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Railcar shipments making a comeback in Indiana

December 1, 2012

The few million dollars Indianapolis developer Duke Realty Corp. anted up to extend a railroad spur to its business park in Lebanon illustrates how critical the mode of transportation is becoming for some companies.

Rail cars, which long took a back seat to quicker and cheaper semi trailers, are making a comeback of sorts due mostly to the high cost of diesel fuel.

Examples abound in central Indiana, despite the area’s vast network of interstate highways that converge on Indianapolis to create the “crossroads of America.”

“Environmental concerns and cost of fuel, and even driver shortages in the trucking industry, are driving a lot of industries to look at rail again,” Jeffrey Wagoner, manager of industrial development at CSX Corp., says in a Duke promotional video touting the rail line at Lebanon Business Park.

The Indianapolis-based developer and the city of Lebanon split the $4 million bill to build the 1.4-mile spur two years ago.

The spur extends from CSX’s main line running through the Boone County city and serves a couple of companies in the business park.

One of the companies is D-A Lubricant Co., which provides lubricating products to the commercial industry. After searching for nearly 18 months, D-A chose to leave Indianapolis and build a 225,000-square-foot facility at the park largely due to the availability of rail service, CEO Mike Protogere said at the time of the move.

Another tenant, U.S. Cold Storage, cited rail access as the key to economically shipping frozen foods to its massive food storage warehouse.

With just 250 of 700 acres developed at the park, Duke expects the rail line will help attract additional tenants, said Charlie Podell, senior vice president of Indiana operations.

“It’s a piece a lot of the big shippers are going to want to have,” he said.

The trend clearly favors railroads if diesel prices remain high. They are hovering around $4 a gallon and topped out at $4.70 in July 2008. Trucking firms inevitably pass all or part of the extra cost to their customers.

The diesel-fueled locomotives, however, have one giant advantage over the ordinary Freightliner or Kenworth: They’re commercial transportation’s version of the Toyota Prius hybrid.

By coupling diesel engines to electric generators that power steel wheels, a run-of-the-mill diesel-electric locomotive is at least three times more fuel-efficient than a semi. One gallon of diesel can move a ton of freight an average of 436 miles, according to the Association of American Railroad, a claim supported by FactCheck.org.

Nationwide, railroad employment in 2011 increased 4 percent from the previous year, to more than 158,400, and total trailers and containers transported increased 5 percent, to 11.9 million, according to the Association of American Railroads.

“The single largest customer of rail in America is UPS, so even trucking companies recognize the advantages of rail in the supply chain,” association spokeswoman Holly Arthur said.

Central Indiana increasingly contributes to the growing use of rail.

In Kokomo, 12 miles of inactive track are about to be returned to service. Kokomo Grain; Toledo, Ohio-based US Rail Corp.; and Norfolk Southern Railroads are teaming up on a $5.5 million project to reroute much of the grain company’s freight south toward Tipton instead of east toward Marion.

Getting the track back in service, which hasn’t seen trains since 1997, should cut the time it takes Kokomo Grain to ship its cars full of grain to Tipton from three days to a mere four hours, US Rail said.

In Indianapolis, The Indiana Rail Road Co. this year reopened its trans-load yard on Senate Avenue south of Lucas Oil Stadium after closing it four years earlier due to the poor economy.

The Indianapolis-based company reactivated the yard through a partnership with Canada-based Arrow Transportation Systems, which serves about a dozen of the railroad’s customers at the yard.

Indiana Rail Road President Thomas Hoback said some of the activity is from southern Indiana businesses shipping hardwood lumber to Canada. The company expects to move 175,000 carloads this year at the yard, more than the 130,000 it moved in 2006 before closing.

Trans-load facilities transfer cargo between train and truck or vice versa. It’s a way to connect with a train without a customer’s needing a rail spur at its facility.

That’s different from an intermodal facility, such as CSX’s yard in Avon. There, containers carrying cargo are transferred between train and truck, instead of the cargo itself.

“Yes, we believe that the future really bodes well for rail,” Hoback said. “With more consistent schedules, railroad service is better than it’s ever been.”•

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