Supply chain: Rail freight carriers, including short lines, vital to Pa. economy
Without trucks, America stops, or so says a motor-freight industry slogan.
Without trains, however, the proliferation of trucks would bring America’s roads to a standstill, advocates of rail freight say.
“Anyone who regularly drives I-83 between Harrisburg and Baltimore should be thanking York Railway,” said Jerry Vest, senior vice president of government and industry affairs for Genesee & Wyoming Inc. “We actually keep trucks off the highway.”
His company owns 122 freight railroads worldwide, including the York Railway Co., a 42-mile “short line” that links shippers and customers around York County with the services of CSX Corp. and Norfolk Southern Corp., two of North America’s largest rail freight carriers, which connect to major hubs in Harrisburg and Baltimore.
Since the first steam locomotives ran in Pennsylvania nearly 200 years ago, Pennsylvania has been a leader in rail transportation, with trains facilitating the state’s rise to industrial prominence. Both railroads and Pennsylvania’s economy have changed dramatically since then — not always for the better — but the relationship remains.
With 59 freight railroads and 5,165 miles of track according to AAR statistics, Pennsylvania leads all states in the number of lines, and is exceeded only by Texas (10,539 miles) and Illinois (7,119) for the amount of track.
Through those links, thousands of tons worth of goods move into and out of the midstate every year. And the heavy haulers help cut down on emissions by using fuel more efficiently than rubber-tired vehicles and reducing the number of big rigs on the highways.
One train can carry as much freight as several hundred trucks, according to the Washington, D.C.-based Association of American Railroads (AAR). Thus, it would have taken about 12.2 million additional trucks to handle the 219.9 million tons of freight that originated in, terminated in, or moved through Pennsylvania by rail in 2014, an AAR fact sheet for the state shows.
And that movement requires less fuel. In 2015, America’s railroads moved a ton of freight an average of 473 miles on one gallon of fuel, or roughly the distance from Pittsburgh to Raleigh, N.C., AAR points out.
So rail shipping can, in many instances, be less expensive than long-haul truck transport. But not for every shipper, or in all cases.
Industry observers say it’s important for railroads to understand their niches, which means some products travel partly by train and partly by truck, while some commodities tend to be best with one mode or the other.
Sizing up cargo
With commodities, the size, shape and form heavily influence how best to transport them.
Some bulky or non-uniform products, such as minerals or petroleum goods, are ideal candidates for shipping in large quantities over long distances in specialized railroad cars, industry advocates say. Such transport tends to be more direct and requires less handling, taking full advantage of rail’s fuel efficiencies.
“A national sweet spot (for railroads) is customers who use a lot of products to make something,” said John Rudman an assistant vice president for sales and marketing with Genesee & Wyoming.
The plastic manufacturing industry is one such customer, thanks to resin. That is the granular raw material used to create larger plastic pellets and sheets, which are then used by manufacturers to create a range of finished plastic products, as well as components for other manufacturers.
“Most resin comes from Texas and Louisiana, and plastic is very heavy,” said Jeff Stover, executive director of the Union County-based SEDA-COG Joint Rail Authority, which owns five short line railroads in northcentral Pennsylvania.
The Ames Companies Inc., plant in Hampden Township, Cumberland County, uses 15 tons of resin each year, Chief Operating Officer Bob Novak said. The material is used to manufacture home and garden products including snow shovels, wheelbarrow trays, rakes, hose reels and more.
That resin is delivered to Ames’ Railroad Avenue plant on trains along a spur off Norfolk Southern’s line.
“It’s vital to our plastics operation,” Novak said. “It’s as significant as it could be to our operation.”
In York County, manufacturer Glatfelter, which makes specialty paper products and other goods, relies on rail to bring in raw materials including starch, chlorate, and latex, supply chain director Joseph Sanders said.
“For these bulk materials, it tends to be more economical to ship via rail,” Sanders added.
Perhaps not surprisingly, bulk coal also remains an important cargo for Pennsylvania’s railroads.
More than 255,000 railroad carloads of the fuel started their journeys in Pennsylvania in 2015, AAR, noted, or 23 percent of all the state’s originating traffic for that year, while more than 111,000 carloads terminated in the state. The railroad “hopper” cars, which carry coal typically are capable of holding 100 tons or more. To put that into perspective, consider that the average U.S. auto weighs about 4,000 pounds, or two tons.
Of course, not all commodities are as bulky as resin or coal, and not all shippers and customers are located on rail spurs. What is rail’s advantage in those cases?
