1. Mid-Continent Transportation Research Forum, Madison, WI, August 17-18 2006 Transmodal Rail Operations and the Thruport Concept Jean-Paul Rodrigue, Hofstra University, New York John Zumerchik, Mi-Jack Products Inc. “There’s no business like flow business” Email: ecojpr@hofstra.edu Paper available at: http://people.hofstra.edu/faculty/Jean-paul_Rodrigue

2. Integrated Transport Systems: From Fragmentation to Coordination FactorCauseConsequence TechnologyContainerization & ITModal and intermodal innovations; Tracking shipments and managing fleets Capital investmentsReturns on investmentsHighs costs and long amortization; Improve utilization to lessen capital costs Alliances and M & ADeregulationEasier contractual agreements; joint ownership Commodity chainsGlobalizationCoordination of transportation and production (integrated demand) NetworksConsolidation and interconnection Multiplying effect

3. Value Per Ton of U.S. Freight Shipments by Transportation Mode, 2002

4. Integrated Transport Systems ■Resurgence in rail transportation (competitive advantages) Substantial growth in international trade: Particularly imports from Asia (China). Interface between global supply chains and national distribution; national gateways. Growth in long distance shipments at the international and national levels. Rail productivity: Decrease in rail freight rates (35% decline between 1980 and 2000). Increase in trucking transport costs (wages, fuel, insurance, congestion). Capacity constraints at gateways: Containerization growing rapidly. Large volumes at gateways create capacity constraints. Intermodal rail offers a shipping alternative to the capacity constraints of trucking.

5. Cargo Handled by the Top 5 US Container Ports, 1984-2005 (in TEUs)

6. Freight in North America: Between a Gateway and a Hard Place: Major Maritime and Land Gateways, 2004

7. Integrated Transport Systems ■Transshipments Between (intermodal) modes and within (transmodal) modes. Benefits accrued at the terminals. ITS expanded the demands on intermodal and trans-modal transportation alike. Trans-modal component of growing importance. ■The geography of transshipments Connect different parts of the transport system (ITS). Enabling different freight markets and forwarders to better interact. Conventionally at load break locations; gateways. Now at “logistically suitable” locations (plus added value).

8. Time Dependant Transport Transshipment Flows Integrated Freight Transport System Intermodal operationsTransmodal operations Road DCs / CD Rail Thruport Maritime Ship-to-ship Intermodal Terminal

9. Transmodal Transportation ■Why transmodal shipments take place? Market fragmentation. Supply chain fragmentation. Ownership fragmentation. Requirements for a high throughput trans-modal facility ■Thruport concept Coined by an intermodal equipment manufacturer (Mi-Jack). “Seamless transfer of freight”. Reduce handling and the number of container movements. Analogy with air transport hubs: Consolidation and redistribution. Passengers “reposition” themselves.

10. Transmodal Transportation and Market Fragmentation ■Market fragmentation Mainly retail / consumption related. National distribution and global production. Single origin; through a gateway and several destinations (DC). Thruport: reconcile the high volume requirements of markets with the time sensitive requirements of distribution. Thruport Gateway Markets

11. Transmodal Transportation and Supply Chain Fragmentation ■Supply Chain fragmentation Contemporary supply chains involve a complex sequence of trips. Specialization and comparative advantages. Different stages (parts, manufacturing, distribution); each of which could use a Thruport. Potential Thruport impact on the locational behavior of production and distribution activities. Thruport Supply Chain Parts & raw materials Manufacturing Distribution 1 1 2 2 3 3 123 4 4 4 4 4 Customers

12. Transmodal Transportation and Ownership Fragmentation ■Ownership fragmentation Rail companies have their facilities and customers. They have their own markets along the segments they control. Interchange is the major problem. The Thruport creates multiplying effects. The distribution potential of each operator is expanded. Network alliances like in the airline industry (constrained by the spatial fixity of rail networks). Thruport Gateway B A C D

13. 13.98 M TEU

14. Transmodal Transportation and Ownership Fragmentation ■Local Rail Terminals Location Fragmentation at transmodal Interchange. Requires cross-town hauling of containers between terminals. Takes place within a metropolitan area. Contributes to congestion. Negative feedback undermines the reliability of the transport chain. The construction of new terminal facilities in suburban areas exacerbate the problem. CBD Metropolitan Area

15. Sequence of Transmodal Rail Container Operations: Before and After Thruport Container Rail terminal Outbound Storage Yard Cross-town Rail Operator A (inbound) Inbound Storage Yard Rail Operator B (outbound) Rail terminal Thruport 2 3 4 6 5 1 7 2 3 1 4 6 5 7 Container unloaded from the train and loaded on chassis. Chassis brought trackside of inbound operator A. Chassis/container brought to the outbound storage yard of the inbound terminal operator A for delivery to outbound rail operator B. Cross-town operations. Outbound rail operator B picks up the container/chassis at the storage area and brings it trackside for outbound loading. Crane unloads container from the chassis and loads into the double stacked car. After the container is loaded on to the double stacked car, chassis removed from trackside and stored in an empty chassis area.

