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VOICES FROM THE INDUSTRY: Intermodal is key to Indiana's future crossroads identity

April 28, 2008

Earlier this year, the Wall Street Journal ran a front-page story about rail's resurgence as a means for moving goods across the country. The story described the federal dollars being spent to fuel this railroad recovery, as well as the private sector investments being made and the economic benefits waiting for cities that get involved.

The story included a map with thick, colored lines representing the key rail systems connecting the Midwest to the coasts. It took only a quick glance to see cause for concern: Not a single thick, colored line ran through Indianapolis. The Crossroads of America is, literally, not on the map.

That needs to change.

The stakes are high. As the global marketplace grows, more and more products arrive in the United States via ships. After they're unloaded on the coasts, the goods shift to trains, trucks and other conveyances-sometimes multiple times along the way-to complete their journey into America.

Intermodal rail facilities, where goods make the inland shift from trains to trucks or from one train to another, provide important links in this logistics chain.

However, many existing intermodal facilities are overwhelmed, and that creates big opportunities. The Ports of Indiana has estimated the direct economic impact of just one new Indiana intermodal rail facility would be $800 million in development investments, 16,000 permanent jobs, 20,000 construction jobs and $27 million in property tax revenue.

Before we see such opportunity, though, the goods have to get to Indiana. Congestion in the Los Angeles/Long Beach port is forcing shippers to divert traffic to other Western ports or to Eastern or Gulf ports. At the same time, the federal government has committed $150 million to raise the roofs on tunnels in Virginia and West Virginia, allowing double-stacked trains to make the trip west and opening opportunities for increased volume in intermodal facilities west of those tunnels. The pipeline appears to be opening up.

Falling behind

Unfortunately, other areas are ahead of Indiana in taking advantage of this opportunity. For example, a new intermodal facility will open soon in Columbus, Ohio, and another is planned for Dayton, Ohio, while Chicago is well-established as an intermodal hub.

Although Indiana has courted railroads to discuss intermodal opportunities, no railroad has committed to building or expanding in Indiana.

This is surprising. Central Indiana's assets would appear to be perfect for such an undertaking. Indiana is first in the nation in interstate highway access, fifth in volume of commercial freight, eighth in air freight movement, ninth in rail miles; 14th in cargo moved by water, and home to the nation's second-largest FedEx hub.

In addition, Indiana has 4,200 miles of Class I rail tracks, and the CSX Avon Yard could serve as the foundation for a major intermodal facility. We have 60-percent higher employment in warehousing operations relative to the national average.

And we're adding more assets, with a $1.1 billion airport renovation and billions more committed to new highway construction. Furthermore, state and local governments offer aggressive economic incentives, and the state recently eliminated its inventory tax. And, last year, a coalition of public and private entities created Conexus Indiana, with nearly $7 million in funding, to assess Indiana's logistics assets, marshal its resources and plan a cooperative strategy for boosting the state's economic position.

Put it in reverse

So how did we fall off the map? That's not clear, but we do know that we need to reverse the situation. We need to engage supply chain experts to better understand this distribution shift. And, because decisions about intermodal facilities will be bottom-line-driven, we must make our case on a better total-cost scenario, not based on category cost-savings.

In short, central Indiana must identify and promote the role it can play in the evolving distribution and logistics industry. Otherwise, we'll not only risk the logistics infrastructure and labor base already here, but we'll also fail to claim a share of logistics-industry growth-growth that could put us on the map once again.



Zurawski is a principal with Indianapolis-based Summit Realty Group and serves on the executive committee of Cushman & Wakefield's Global Supply Chain Solutions Group. Views expressed here are the writer's.
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