That’s where trains and trucks can complement each other, though intermodal shipping -- trailers or containers filled with goods transferred between railroad flatcars and trucks or cargo ships -- or transloading, in which goods are transferred between railcars and trucks to start or end their journeys.
Though not new concepts, intermodal shipping and transloading have been a boon for railroads, and for Pennsylvania.
Virginia-based Norfolk Southern, whose 2,400 miles of track represent nearly half of the state’s total, employs 5,300 people in Pennsylvania, where 71 percent of its outbound traffic and 62 percent of inbound traffic is made up of intermodal shipments, according to published statistics. Its midstate footprint includes the Enola Yard and locomotive shops in East Pennsboro Township, its Harrisburg intermodal terminal and its Rutherford intermodal terminal in Swatara Township.
Norfolk Southern officials did not respond to multiple requests for comment for this story, but the company’s previous activities underscore how important intermodal freight is to their business.
A 2014 Business Journal story reported that NS completed a $28.6 million expansion of its Harrisburg facility in 2014, and was working on a $60.5 million expansion of its Rutherford facility. The latter project was expected to add 48 jobs to the 88 already supported at Rutherford, the report said. The company also opened a Franklin County intermodal facility in 2013.
The view from York
These developments are good for businesses and good for other railroads, such as the connecting York Railway. Connections to Norfolk Southern and CSX give York Railway’s customers easy access to shipping and receiving via the entire North American railroad network, including ports that load and unload containers full of goods that travel the oceans.
York’s range of services also mean its customers have access to rail-shipped goods, whether they’re on a spur or not.
“We serve customers that have freight sidings, but also customers who are not directly on the railroad,” Vest said. That’s because the railroad has a transloading facility on West Market Street, where freight is transferred from trains to short-haul trucks, and vice-versa, for the beginning or end of their local journeys.
“A shortline like York Railway provides a critical service for the region and for the community it serves,” Vest said. “You can think of it like a first and last mile” service, intended to provide seamless service to customers.
“We have to make it as easy as possible to use,” Vest said.
Thanks to the spectrum of manufacturing in York County, between 70 and 80 percent of York Railway’s traffic consists of inbound raw materials and bulk goods, Rudman explained, and the products coming in vary widely: clay from Wyoming, for the manufacture of cat litter; oils from the corn belt for use in snack food production, as at Frito Lay; and raw materials for Glatfelter. Because agriculture is important in the region, fertilizer and feed also come in by train, he added.
“It’s a very diverse railroad,” Rudman said.
Such diversity is a hallmark of what keeps railroads viable said SEDA-COG Joint Rail Authority’s Stover.
While coal remains an important commodity, he pointed out that the fuel’s historic decline in Pennsylvania hit many railroads hard in decades past because of their heavy reliance on that commodity for traffic. It’s a pattern his organization has fought not to repeat.
“You don’t want to have a railroad that’s dependent on a single industry,” Stover said.
“If you look at our list of customers in the mid-80s, a lot of those names aren’t there anymore,” he added. “Regional economies are dynamic. You can’t look at things year-to-year. You have to think decade-to-decade.”
Understanding that need for diversity and working a niche is how the authority has grown since its inception nearly 35 years ago.
As former freight rail operator Conrail was looking to abandon unprofitable lines throughout the Northeast and Midwest in the 1980s, the authority was formed to study whether some routes in its part of Pennsylvania could be saved, helping support economic development in the region. Its public-private partnership formula was to place the lines under ownership of the public authority, but have them operated by outside contractors. That allowed the authority to finance infrastructure projects and overall policy, while the contractors focus on what they do best — running railroads.
The plan worked. Today, the authority’s routes cover nearly 200 miles of track in Centre, Clinton, Columbia, Lycoming, Mifflin, Montour, Northumberland and Union counties, serving about 70 customers. Like York Railway, it connects local shippers with the wider national network, through links to former Conrail lines now owned by Norfolk Southern.
Those customers represent a range of services and commodities, including pulp and paper products, resin, chemicals, food oils, pipes, steel, scrap metal, aggregates, coal and more.
Also Like York Railway, the authority finds that inbound shipments of raw materials are an important part of their business, thanks to the efficiencies and economies of scale rail offers, and understanding that niche is key.
For example, Wise Foods has a snack manufacturing plant in Berwick, which brings in bulk commodities such as vegetable oil and corn by train. But the company dispatches boxes of perishable finished food products by truck, and Stover sees that as the natural order of things.
“Shipping out potato chips in a rail car just wouldn’t make sense,” he said.