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New rail route connects Hendricks to West Coast: Line should bolster county's distribution industry

October 27, 2008

A new rail route launched last month between Los Angeles and CSX's Avon rail yard could give a further boost to Hendricks County's booming warehousing-and-distribution industry.

The county already hosts some 29 million square feet of warehouse space. However, it lacked a direct connection to the teeming Port of Long Beach in Los Angeles, a major gateway for U.S./ Asian trade. Anyone in the Hendricks County area wishing to send or receive goods from that port by rail had to first truck them to Chicago.

"Chicago has become a huge bottleneck," said David Holt, vice president of operations and development for Conexus Indiana, the state's advanced manufacturing and logistics initiative.

"It's a three-hour drive to get there, and maybe your drivers have to wait a day or two because the cargo can't be unloaded immediately. You can imagine the money lost by companies that have to pick up their products in Chicago."

The new route provides five-day-aweek service from Los Angeles to Avon. Union Pacific trains are loaded on the West Coast and travel to St. Louis, where the cargo is transferred onto CSX Corp. trains bound for the CSX rail yard. The Avon facility serves as an intermodal terminal-a facility for switching large containers between railroad cars and trucks.

"When you have a direct pipeline from the West Coast, where you have the majority of intermodal containers coming in, this is a connectivity we've never had before," said Jody Peacock, director of corporate affairs for the Port of Indiana. "It has tremendous potential to cut supply-chain costs for Indiana companies and to provide a huge economic development incentive for companies looking at locating here."

The business case for direct intermodal service to Avon seems cut-and-dried. Chicago-famously called a "Player with Railroads and the Nation's Freight Handler" by poet Carl Sandburg-is still the region's freight hub, albeit a congested and overstretched one. The opportunity to create a West Coast bypass through the Avon yard, which already has the ability to efficiently move large numbers of containers from trains to trucks, seemed like a good fit.

"The thing about the Avon facility is that they already have the capacity to do 100,000 lifts [transfers of containers from trains to trucks, and vice versa] per year without any investment," Holt said.

In theory, the facility could increase its capacity to 500,000 lifts, making it comparable to Columbus, Ohio's Rickenbacker Intermodal Terminal, an alternative to Chicago for shipments coming from the East Coast.

"They're kind of the East Coast bypass route," Holt said. "It would be great if we could have a West Coast bypass route around Chicago as well."

Applying pressure

Even so, decision-making in the railroad industry is typically glacial. Until recently, the deliberation on the Avon yard was no exception.

"I've been in this position for a year and I've heard this project has been discussed for a very long time by my predecessor and even before him," said Cinda Kelly, executive director of the Hendricks County Economic Development Partnership.

A recent push by some of the area's biggest players in logistics-including developer Duke Realty Corp. and retailer TJX Cos.-helped cajole Jacksonville, Fla.-based CSX and Omaha, Neb.-based Union Pacific to seal the deal.

TJX has an 800,000-square-foot HomeGoods warehouse in Brownsburg, as well as warehouses for other divisions in Evansville and South Bend. The Brownsburg facility expects to receive at least 70 rail containers a week via the new route.

The new pipeline will give economic development leaders another strength to tout as they attempt to lure additional logistics companies to the area. The county already boasts strong highway connections and proximity to Indianapolis International Airport.

But community leaders aren't satisfied yet. The Hendricks County Economic Development Partnership still wants a direct route from the West Coast, one that doesn't require transferring cargo in St. Louis.

Heading west

Another challenge is that most runs so far are from Los Angeles to Avon, but not back. The problem is that while the railroads know they can profitably pack their trains full of imported goods bound for the Midwest, they worry about whether they can pick up enough freight in Avon to make the return trip worthwhile.

Conexus is trying to make that case now, by, among other things, polling regional businesses about how much use they might make of an intermodal facility to move their products.

Those companies include firms in the farthest reaches of the southern portion of the state. Trucking their goods to Avon would be a haul. But in theory it would be infinitely preferable to driving all the way to Chicago. Firms that now ship mostly by truck also are being polled.

"Some maybe just go ahead and truck everything because they don't want to worry about those delays in Chicago," Holt said. "There's a lot of new business that we believe is out there and that would ship from [Avon]."

Brad Hurt, president of Urban Initiatives LLC, a Crawfordsville-based economic development consulting firm, thinks the intermodal service could accelerate a trend already developing among the region's big-box distributors-valueadded manufacturing.

"Almost all of these distribution centers are more than just four walls and 50-foot ceilings," Hurt said. "I think the logical evolution is taking various components that come in from other places and assembling or repackaging them in ways that add value."
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