Virginia is for freight
Connaughton builds on state's strong infrastructure focus, stresses importance of goods movement.
By Eric Kulisch
Virginia has been one of the foremost states when it comes to supporting freight transportation, and Sean Connaughton, the new secretary of transportation, is pushing more innovative ideas to help move imports, exports and domestic cargo more efficiently through the state.
With a background in maritime and intermodal issues during his tenure at the federal Department of Transportation and in the private sector, Connaughton understands the importance of the freight transport system to economic prosperity.
'We view investments in infrastructure as critical to our economic success as well as to address congestion and environmental issues,' he said in an interview after a speech to the National Industrial Transportation League's spring conference in Arlington, Va.
'We're going to look more and more to transport problems with a multimodal view. In some cases it may make sense to invest in a new road or an additional lane. In other cases it may be cheaper for us to invest in rail or marine transport.'
Connaughton noted new grants to grow a container barge service and maintain a rail barge as examples of programs that can help shift cargo from trucks to other modes that are cost-effective and efficient.
Kevin Page, chief of rail transportation at the Virginia Department of Rail and Public Transportation (DRPT), echoed his bosses' multimodal perspective. 'The philosophy we have is to always expand transport choices. We want to maximize opportunities on the water and rail side' so that shippers can utilize the option that best suits their needs, he said.
Connaughton has advanced several projects already in the pipeline when Gov. Bob McDonnell's administration took office in January and proposed others of his own. One of his more intriguing ideas involves the Port of Richmond.
Virginia officials want to integrate the city-owned Port of Richmond with the state-operated port in Hampton Roads and expand an existing tug-barge container service on the James River to increase intermodal efficiency, Connaughton said in late May.
'We're proposing a partnership that we can take that port over and actually turn it into a distribution facility,' he said during an informal roundtable meeting on Capitol Hill organized by Rep. John Mica, R-Fla., to discuss challenges facing the maritime industry.
McDonnell's administration envisions an inland port in Richmond fed by barge modeled on the Virginia Port Authority's intermodal facility in Front Royal, Va., which enables import and export containers to be exchanged to rail without trucks having to travel all the way to the waterfront in Norfolk and Portsmouth, Connaughton said.
The idea, instigated by Connaughton, is for the VPA to lease Richmond's port property and then control operation of the facility, VPA spokesman Joe Harris said. The port authority is 'just kicking the tires,' to see if the lease option would be a good addition to the state's intermodal portfolio and desired by the city.
State officials want to add infrastructure in Richmond to support increased truck-barge and rail-barge transfers because the port is centrally located more than 100 miles inland, is adjacent to Interstate 95, and has direct rail service provided by CSX Transportation and indirect connection to the Norfolk Southern through a reciprocal switching arrangement. They express hope that some distribution centers, now heavily concentrated on the I-81 corridor to the west, could also eventually spring up and help Richmond's economic development.
The Front Royal region has attracted about 7,000 jobs and $500 million of direct investment for distribution facilities around the Virginia Inland Port. But critics note the growth has taken 20 years to achieve.
'If it comes to fruition, we realize it will take time to cultivate and bear fruit' in terms of logistics operations locating around Richmond to take advantage of intermodal transport options, Harris said.
Unifying Richmond under the VPA essentially would be equivalent to moving containers between terminals in the same port and fits the state's strategy to operate more efficiently by controlling all port facilities within its jurisdiction. On July 2 the VPA signed a 20-year agreement to lease the privately held APM Terminal in Portsmouth, a facility for loading and unloading ocean container vessels.
Richmond's weekly short sea barge service is operated by James River Barge Line, a subsidiary of Norfolk Tug Co. The service transports about 100 to 160 containers per week, or 6,000 to 7,000 containers per year since its launch in December 2008. Most of the volume is headed east for export, with a significant amount of return volume traveling as empty containers.
The barge service, which started slowly in the midst of the recession, is almost at capacity now, said David McNeel, the Port of Richmond's executive director, in a telephone interview. The port is talking with two chemical companies about using the '64 Express' barge service for export loads, which would increase volumes by 30 percent by the end of the summer, he said.
Another idea being explored is to use Richmond as a transload facility in which bulk commodities such as cast iron pipe could be brought in by rail and transferred to containers for transport by barge or truck to Norfolk for export, Page said.
The Port of Richmond is under pressure to develop other opportunities at the port after International Container Line moved its direct transatlantic container service to Wilmington, N.C., early last year. The only vessel operator that regularly called Richmond, ICL still has a monthly container service to Canada and Iceland.
