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Charlotte has key facilities at stake as Norfolk Southern takeover contemplated

An American Airlines jet taxis over the Norfolk Southern intermodal yard at Charlotte Douglas International Airport Wednesday, February 12, 2015.
An American Airlines jet taxis over the Norfolk Southern intermodal yard at Charlotte Douglas International Airport Wednesday, February 12, 2015. tsumlin@charlotteobserver.com

As Canadian Pacific contemplates a takeover of U.S. rail carrier Norfolk Southern, two major facilities in Charlotte could be affected.

Norfolk Southern operates a rail freight cargo yard at Charlotte Douglas International Airport that city officials see as key to cementing Charlotte’s status as a major international logistics hub. And Norfolk Southern owns freight rail tracks that the city wants to use for the Red Line commuter rail to Lake Norman, an idea the company has so far rejected.

Reports first emerged Monday of the potential takeover, which could value Norfolk Southern at $24 billion. A deal would consolidate much of the North American rail industry, and could join Canadian Pacific’s Midwestern and Western U.S. rail network with Norfolk Southern’s network in the Southeast.

Norfolk Southern declined to comment Tuesday, with a spokeswoman saying the company doesn’t address “market rumors.” The company employs about 300 people in Charlotte and about 975 total in North Carolina.

At Charlotte Douglas, Norfolk Southern operates a rail yard that transfers cargo from trains to trucks and vice versa. Known as an intermodal yard, because it transfers cargo containers from one mode of transportation to another, the $92 million yard replaced Norfolk Southern’s smaller yard just north of uptown.

The railroad pays the airport $1 million in annual rent for the facility, located between two runways. The federal government paid about $15.7 million for the yard, which opened in 2014, and the state and city governments paid $9.7 million for nearby road improvements tied to the project such as a new interchange on Interstate 485.

Michael Gallis, a Charlotte-based urban planner who helped design the airport’s master plan, said having the intermodal yard operating at its current location is important because it creates a nexus of highway, rail and air connections that’s attractive to businesses.

“The important thing is not the intermodal yard, but the fact that it’s an airport and a crossroads of freeways, all at the same point,” said Gallis. “The goal is to transform Charlotte into a crossroads city.... The intermodal yard was the missing piece.”

Freight can be loaded from trucks and sent by rail to ports from the intermodal yard, or unloaded from trains and transferred to trucks for distribution. Hardly any cargo is sent from trains to planes or vice versa, as air cargo tends to be more valuable, lighter cargo that needs to travel long distances very quickly.

Canadian Pacific doesn’t have any rail facilities south of Philadelphia on the East Coast, so there would not be any overlap combining the two networks in the Southeast.

Norfolk Southern’s stock has jumped more than 12 percent since the potential takeover was first reported, closing Tuesday at $88.63.

Norfolk Southern is also tied to long-term plans for Charlotte’s new Gateway rail station. Last month, the federal government awarded Charlotte a $25 million grant to help with the $53 million first phase of the project, which would move the city’s Amtrak station to an uptown site, at West Trade Street.

A key part of the city’s plans for Gateway Station calls for it to be the last stop on the Red Line from Lake Norman. There are two hurdles for the project: The city doesn’t have $500 million to build the Red Line, and Norfolk Southern owns the freight-rail tracks the Red Line would share.

So far, Norfolk Southern has refused the city’s offer to share its tracks. U.S. Secretary of Transportation Anthony Foxx has offered to bring the city, state and railroad together to find a solution.

Ely Portillo: 704-358-5041, @ESPortillo

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