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Trains, planes and … trucks


Charlotte looks to airport rail yard as engine for growth

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  • Jerry Orr talks about Charlotte's intermodal facility
  • Norfolk Southern pins hope on intermodal yards
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    1. Tracks: Trains will enter the intermodal yard on future tracks connected to Norfolk Southern’s main line.

    2. Cargo: Concrete pads will serve as a parking area for unloaded containers.

    3. West Boulevard: Trucks will use West Boulevard to access the yard and nearby interstates.

    4. Expansion: A future runway is planned near the rail yard.

    5. Taxiway: Planes currently travel here between existing runways.

In the debate over who controls Charlotte’s airport, there’s more at stake than just a place where planes take off and land.

Norfolk Southern railroad plans to open a new intermodal yard this year, sandwiched between two runways. It will allow trains and trucks to seamlessly transfer hundreds of thousands of containers of goods per year.

Supporters say the project is poised to boost Charlotte into a global transportation hub at a time when the city is still recovering from the financial crisis and is hungry for new jobs. The facility could also take advantage of a Panama Canal widening that some say will spur more shipping into East Coast ports – and boost inland transportation centers such as Charlotte.

Picture huge container ships unloading their bulky metal boxes onto trains in ports such as Charleston, S.C., and Wilmington. Those trains will bring containers to Charlotte Douglas International Airport, where they’ll transfer from trains to trucks in the intermodal yard.

Few, if any, of the goods will transfer to planes. Putting the rail yard at the airport is more a marriage of convenience: The airport had unused space between runways and near two highways. And a noisy transportation complex fits on land that would likely otherwise stay undeveloped.

The project is already drawing attention from developers and affiliated businesses. But the eventual economic impact for Charlotte is hard to determine. Estimates of how much money will flow into the Charlotte-area economy vary by billions of dollars. And some experts say it’s still unclear whether East Coast ports will see a big jump in business from a widened Panama Canal when that project is completed in 2015.

Central Piedmont Community College President Tony Zeiss has been promoting Charlotte’s intermodal facility as a source of not only logistics and transportation jobs but also potential manufacturing work, as companies would look to ship locally-produced goods by train and truck.

“It’s going to affect how we ensure a prosperous future,” Zeiss says of the intermodal facility. “It’s a huge part of the equation.”

Norfolk Southern is leasing the airport’s land to build the intermodal yard, which is nearing completion amid a controversy over whether the airport should remain under the control of City Council or be shifted to an independent, regional authority. The N.C. Senate has approved a bill to create an authority and a bill could pass the N.C. House this month, but House Speaker Thom Tillis has said the legislation likely needs more study.

The authority fight has focused mostly on the importance of keeping the low-cost airport attractive to US Airways and merger partner American Airlines as a major hub for passengers. Charlotte Douglas is set to be the combined company’s second-busiest hub, behind Dallas/Fort Worth. But the intermodal facility, which has been nurtured by longtime Aviation Director Jerry Orr, has also been on the minds of some of the other players in the authority push.

About a year ago, Michael Gallis, a Charlotte transportation planner who helped Orr create the intermodal concept in the 1990s, alerted former City Council member Stan Campbell about concerns that Orr could be forced into retirement. Campbell then galvanized the push to create an authority.

“It’s important to have continuity of leadership at the time (Norfolk Southern) completes construction and begins operations,” said Gallis, who has been paid by the airport for his intermodal work. “It’s a very complex facility. It’s important that it gets off and running on the right foot.”

But City Councilman David Howard, who chairs the transportation committee, said any suggestion that an authority would manage the relationship with the intermodal yard better than the city is nonsense. He said the city made the intermodal yard possible by supporting the airport’s land acquisitions, and said that Orr would be running the airport under either city or authority control.

Norfolk Southern says it doesn’t have a position on the issue. “We expect to maintain a beneficial relationship with the airport regardless of the outcome,” company spokesman Robin Chapman said.

Yard takes shape

Off West Boulevard, south of the airport terminal, the yard is taking shape in a man-made, 40-foot-deep valley between two parallel runways. Workers have laid concrete where cargo containers will be stacked and graded land where train tracks will lead into the yard from Norfolk Southern’s main line.

Workers still need to install 96,000 feet of track, construct buildings and erect the huge cranes that will load and unload the trains. The facility is expected to open by the year’s end, but it won’t be fully finished until next year, Chapman said.

Norfolk Southern is paying $76.3 million of the estimated $92 million in construction costs; a federal grant is picking up the rest. North Carolina and the city of Charlotte have funded $9.7 million worth of road improvements tied to the project, including a new interchange at Interstate 485 and West Boulevard to allow trucks easy access to the facility.