Big vessels are constrained from calling the port because of the James River's 25-foot draft.
Connaughton, who was a strong advocate of the marine highway concept during his previous tenure as head of the U.S. Maritime Administration, said the state is about to commit money to triple the barge's service frequency. The public benefits of intercepting trucks far from the seaport include reduced air pollution, fuel consumption, road wear and truck traffic on I-64, as well as increased economic development opportunities around Richmond, he said. Congestion relief has taken on added importance because Virginia is still several years away from widening I-64.
'With the barge service, we're dropping it (the cargo) right there on I-95, where it can be put on truck or rail. So we've moving it around the bottlenecks' in and out of Hampton Roads, he said.
Virginia subsidizes the barge service by providing more than $200,000 per year to cover the cost differential with trucks. Barge service is more expensive because it involves extra handling to transfer containers from one mode to the other.
McNeel said officials are trying to boost container-on-barge volumes to the point where they can cover expenses on both ends without public support.
State DOT officials have recently met with the VPA and the barge operator to discuss possible expansion.
Connaughton, a graduate of the U.S. Merchant Marine Academy, said his department also wants to use the same barge service to run containers between Norfolk and Portsmouth and divert trucks out of the mid-town tunnel that connects the cities on opposite banks of the Elizabeth River.
The Commonwealth Transportation Board recently authorized the DOT to finalize a $1.9 billion deal with a private group that would finance, build and operate a parallel tunnel, as well as rehabilitate the existing downtown tunnel and build a direct connection to I-264 on the Portsmouth side of the tunnel. The private partner, Elizabeth River Crossings LLC, is a joint venture of Australian investment bank Macquarie and Danish construction firm Skansa.
The plan, Connaughton told American Shipper after his NIT League speech, is for the tug to discharge export containers from Richmond at a terminal in Hampton Roads, then shuttle containers across the river, before picking up import containers for the return trip to Richmond.
McNeel said the VPA ' with its extensive staff, commercial contacts and expertise operating a major international port ' could help Richmond with infrastructure improvements, marketing and information technology. But he cautioned there haven't been direct talks so far on an inland port partnership. His comments leaned more towards developing a partnership than a potential port consolidation.
'The port commission expects to know the extent of VPA-state interest and desired level of affiliation with the Port of Richmond' in late July or August, Commission Chairman John Hekman said.
U.S. Department of Transportation efforts to promote the concept of short sea shipping have been slow to take off for a variety of reasons. These include reservations by shippers associated with extra handling costs and slower transits, Harbor Maintenance Tax assessments on coastal moves, high maritime labor costs, and the lack of dedicated port infrastructure for truck-rail-barge exchanges of containers.
'You've got to aggregate enough freight to move a ship or a train,' John Lanigan, chief marketing officer for BNSF Railway, responded to a question at a panel discussion organized by the Council of Supply Chain Management Professionals in Washington. 'If you're only going to make one trip per week between two ports, it's not going to go by sea because of the inventory issues for the customers are exacerbated. It's not that it's not viable technically, but there's got to be the demand and then the density to make it happen.'
Retailers find it difficult to justify using the marine highway because it is too slow for their just-in-time delivery system, said Kelly Kolb, vice president of global supply chain policy for the Retail Industry Leaders Association, at a transportation policy event on Capitol Hill.
Lack of shipper interest is what sank a container-on-barge service between the Port of Elizabeth, N.J., and Albany, in upstate New York. The state and Port of Albany pumped in $5.6 million ' 80 percent of which was state money received through a federal congestion mitigation grant program ' to subsidize the twice-weekly barge service from 2004 through 2006.
The service was terminated because there was not enough demand to run it consistently. On some days there were as few as a dozen containers riding the barge, according to General Manager Richard Hendrick.
Port of Albany officials say they hope to resurrect the service if they can drum up enough new customers, perhaps interested in moving cargo in more environmentally benign ways, but so far don't have any concrete leads.
Rail Barge. Virginia transportation officials also plan to pump life into another barge service to support bulk cargo shippers on the Eastern Shore.
Shortly after taking office, Connaughton approved a DRPT plan to provide a $700,000 grant to a short-line operator to repair a rail-barge connecting the rural Delmarva Peninsula on one side of the Chesapeake Bay with the Port of Virginia. The car float, as it's called, is a specially manufactured barge built shortly after World War II with a flat deck that can haul 20 to 25 railcars, depending on their length and weight.
