Port Everglades, FEC to develop intermodal yard
Most international cargo that enters Florida comes via ports outside the state, including those in California, but the state is laying the foundation to change that dynamic and even compete as a gateway for inland markets by investing in on-dock intermodal and harbor deepening projects.
The latest development came Tuesday when Broward County leaders agreed to move ahead on a public-private partnership with Florida East Coast Railroad for a $72.8 million intermodal container transfer facility at Port Everglades. A memorandum of understanding approved by the board authorizes Port Director Phillip C. Allen to negotiate a definitive deal by the end of the year.
The preliminary agreement calls for FEC to build and operate an intermodal consolidation yard on 42.5 acres of port property for up to 50 years, if two 10-year options beyond the base period are exercised. The facility will handle domestic and international cargo.
The railroad, which is owned by funds managed by Fortress Investment Group, runs between Jacksonville and Miami.
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'FEC continues to be very bullish on the intermodal segment and specifically in South Florida,' said Husein Cumber, the railroad's executive vice president for corporate development, in an interview.
That optimism stems in large part from expectations that all-water container volumes from Asia to the East Coast will grow with opening in 2014 of a new set of expanded locks in the Panama Canal capable of handling ships in excess of 12,600 TEUs, almost triple the maximum size of vessel that can currently make the transit. Florida ports are fighting to win their share of that market and need infrastructure in place to make the inland move cost-effective and efficient.
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In fiscal year 2010, Port Everglades moved 793,227 TEUs.
Port authorities or other public agencies typically are responsible for building and operating on-dock rail facilities on port property, with rail lines simply providing a hook-and-haul service.
'In this case we recognize the importance of having an ICTF at Port Everglades as soon as possible, which is why we're willing to enter into this unique public-private partnership,' Humber said.
The project is supported by an $18 million grant from the Florida Department of Transportation, an anticipated loan of $30 million from Florida's infrastructure bank, and a $5 million investment and loan guarantees from FEC. Broward County is donating the land, which cost $19.7 million at purchase in 1997.
The timing of the tentative concession arrangement is important because FEC faces an Aug. 31 deadline to apply for the infrastructure bank financing. The state plans to announce loan winners on Oct. 21.
Assuming no setbacks, FEC expects to reach a final agreement with Broward County by the end of the year, issue early next year a request for proposals to design and build the installation, award a contract by July 1 and have the installation completed by the end of 2013, Cumber said.
According to the MOU, FEC will pay Port Everglades $3.50 per loaded domestic intermodal unit handled at the new rail facility during the first year of operation. The fee increases to $4.50 per unit for the following five years, and then rises 4 percent each year after 2020.
International boxes are defined as any container that moves across the port to and from a vessel, while domestic containers are boxes that enter the port by rail even if they originate at another port.
Under the preliminary terms, FEC will spend $150,000 from 2012 to 2014 to help promote the port and the ICTF to ocean carriers and beneficial cargo owners.
The facility will have annual capacity of 400,000 TEUs and storage space for at least 750 trailers, refrigerated containers and regular boxes. FEC plans to use modern, wide-span electric cranes that can quickly transfer containers to and from railcars and reach across multiple tracks.
Making construction of the intermodal yard possible was the groundbreaking in July for a $42 million, four-lane overpass to carry traffic on the port's primary entrance road over a planned double-track rail spur connecting the port to the FEC's mainline. The project, funded by the state, also involves the widening, realignment and construction of service roads parallel to the Eller Drive flyover.
In addition to making ship-rail transfers more efficient and facilitating potential trade growth, the intermodal container transfer facility is expected to provide relief to local residents who often endure traffic backups when trains being built at FEC's existing rail yard extend out over at-grade intersections on state route 84, a major east/west artery. The current facility is located on 14 acres about two miles from the port near downtown Fort Lauderdale. Moving the intermodal operation onto port property will also eliminate 40,000 truck trips per year to shuttle containers between the port and the yard. Instead, yard tractors will pull containers a short distance to and from the rail facility without entering public roads, Port Everglades spokeswoman Ellen Kennedy said.
