The Florida East Coast Railway in October launched a new two-day intermodal service from Nashville, Tenn., to Miami designed to reduce trucking challenges into South Florida.
It is the latest in a series of new investments and business initiatives to attract more shippers with customers in the Florida market, as well as those importing through the ports of Miami and Everglades.
The “Music City Express” involves round-trip truck drayage between Nashville and Atlanta, with rail transport on the Norfolk Southern Railway network to Jacksonville, Fla., where the Florida East Coast (FEC) Railway originates and interchanges with the Norfolk Southern. FEC Highway Services, the company’s short-haul trucking arm, arranges for independent truckers to haul freight from Atlanta to the Nashville area and pick-up southbound loads to Atlanta, thereby eliminating empty backhauls, FEC Chief Executive Officer and President James Hertwig said in an interview.
The two-day service, which builds on the existing “Peachtree-Sunshine Express” from Atlanta, is possible because owner-operators picking up freight by 1 p.m. can drive 250 miles and make the 9 p.m. cutoff at the Norfolk Southern terminal. In Jacksonville, the intermodal containers are transferred to the FEC for the 350-mile trip to Miami, with stops in Fort Pierce and Fort Lauderdale. FEC Highway Services completes the door-to-door move by making deliveries from those facilities.
Hertwig said there have been “a tremendous amount of inquiries” about the Nashville-Miami service and suggested potential business could be equivalent to a similar overnight service started one year ago between Savannah, Ga., and Central and South Florida.
During the first year, the railroad has hauled about 9,000 loads by converting southbound truck traffic from Savannah to rail. The service is aimed at improving driver productivity for motor carriers delivering goods from points north and west so they don’t have to send trucks into Florida, which doesn’t have much of a manufacturing base with outbound, revenue-generating loads. Truckers can drop their freight at the FEC relay yard in Savannah, get an empty container or trailer, and pick up a shipment for a customer in the area for the return leg instead of driving all the way to Jacksonville.
There is a lot of truck activity in Savannah because there are many distribution centers handling import traffic from the nation’s fourth largest container port.
FEC contractors handle the truck shuttle to Jacksonville and reposition loaded or empty containers back to Savannah. Moving empty containers from South Florida back to Jacksonville by train is more economical than truck.
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Hertwig said a large retail customer is outsourcing dedicated truck business to the FEC from Savannah into Cocoa Beach, or Fort Pierce, for delivery to Orlando and elsewhere in Central Florida, because of a tight supply of drivers and to reduce deadhead miles. The retailer provides its own local pick up and delivery, so it only requires ramp-to-ramp service.
The FEC early this year opened a new intermodal facility in Cocoa Beach, which is about 120 miles south of Jacksonville.
Intermodal accounts for 80 percent of FEC’s business, underscoring the company’s ability to make money in the short-haul intermodal market that other railroads with more far-flung networks are dabbling in and still trying to perfect. The company achieved a 53 percent increase in operating income to $38.8 million through the third quarter on revenue of $178.8 million.
The railroad this month said it has acquired 200 new 53-foot containers to handle more domestic intermodal business. The containers replace older trailers in the FEC fleet and will allow more efficient use of assets because the containers can be stacked two high.
One of the the FEC’s big efforts is to increase international business by hauling import containers from the ports of Miami and Everglades, in Fort Lauderdale, to big population centers in the Ohio Valley and the East Coast.
It is nearing completion of a $45 million to $50 million project for an on-dock rail facility at the Port of Miami and rehabilitation of an abandoned spur connecting the port to the FEC’s mainline. Rail service is expected to begin in the first quarter, putting the company on track to begin hauling some Asian imports for the Walt Disney Co. to its resort in Orlando on a trial basis, Hertwig confirmed.
Last week, the FEC and Port Everglades announced the signing of a joint marketing agreement to promote the planned construction of a 42.5-acre near-dock intermodal container transfer facility on port property that will combine both domestic and international freight moving between South Florida and inland destinations. The ability to sort domestic and international traffic to similar destinations is unique because ports typically only build unit trains of ocean containers to inland points.
The FEC has a lease for up to 50 years, if all options are exercised, to develop and operate the $73 million, 400,000 TEU facility, which will eliminate current truck traffic from the port through the city to the local FEC yard. In October, Florida gave final approval for a $30 million loan from the state’s infrastructure bank for the public-private project.
As previously reported, the preliminary lease required FEC to spend up to $150,000 during the next couple years to promote Port Everglades and the intermodal facility to ocean carriers and shippers. Under the joint marketing agreement, for example, the FEC will sponsor a panel at the 13th annual Transpacific Maritime Conference in Long Beach, Calif., next spring, Hertwig said.
The Port of Miami is scheduled next year to begin dredging the main channel to 50 feet in order to handle the mega-containerships that will be able to pass through the Panama Canal once a lock expansion project there is completed in early 2015. Everglades officials are trying to get approved for harbor deepening by 2017.
Many analysts and industry officials dismiss South Florida as a viable gateway for inland markets because other ports along the eastern seaboard are much closer to major metropolitan areas, but Hertwig and others say the region is a player because cargo can be on the rail and in other cities, via the Norfolk Southern or CSX Transportation rail networks, before ships reach those ports and begin unloading. The extra day or two advantage from being at the southern reach of the Asia all-water trade lane applies whether a vessel stops at Miami first to unload, or moves directly to Savannah, Charleston, Norfolk or other ports, FEC and local port officials say.
The FEC, for example, delivers cargo to places like Charlotte, N.C., Nashville and Atlanta in two days, and has overnight service throughout South Carolina.
The FEC and its real estate affiliate Flagler Development Co. are also in the midst of developing a 400-acre, rail-served logistics park with 1.5 million square feet of warehouse space adjacent to Miami International Airport and the FEC’s Hialeah yard where imports in 40-foot containers will be swapped to 53-foot domestic containers, stored or reconfigured for final delivery. Some inbound cargo will be loaded at the Port of Miami and directly move up the coast, while other containers will go the logistics center for further processing.
The South Florida Logistics Center will be able to reach 70 percent of the U.S. population in one to four days, FEC officials say. It is scheduled begin operating in July or August of 2013, Hertwig said. – Eric Kulisch