One year ago, the Bay Coast Railroad suspended the rail-barge operation because the vessel had severely corroded. The service carried bulk railcars full of chemicals, grain, cement, concrete structures, stone, brick, fertilizer and liquefied propane gas. The barge has four tracks for railcars.
Shippers now have to truck commodities through the Chesapeake Bay Bridge-Tunnel or route rail shipments back on the Norfolk Southern through the congested Northeast corridor via Salisbury and Hagerstown, Md., and down through Virginia to the coast. The latter can add 200 miles or more to the transit depending on the origin.
The Bay Coast Railroad comprises 60 miles of mainline track between Pocomoke, Md., and Cape Charles, Va., the 26-mile car float operation and about nine miles of track from Little Creek, Va., near Virginia Beach, to Norfolk. There it connects to the Norfolk Southern and the Portsmouth Beltline Railroad, another short line that provides terminal and mainline switching to the NS and CSX railroads in Norfolk and Portsmouth.
The Bay Coast Railroad and Accomack and Northampton counties, which own the track on which it operates, will each put up $100,000 towards the $1 million repair bill for the barge, Page said. The barge will be taken to a dry dock where its superstructure will be reinforced. Bids were due to Bay Coast on July 6, said Larry LeMond, vice president of operations.
'It's a very important route for the state because once you lose it, it's gone. It's still the shortest route to the Northeast from Hampton Roads,' he said of the rail barge, which carries traffic both ways.
Its importance could increase, LeMond added, as NASA's space flight facility at Wallops Island on Virginia's Eastern Shore becomes more active. In December 2008, NASA awarded Orbital Sciences Corp. a $1.9 billion contract to supply the space station from 2011 to 2015. The car float would give satellite launchers another option for moving large project cargo.
Connaughton said both barge services demonstrate programs that can get thousands of trucks off congested highways and downtown streets for a small amount of money.
Freight Rail. The Rail Department is in the process of issuing a contract backed by more than $9 million in federal stimulus grants to add a second intermodal track to connect the APM Terminal in Portsmouth with a marshalling yard about six miles away in Suffolk, Va. It is the latest example of state financial assistance for freight railroad improvements. Many of the state-backed projects also benefit passenger rail, which the state is also heavily promoting.
While many states tend to wait for federal assistance, Virginia has committed a significant amount of its own resources to rail infrastructure since the legislature created a Rail Enhancement Fund in 2005. It is one of the few states with a dedicated source of funds for rail.
'We're very close to the top in miles of railroad track being built or rehabilitated in the U.S,' Page said.
The stimulus money will go to lay a second track so that trains can run in both directions on a line created in the median of Rt. 164 to serve the APM container facility that opened in 2007 and the planned Craney Island Marine Terminal. By relocating an existing 4.5-mile line to the median the state was able to close 14 at-grade street crossings and avoid communities. The state footed most of the original $60 million investment (including a $15 million federal earmark) to help the Commonwealth Railway, a short line that shuttles cars between its marshalling yard and the APM Terminal. The state also paid $3.4 million of the $4.8 million preliminary engineering work for the project. The new track addition costs less because the rail bed is already in place.
At the time, Virginia also matched APM's investment for six tracks of on-dock rail infrastructure with $9.3 million from its Rail Enhancement Fund. It funded 40 percent of the $10.8 million cost for the Commonwealth Railway to purchase 17 miles of track from Norfolk Southern so it could provide access to both Class I railroads in the region. And it provided $4.2 million to connect CSX to the Commonwealth Railway.
The Commonwealth Railway also received $1.5 million from the fund, dedicated to helping short lines with big ticket items, for the marshalling yard where CSX and Norfolk Southern drop and pick up their international railcars. CSX and NS have overhead rights to run trains on Commonwealth track to the yard. The state also provided $2.8 million towards increasing clearances on the CSX line from Suffolk to the North Carolina border.
The rail investments are intended to support the Port of Virginia, considered a major economic engine as a global gateway, and to reduce highway truck traffic and air pollution.
'We think we play a role through these partnership agreements to move more goods by rail and we've been very aggressive about that,' Page said.
'If it weren't for the two programs and the Commonwealth Rail Line you wouldn't have a connection to the APM terminal,' because once a rail corridor is abandoned any land taken through condemnation could revert back to the original owners if new arrangements aren't made, Page said.
CSX tore up a line it had near the APM site in the 1990s.