The railroad will also pay the airport $1 million in rent every year. The city of Charlotte can’t take that money due to federal rules about diverting revenue from the airport, but it still benefits by gaining the ability to redevelop Norfolk Southern’s current 40-acre intermodal yard north of uptown.

The project could provide billions in economic benefits for the region, but estimates vary widely.

A presentation Norfolk Southern made to the Charlotte Chamber in 2010, based on 2005 data, put the possible impact at $10.2 billion over 20 years. That included an estimated $2.6 billion in development that would not occur if the facility wasn’t built, plus $7.6 billion in benefits for industries that were already in the area or that might relocate to it. In addition, the facility itself would have an impact of about $300 million.

But a later 2010 study, taking into account the impact of the 2008-09 recession, lowered the total 20-year economic impact estimate to $6.3 billion.

In the past couple of years, Charlotte community leaders have started to latch onto the promise of the intermodal facility as a new frontier for a city looking for the next job engine now that the banking industry is contracting.

In 2011, Chase Saunders, a retired superior court judge and Charlotte attorney, said he began talking to Zeiss, the CPCC president, about how the city could reinvent itself. They met with officials at the Charlotte Chamber, the Charlotte Regional Partnership and Gallis, who told them about the intermodal facility.

Saunders, who said he and Zeiss aren’t involved in the authority push, crafted a white paper that laid out a vision for Charlotte with the slogan: “Create it, Make it and Move It.” In short, the city needed to become a global commerce center where entrepreneurs would dream up products, manufacture them and move them through a transportation hub. CPCC hosted summits the past two years that promoted a global vision for Charlotte.

“If it’s done right, the intermodal facility is going to produce an opportunity for a diverse economy for the first time in the region’s history,” Saunders said.

Gearing up for new digs

Some companies are already gearing up for the new yard.

Tim Frye Sr. is head of FSI Inc., a Charlotte-based trucking, intermodal and warehousing company. He operates yards that store equipment and containers for Norfolk Southern and CSX, and he’s excited about the potential for more business.

“They’ve been talking about doing this since I left the police department in Charlotte and started this in ’89 or ’90,” Frye said. “That’s one reason I bought all this property out by the airport.”

The company’s two container yards total more than 36 acres. Frye expects trucking and container-storage business to increase once Norfolk Southern opens the new yard.

Liberty Property Trust, a real estate investment trust, is also betting on growth around the facility. In the past few years, it has acquired about 1.3 million square feet of industrial space in the area around the airport, and the intermodal facility was part of the attraction, said Massie Flippin, Liberty’s Carolinas city manager.

If companies can locate warehouses near the facility, they can save money on transporting goods between the rail yard and their own distribution hubs, he said. “We do think it’s an area that will emerge,” Flippin said.

Whether the project will play out under the oversight of the city or an airport authority remains to be seen. But experts caution that its ultimate impact remains uncertain and will take time to develop.

Intermodal yards are increasing nationwide, paralleling the development at the nation’s East Coast ports, which are pouring billions into dredging their channels, said Don Sweeney, associate director of the Center for Transportation Studies at the University of Missouri-St. Louis. But he questions whether there’s enough extra shipping to all the East Coast ports to justify such investment, and he said some ports will likely end up being underused. The same could happen with all the new intermodal yards coming online in the next few years, Sweeney said.

Whether things will work out in Charlotte’s favor “is anybody’s guess,” he said. It all depends on how many ships the new Panama Canal attracts to the East Coast, and estimates vary widely. “The future’s uncertain,” he said.

Intermodal facilities in locations such as Chicago and near Fort Worth, Texas, have attracted development around them, said Rich Thompson, managing director of supply chain and logistics for commercial real estate services firm Jones Lang LaSalle. But he cautioned that it takes time for these projects to come to fruition.

Charlotte is currently the 17th largest industrial real estate market, with about 250 million square feet of stock, according to Jones Lang LaSalle. But even if the intermodal facility brings 5 million square feet – a high-end estimate – the city would move up one spot at most. The largest industrial market, Chicago, has 1.1 billion square feet of stock.

“You don’t build it,” he said, “and everything pops up right away.”

Still, Saunders, the retired judge, sees the intermodal facility as critical to fueling the next era of prosperity for Charlotte, following past booms spurred by a gold rush, military encampments, textiles and banking. It also takes advantage of Charlotte’s long-held status as a place where trade routes cross, going back to the area’s first settlement by Native Americans.

“We are all looking at how do we jump-start our economy,” he said. “This piece goes a long way to pulling that off.”

Portillo: 704-358-5041; Twitter: @ESPortillo
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