17. The Thruport Concept ■Characteristics Neutral facility (preferably): Joint venture (rail companies, terminal operators). A local consortium? Location and setting: At the junction of long distance rail corridors. Linear structure of about 2.25 miles (3.6 km) in length. Minimal interface with trucking (could be a road / rail facility). A Thruport does not necessarily require to be located nearby a metropolitan area. Performance: No container truck chassis and hostlers required. About 250 containers per hour (4,500 per day).

18. Mi-Jack Stack-Packer (Thruport Terminal)

20. The Thruport Concept ■Thruport implementation stages Impossible to fully reconcile rail distribution strategies: Different carriers having their own schedules and frequency of service. Long distances involved. Possibilities of disruptions. Uncertainties inherent to freight distribution. A “buffer” of temporary container storage will always be required, even at a Thruport. First stage: Temporary buffer due to the lack of synchronization of unit trains. Some carriers experiment with synchronized services. Second stage: The Thruport becomes part of the operational planning of rail carriers. “Thruport shuttles”; unit trains assembled specifically at major gateways for transmodal operations.

21. Potential Impacts of a Thruport System Derived efficienciesSubstitution effect NatureTransmodal operationsModal shift to rail ScaleMicro (metropolitan area; city logistics) Macro (national; commodity chains) Thruport effect Direct (transmodal benefits); less short distance trucking Indirect (supply chain management); less long distance trucking Potential modal shift 20-40% (depending on local rail terminal locations and configurations) 10-20% (depending on the level of market, supply chain and ownership fragmentation); 30 to 60 million reduction in tractor trailer originations. Potential energy savings 25,000 to 50,000 barrels of diesel per year for a large terminal (e.g. Chicago) 60 to 120 million barrels of diesel per year (United States) Potential time savings About 1 day (30% to 50%) of transmodal operations (from 1 to 2 days currently); Less uncertainties About 2 days for landbridge shipments (from 5 days currently, including time savings from derived efficiencies)

22. Costs/ Benefits ■Costs Construction costs are expected to range from $400 to $500 million. ■Benefits Shippers’ Savings Labor Productivity Energy Consumption Emission Reductions/Health Care Congestion Rail Capacity

23. Quantifying Benefits Will Require Baseline Terminal Performance Metrics? ■Transmodal performance metrics The benefits of the Thruport would be more quantifiable. ■Indicators Percentage of TEU volume that is interchange. Average throughput velocity: rubber tire interchange steel wheel interchange Average time in-terminal for dredgeman: peak off-peak

24. Temperature-Sensitive Freight Although there is a shortage of active temperature controlled containers, passive protection has proven to be a highly effective alternative in reliable freight transport corridors, and a major cost saver for companies making the modal shift to rail: FoodPaints BeerAdhesives WineChemicals ConfectionaryCoatings

25. Environmental Impacts Real estate97 acres, far less than the 1200 acres needed for Global III in Rochelle, IL. ConcreteOnly 7040 cu. ft., far less than the 45,000 cu. ft. used to build Global III. PavementMinimal since traffic mostly sits on the rails. Roadway AccessMinimal beyond employee access. DrainageMore crushed limestone; less pavement and concrete. NoiseCoupling and decoupling of cars will be minimal, and sound level drops off quickly for crane's warning "point source" alarms. StorageNo need for chassis storage and container storage yard.

26. Conclusion: Towards a “$100 per barrel” Logistics? ■The Thruport concept and Inland Freight Distribution Containerization insured a global freight distribution market. Rail bound to play a greater role; a continental ITS strategy. Reduce congestion for all modes by exploiting their comparative advantages. The Thruport would service a niche market (transcontinental containerized freight distribution). “$100 per barrel” logistics may be upon us. Thruport could mitigate energy cost increases. Unique opportunity to build more efficient intermodal relationships between rail and truck transport systems. “In the 20th Century, it was said, ‘distance was conquered.’ In the 21st Century, distance shall have her revenge, and the world will become a much bigger place.”