The VPA and state transportation officials continue to position the port for expansion of the Panama Canal in 2015, and future growth. Even as the General Assembly recently cut billions of dollars from the two-year transportation budget, it still committed $155 million for preliminary work on the 2.5 million-TEU Craney Island container terminal, which is to be built on reclaimed land on the Elizabeth River next decade. The Rail Department recently gave the VPA $1.9 million in seed money for its plan to double the size of its on-dock rail capacity at the Norfolk International Terminal. It previously contributed $3.4 million towards the terminal's nearby marshalling yard. And the Rail Department just gave the VPA $4.5 million to prepare a rail connection from the APM Terminal to the site of its proposed Craney Island terminal, which is to be built on reclaimed land on the Elizabeth River next decade.
Gov. McDonnell also aspires to make Virginia the offshore energy capital of the East Coast. His administration is promoting offshore oil, gas and wind development. Connaughton said officials are evaluating the existing port infrastructure in Hampton Roads to determine whether changes are needed to support those industries.
As for the major railroads, Virginia is supporting NS's Heartland Corridor (about $36 million, including $9.2 million for an intermodal transfer facility near Roanoke) and CSX's National Gateway. Both projects are designed to clear tunnels and make other improvements to create more direct routes between mid-Atlantic ports and the Midwest, and allow for increased usage of double-stack container cars.
NS is nearing completion of the Heartland Corridor between the Port of Norfolk and Columbus, Ohio, through which shipments to Chicago will flow. The railroad recently said it is extending the corridor west to Cincinnati under a $6.1 million project to increase clearances at five locations and increase track at the Rickenbacker intermodal hub in Columbus. The project was made possible by $3.6 million from the stimulus act and matching contributions by Norfolk Southern and the Ohio-Kentucky-Indiana Regional Council of Governments.
Virginia is also providing $40 million for NS's Crescent Corridor, a $2 billion initiative to remove intermodal bottlenecks from New Orleans to New Jersey. The money will help install signals on a 50-mile stretch of line from Manassas to Front Royal, double tracks and passing sidings in certain areas, and a new interchange next to the Virginia Inland Port.
Virginia's commitment to freight rail is illustrated by the fact that it even contributed funding to an intermodal project outside its border because officials believe improving traffic flow along an entire rail line will benefit the Port of Virginia and give the state a competitive advantage when it comes to attracting imports, exports and distribution centers.
Virginia pledged $24.1 million so CSX can make improvements to the Virginia Avenue tunnel in Washington, D.C., as part of $37.5 million towards the National Gateway initiative. DRPT is also contributing $11.4 million of that figure for a yard in Kilby, Va., where CSX will build trains coming out of the Norfolk and Portsmouth marine terminals. The Rail Department recently notified CSX it can proceed with preliminary engineering for the Kilby yard.
Most projects involve a matching contribution from railroads, but it is noteworthy that the state in many cases provides the larger share. The Rail Enhancement Fund requires a minimum 30 percent match from private or other public sources.
Trucks, Tolls. In other recent surface transportation developments, McDonnell in May asked the U.S. Department of Transportation for permission to collect tolls on I-95 near the North Carolina border instead of on I-81, more than 100 miles to the west.
I-95 is one of the most heavily traveled U.S. highways and a major north/south artery for truck transportation. The Virginia Department of Transportation estimates that tolling the north/south highway can generate $30 million to $60 million per year with tolls set at $1 to $2 per axle.
The state has permission to install truck-only toll lanes on I-81 under a federal pilot program that permits some states to try tolling on federal interstates to raise money for improvements. The program requires states to use toll receipts to improve the highway tolls were collected and not for other state roadways. That condition derailed Pennsylvania's recent request to toll I-80 because it wanted to use the money to fund other transportation projects.
The I-81 toll-lane project was stalled by historic preservation concerns and local opposition. It was unable to pass a Federal Highway Administration environmental review and would have required the state to start over with planning the project, Connaughton said in an interview.
Virginia officials plan to immediately use toll proceeds to make $176 million in safety improvements such as guardrails, pavement markings, shoulder widening and lighting, and then repair pavement and structures on I-95 during the next phase. The poor condition of the infrastructure, they said, contributes to one of the highest accident rates of all major transportation corridors in the state. Long-term plans call for adding lanes to portions of the highway.
Connaughton told the Washington Post the decision to locate a toll facility near the North Carolina border was made because most of the traffic there is interstate, sparing many Virginians from the fee. If the request is approved, it would be 18 to 24 months before toll collection could begin.
