2. Richard D. Stewart, Ph.D., CTL Rail Served Intermodal Terminals in Rural Regions: Challenges and Opportunities CLTT Symposium Gulfport, MS, USA February 26-27, 2014

3. Freight Transportation Demand is Derived 1.Demand for freight transportation is derived from the requirement of shippers and receivers. 2.Those who need freight transportation define the benefits they want: reliable, cheaper, better, and faster. 3.Freight transportation services are purchased by increasingly sophisticated buyers based on total landed cost. 4.Carriers usually cannot create a demand for transportation. They can however, improve the mode’s attributes to expand market share thru new cargoes or modal shifts of existing cargo.

4. Historical Modal Shifts Canal to Rail 1840s-1870 Rail to Plane - Mail 1930s-1960 Truck to Plane - Fed Ex 1970s-2000 Truck to Ship - Container 1954-Present Rail to Truck- Railway Express 1920s-1980s Truck to Rail- Double stack 1990s-Present Modal Shifts tend to be gradual. There is resistance to change and infrastructure investment

6. Modal Shift Drivers

7. Courtesy NFS and Hub Group

9. $ Cost Per Ton Distance in Miles INTERMODAL TRANSPORTATION Truckload Rail Intermodal Rail Carload Rail Unit Train Breakeven Zone in Europe Barge Intermodal Breakeven Zone in US The European “breakeven” mileage for intermodal versus truck is 250- 600 miles; in US it is 500-1000 miles and going down in range.

10. Intermodal Growth Volume quintupled since 1980 2013 Largest Year Ever

11. Intermodal Gains Q3-2013 Q3 2013 marks the first time seasonally adjusted domestic intermodal shipments exceeded international shipments. This milestone was achieved after a decade of domestic intermodal service improvement and five years of accelerated volume gains. Q3 2013 Intermodal Market Trends & Statistics from Tara Mullen at tara@intermodal.orgtara@intermodal.org DOM-TOFC DOM-CON All DOM INTL All Intermodal

12. US and Canada Rail Intermodal Network

13. Short (under 400 miles) Intermodal Routes NFS ATL-Greensborough NC 331 miles Astell GA – Charleston SC 315 miles Charleston SC – Charlotte, NC 208 Miles CSX ATL-JAX –347 miles JAX-Tampa –200 miles

14. Future Modal Shift

15. IMC (26%) Intermodal Marketing Companies leverage Norfolk Southern’s shared container fleet. From our intermodal terminal, IMCs deliver “the final mile” using their own truck fleet, or may contract each leg to a local drayage company. Truckload (25%) Trucking lines move their own container fleets on Norfolk Southern’s rail network to remove over-the-road miles. Instead of one long-haul truck move, these companies move freight locally to and from each market’s intermodal terminal. Premium (9%) - Due to special service and equipment needs, handlers of premium freight like refrigerated or parcel goods use their own trailers and containers on Norfolk Southern’s intermodal network, and also arrange pickup at the terminals. International (40%) Steamship lines each have their own inventory of 20’ and 40’ containers. Over the road, ocean carriers contract directly with local trucking companies. NSF Intermodal’s Channel Partners (2012)

16. Research Questions Will the expansion of domestic intermodal service lead to the development of more terminals? Will these terminals serve domestic and/ or international markets? Will these terminals be built in rural areas? Are there examples of rural terminals? What will rural terminals need to be successful?

17. Intermodal Rural Terminals Case Studies Decatur, IL – Shipper Model Chippewa Falls, WI – Shipper Inspired Manley, IA – Short Line Railroad (in development)

18. Decatur, IL CSX, CN, NS ADM Facility Expansion Open to Public Privately funded Decatur, IL

20. Chippewa Falls, WI CN Rail Initiated by Menards Backhaul Agriculture Limited Service Chippewa Falls, WI

22. Manley, IA (Proposed) Manley, IA

23. A Domestic Terminal will need A value added rail transportation network between intermodal terminals with minimal drayage Catchment areas for the intermodal terminals that provide inbound and outbound cargo – market proximity A sufficient volume for frequent service on a regular basis, ideally lane/load balance Dedicated shippers using the facility

24. A Domestic Terminal will need An educated and reliable workforce Community support – Leadership! Collaboration coupled with accurate timely transportation information allowing lane balancing opportunities. The system must be financially viable for all parties as an ongoing operation. Class 1 Rail participation early on

25. Overweight Intermodal lanes Each Stora Enso Container Units (SECU) is 13.8 meters long by 3.6 meters wide ( 44.9 feet long x 11.7 feet wide) and can hold up to 80 tonnes (176,368 lbs) of cargo.

26. SECU System: Vessels, Terminals, Rail

27. Final Thoughts  Truck may lack adequate capacity  Energy and labor costs will continue to rise  Highway congestion will continue to grow  Environmental concerns will increasingly shape transportation decisions  Shippers want products delivered in compliance with the 8 Rs of Logistics. They are very open to multi-modal solutions.

28. Final Thoughts –Collaborative partnerships between shippers and modes will be essential –Take a systems approach when growing transportation markets! –Reliability more critical than price –Freight Flows Like Water = Following the Path of Least Resistance

29. Thank you Questions?