Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, December 4, 1994 TAG: 9412060013
SECTION: BUSINESS PAGE: C3 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Medium
And customer service is a key element in the most rapidly growing aspect of the railroad-freight business: intermodal, or freight that moves in containers or wheeled trailers by more than one form of transportation - trucks, trains or oceangoing ships. It's a business that regional economic developers would like to see Norfolk Southern bring to Southwest Virginia.
NS' intermodal business, which uses 6 percent of the company's $10.5 billion in assets, has increased steadily in profitability over the past four years. It contributed 9 percent of railway operating revenues last year and over a fifth of the railroad's revenue gain in this year's record third quarter.
Through Nov. 19, the Association of American Railroads reported the amount of intermodal freight moving on the railroads already had broken a yearly record set in 1993. Intermodal freight moving on U.S. railroads has set new records every year since 1982; 8.2 million units are expected to be moved by the end of this year.
Much of the new intermodal business is coming to the railroads from their longtime fierce competitors: the trucking companies. Faced with driver shortages, truckers are finding it cheaper to put their trailers on railroad flat cars for long hauls.
The lowest economical threshold for an intermodal haul using rail is 500 miles, said Thomas Finkbiner, NS' vice president for intermodal traffic. At hauls of 750 miles, the train is 10-15 cents a mile cheaper than a truck and at 2,000 miles it's 20 cents cheaper, he said.
The railroad is eyeing the heavy north-south truck traffic on Interstates 81 and 95 as a potential new source of revenue. First, however, it must arrange with Conrail for efficient movement of the freight in and out of the Northeast where NS doesn't have any rail lines.
NS is winning business from trucks because it is providing better service with new facilities and improved schedules, Finkbiner said. For instance, the average transit time for a container or trailer shipment is two days. Customers want lower transit times and, most important, lower rates, he said.
Between 1980 and 1990 the cost of shipping freight went down each year and NS sees opportunities over the next five years to wring even more costs out of the business, Finkbiner said. In 25 of the 27 cities where NS operates an intermodal terminal, another railroad operates one, too, and every sale is a hard sale, he said.
Norfolk Southern does not operate an intermodal facility or a truck ramp in Roanoke or anywhere else in Southwest Virginia. To offload freight onto a truck for delivery in Southwest Virginia now, the truck has to go to Greensboro, N.C., to pick it up.
NS officials are well aware that intermodal yards are sought by people interested in economic development, including those in Southwest Virginia. NS looks about every other year at the possibility of locating a facility in Roanoke, Finkbiner said.
Roanoke easily could support an intermodal terminal on the basis of the outbound freight that the region generates but there's not a lot of inbound freight within the 150-mile radius that a facility normally serves, Finkbiner said. The railroad needs sufficient freight moving in both directions to avoid hauling empty containers.
High volume is needed to justify building an intermodal terminal: about 160 loads - containers or trailers - a day, Finkbiner said. Terminals, which need lots of parking space for trailers and containers and expensive heavy cranes to lift them, can cost from $12 million to $15 million to build.
Finkbiner said NS has talked from time to time with Westvaco Corp. about trucking the company's products to Roanoke to an intermodal yard but the two have yet to agree on a contract. The railroad also has pursued intermodal business with other Roanoke Valley businesses, he said.
Eventually, Finkbiner said, he expects an intermodal yard to be built in Roanoke.
A public-private group, the World Trade Alliance of the Blue Ridge Region, which was created last year by the Virginia General Assembly, has asked the Virginia Port Authority to study the potential of an intermodal yard in Southwest Virginia and collect information about potential shippers.
Many of the containers used in intermodal shipments belong to shipping lines that use them in world trade. At NS' intermodal yard in Charlotte, N.C., for instance, the railroad's biggest customer is American Presidential Lines.
"The steamship lines are relying more and more on us," said C.D. "Dewey" Bryson, manager of intermodal yards in Charlotte; Greensboro, N.C.; and Knoxville, Tenn.
NS' intermodal business caters mostly to truckers, steamship companies and third-party freight expediters, Bryson said.
"Railroad companies nowadays are primarily wholesaling their services," he said.
by CNB