chains

involve a complex sequence of trips.

• Specialization and comparative advantages.

• Different stages (parts, manufacturing, distribution); each of which could use a Thruport.

• Potential Thruport impact on the locational behavior of production and distribution activities.

Thruport

Supply Chain

Parts & rawmaterials

Manufacturing

Distribution

11

2

2

33

1 2 3 4

4

44

4

Cu

sto

mers

Transmodal Transportation and Ownership Fragmentation

■ Ownership fragmentation• Rail companies have their

facilities and customers.• They have their own markets

along the segments they control.• Interchange is the major

problem.• The Thruport creates multiplying

effects.• The distribution potential of each

operator is expanded.• Network alliances like in the

airline industry (constrained by the spatial fixity of rail networks).

Thruport

Gateway

B A

C

D

ChicagoChicago

Minneapolis / St. PaulMinneapolis / St. Paul

Dallas / Fort WorthDallas / Fort Worth

MemphisMemphis

Kansas CityKansas City St. LouisSt. Louis

13.98 M TEU

Transmodal Transportation and Ownership Fragmentation

■ Local Rail Terminals Location• Fragmentation at transmodal

Interchange.• Requires cross-town hauling of

containers between terminals.• Takes place within a

metropolitan area.• Contributes to congestion.• Negative feedback undermines

the reliability of the transport chain.

• The construction of new terminal facilities in suburban areas exacerbate the problem.

CBD

Metropolitan Area

Sequence of Transmodal Rail Container Operations: Before and After Thruport

Container

Rail terminal Outbound Storage Yard

Cross-town

Rail Operator A (inbound)

Inbound Storage Yard

Rail Operator B (outbound)

Rail terminal

Thruport

23

4 65

1 7

2

3

1

4

6

5

7

Container unloaded from the train and loaded on chassis.

Chassis brought trackside of inbound operator A.

Chassis/container brought to the outbound storage yard of the inbound terminal operator A for delivery to outbound rail operator B.

Cross-town operations.

Outbound rail operator B picks up the container/chassis at the storage area and brings it trackside for outbound loading.

Crane unloads container from the chassis and loads into the double stacked car.

After the container is loaded on to the double stacked car, chassis removed from trackside and stored in an empty chassis area.

I l l i n o i sI l l i n o i s

I n d i a n aI n d i a n a

CP_all

Cicero

Calumet

Corwith

Global I

Global II

Joliet_LPC

63rd Street59th Street

Yard Center

Bedford Park

Canal Street

Moyers_Gateway

Willow SpringsLanders / Hanjin

47th/51st Street

Number of Lifts at Major Intermodal Rail Terminals, Chicago, 2005

Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra UniversitySource: US National Transportation Atlas

Other

CN (Canadian National)

CPRS (Canadian Pacific)

BNSF (Burlington Northern Santa Fe)

CSXT (CSX Transportation)

NS (Norfolk Southern)

UP (Union Pacific)

Lake Michigan

Number of Lifts

Less than 40,000

40,000 to 200,000

200,000 to 350,000

350,000 to 500,000

More than 500,000

0 10 205 Miles

The Thruport Concept

■ Characteristics• Neutral facility (preferably):

• Joint venture (rail companies, terminal operators).• A local consortium?

• Location and setting:• At the junction of long distance rail corridors.• Linear structure of about 2.25 miles (3.6 km) in length.• Minimal interface with trucking (could be a road / rail facility).• A Thruport does not necessarily require to be located nearby a

metropolitan area.• Performance:

• No container truck chassis and hostlers required.• About 250 containers per hour (4,500 per day).