North Carolina has supported Virginia's effort because it too wants the ability to levy tolls, he said.
Virginia has cut $4.6 billion from its six-year transportation plan the past two years because of low tax revenues. States are looking for alternative funding schemes as federal contributions decline along with falling gas tax receipts. McDonnell promised during his campaign not to raise taxes to cover transportation budget shortfalls and instead has proposed measures such as public-private partnerships and selling the state's liquor stores to raise money for transportation.
Connaughton brought in strategic advisor KPMG to audit the state's public-private procurement practices for transportation and provide advice on the best way to solicit and structure multimodal partnerships to leverage limited state and federal resources. Attracting private investment could also accelerate projects the state cannot afford to build for years, if not decades, to come.
Authority for the government to enter into public-private deals has been on the books in Virginia since 1995, but projects have been limited by a lengthy approval process, red tape and unclear deadlines.
McDonnell's administration plans to implement the recommendations this summer.
VDOT recently issued a solicitation of interest for a private investment group to build and operate a limited-access expressway along 55 miles of Route 460 between Petersburg on I-95 and Suffolk. The new highway would be open to cars and serve as another hurricane evacuation route. But Connaughton describes the road as a truckway because its primary purpose is to ease the movement of truck traffic between I-95 and the Port of Virginia in Hampton Roads. It would sit on the southern side of the James River, parallel to I-64 on the northern side of the tributary. The project, on the drawing board for more than 15 years, would be financed through tolls.
'We're going to really find ways to try and get as much of the truck traffic on there as possible,' he said.
The state's transportation secretary also views the construction of High Occupancy Toll (HOT) lanes alongside I-95 between Washington and Fredericksburg and on I-495 (the Washington beltway), which are typically touted as helping commuters avoid rush hour congestion, as a plus for motor carriers. The express lanes are designed to manage congestion by requiring travelers to use multipassenger transportation or pay a toll. HOT lanes are free to cars with three or more passengers, transit vehicles and motorcycles. Other vehicles can pay a toll, which varies by the amount of traffic to ensure the lanes flow smoothly.
A large amount of truckers prefer to divert to I-81, more than 100 miles to the west, to avoid the chronic bottlenecks on I-95 between Richmond and Washington. Tractor-trailers won't be allowed on the I-495 HOT lanes and likely won't be allowed on I-95, pending a final agreement with the project developer. But Connaughton said HOT lanes will alleviate the feared 'black hole' and give truckers a faster option around traffic because the project adds capacity by extending High Occupancy Vehicle lanes down to Fredericksburg.
A private consortium is building HOT lanes on the beltway, but local concerns and tight credit markets have slowed a deal on the I-95 lanes.
In late April, McDonnell approved the sale of $500 million of transportation bonds, as part of a $2.2 billion bond initiative to improve transportation infrastructure under the state's six-year plan. Legislation authorizing the borrowing was enacted in 2007.
The money will be combined with other funding to advance projects such as truck-climbing lanes on I-81 near Staunton and Salem, bridge rehabilitations on I-95 near Richmond, and several new interchanges.
Meanwhile, McDonnell's administration showed its pro-business stripes on July 2 when it announced that trucks registered in Virginia that engage in interstate commerce no longer will have to undergo redundant federal and state safety inspections.
Under a plan developed by Connaughton and Secretary of Public Safety Maria Decker, Virginia will accept inspections that meet Federal Motor Carrier Safety Administration requirements for annual safety inspections by third parties as meeting state requirements without having to stop at a Virginia inspection station once a year. The FMCSA allows motor carriers with a strong compliance record to self-inspect their vehicles.
The decision was made to reduce regulatory hurdles and attract large trucking companies to title and register their vehicles in the state. Under a mutual interstate agreement called the International Registration Plan, motor carriers can register vehicles in any state that they have an established place of business, and work through that base state to get vehicles registered to operate in all states and Canadian provinces that are party to the agreement.
'As a result of the commonwealth's adoption of the federal safety inspection requirements, together with existing benefits such as permanent plates, an electronic renewal system and no sales and use tax on the purchase of trucks and trailers over 26,000 pounds, companies will be more inclined to select Virginia for vehicle titling and registration needs,' Connaughton said in a statement.
UPS has chosen Virginia to meet its registration needs for 300 new vehicles being purchased this summer because of its regulatory facilitation and automated processes, according to a news release issued by his office.