Mi-Jack Stack-Packer (Thruport Terminal)

I l l i n o i sI l l i n o i s

I n d i a n aI n d i a n a

Gary

US Steel

Riverdale

Gibson EastGibson West

Wisconsin Steel

Potential Thruport Sites in the Chicago Metropolitan Area

Dr. Jean-Paul Rodrigue, Dept. of Economics & Geography, Hofstra UniversitySource: US National Transportation Atlas & L. Rohter (2006)

Other

CN (Canadian National)

CPRS (Canadian Pacific)

BNSF (Burlington Northern Santa Fe)

CSXT (CSX Transportation)

NS (Norfolk Southern)

UP (Union Pacific)

Lake Michigan

0 10 205 Miles

Indian

a Harbor Belt Rai lway

Thruport Site

Existing Intermodal Rail Terminal

The Thruport Concept

■ Thruport implementation stages• Impossible to fully reconcile rail distribution strategies:

• Different carriers having their own schedules and frequency of service.• Long distances involved.• Possibilities of disruptions.• Uncertainties inherent to freight distribution.

• A “buffer” of temporary container storage will always be required, even at a Thruport.

• First stage:• Temporary buffer due to the lack of synchronization of unit trains.• Some carriers experiment with synchronized services.

• Second stage:• The Thruport becomes part of the operational planning of rail carriers.• “Thruport shuttles”; unit trains assembled specifically at major gateways

for transmodal operations.

Potential Impacts of a Thruport System

Derived efficiencies Substitution effect

Nature Transmodal operations Modal shift to rail

Scale Micro (metropolitan area; city logistics)

Macro (national; commodity chains)

Thruport effect

Direct (transmodal benefits); less short distance trucking

Indirect (supply chain management); less long distance trucking

Potential modal shift

20-40% (depending on local rail terminal locations and configurations)

10-20% (depending on the level of market, supply chain and ownership fragmentation); 30 to 60 million reduction in tractor trailer originations.

Potential energy savings

25,000 to 50,000 barrels of diesel per year for a large terminal (e.g. Chicago)

60 to 120 million barrels of diesel per year (United States)

Potential time savings

About 1 day (30% to 50%) of transmodal operations (from 1 to 2 days currently); Less uncertainties

About 2 days for landbridge shipments (from 5 days currently, including time savings from derived efficiencies)

Costs/ Benefits

■ Costs• Construction costs are expected to range from $400 to $500

million.■ Benefits

• Shippers’ Savings • Labor Productivity• Energy Consumption• Emission Reductions/Health Care• Congestion• Rail Capacity

Quantifying Benefits Will Require Baseline Terminal Performance Metrics?

■ Transmodal performance metrics• The benefits of the Thruport would be more quantifiable.

■ Indicators• Percentage of TEU volume that is interchange.• Average throughput velocity:

• rubber tire interchange• steel wheel interchange

• Average time in-terminal for dredgeman:• peak• off-peak

Temperature-Sensitive Freight

Although there is a shortage of active temperature controlled containers, passive protection has proven to be a highly effective alternative in reliable freight transport corridors, and a major cost saver for companies making the modal shift to rail:

Food Paints

Beer Adhesives

Wine Chemicals

Confectionary Coatings

Environmental Impacts

Real estate 97 acres, far less than the 1200 acres needed for Global III in Rochelle, IL.

Concrete Only 7040 cu. ft., far less than the 45,000 cu. ft. used to build Global III.

Pavement Minimal since traffic mostly sits on the rails.

Roadway Access Minimal beyond employee access.

Drainage More crushed limestone; less pavement and concrete.

Noise Coupling and decoupling of cars will be minimal, and sound level drops off quickly for crane's warning "point source" alarms.

Storage No need for chassis storage and container storage yard.

Conclusion: Towards a “$100 per barrel” Logistics?

■ The Thruport concept and Inland Freight Distribution• Containerization insured a global freight distribution market.• Rail bound to play a greater role; a continental ITS strategy.• Reduce congestion for all modes by exploiting their comparative

advantages.• The Thruport would service a niche market (transcontinental

containerized freight distribution).• “$100 per barrel” logistics may be upon us.• Thruport could mitigate energy cost increases.• Unique opportunity to build more efficient intermodal

relationships between rail and truck transport systems.

“In the 20th Century, it was said, ‘distance was conquered.’ In the 21st Century, distance shall have her revenge, and the

world will become a much bigger place.”