Florida East Coast Railroad is also working on a $50 million project to restore an old rail line to the Port of Miami so intermodal shipments can move directly from the dock to points in Florida and beyond. In 2005, rail service was suspended after the rail lift-bridge that spans Biscayne Bay suffered damage to its mechanical system in a storm and a boat anchor damaged an underwater electrical power line. In reality, the FEC rarely used the port line because the service wasn't clearly marketed and volumes were extremely low.
The first phase of the project involves rehabilitating the 4.4-mile rail line connecting the port to the FEC mainline so that trains can move up to 30 mph from 5 mph. Follow-on work includes repairing the bridge, constructing an on-dock rail facility and modifying FEC's rail yard in Hialeah to accommodate the increase in intermodal traffic.
In October 2010, the U.S. Department of Transportation awarded a $22.7 million TIGER grant to Miami-Dade County and the port to restore the rail service. TIGER is a competitive program that used merit-based criteria to fund high-impact infrastructure projects that meet long-term, multijurisdictional needs for transportation efficiency, reducing energy consumption, and creating jobs.
The public-private partnership includes funding from the Florida Department of Transportation ($10.9 million), FEC ($10.9 million) and the Port of Miami ($4.8 million).
The rail reconnection project is part of a broader investment strategy to make the Port of Miami a destination port for large container lines. Construction has begun on a $900 million, privately financed port access tunnel to carry truck traffic between the port and interstates 395 and 95 instead of having it wind through downtown streets. Earlier this year, Florida Gov. Rick Scott stepped in when federal funding was slow to materialize and committed $77 million to help pay for dredging the Miami ship channel to 50-feet to accommodate the new generation of massive ships. The Port of Miami will pay the remainder of the cost for the $150 million project.
Officials at the Port of Miami, which handled 847,249 TEUs in 2010, have said they expect volumes there to double in the next five years.
'We feel that South Florida is a natural entry point to serve the Southeast United States and that South Florida can be a first port of call for ships coming through the Panama Canal,' Humber said. 'So our goal is to be able to show that by offloading containers in South Florida we can get those containers to Charlotte, to Memphis, to Atlanta, quicker than that ocean carrier using another port on the East Coast. And the direct rail connection at both the Port of Miami and Port Everglades allows us to provide that service.'
FEC, through connections in Jacksonville to main carriers Norfolk Southern and CSX Transportation, can provide next-day service to Central and North Florida, as well as Georgia, he said. Central Florida is a huge market that could be served by ports in Florida, including Tampa, rather than ones in the Southeast or other parts of the country.
FEC can also provide second-morning service to Atlanta and Charlotte, and fourth-morning service to Chicago, Dallas, Memphis, the Ohio Valley and New York, Humber said, demonstrating the intent of Florida ports to compete against other ports for shippers in the prized consumer market east of the Mississippi River.
Ocean transportation is generally less expensive than rail, but Humber said the FEC can offer competitive prices because of the extreme equipment imbalance in the state. There is one northbound load for every four southbound loads, meaning a lot of empty rail equipment has to be repositioned. Having more freight volume originating in Florida will allow rail carriers to spread that two-way cost among more shippers.
Meanwhile, the Port of Jacksonville in northern Florida is also looking to establish a better intermodal capability. Port and local officials are studying the feasibility of building an international container transfer facility on the Dames Point Terminal to enable direct distribution of containers by rail and keep them off the road, spokeswoman Nancy Rubin confirmed.
The study is examining what international volumes would be necessary to justify the investment, the size of the facility, who would operate it and other factors, she said.
Officials are considering applying for the next round of TIGER grants to support the project.
Japanese carrier MOL opened its TraPac container terminal in 2009 and another carrier, Hanjin, has delayed plans to build a $300 million terminal next door on Dames Point until the St. Johns River can be deepened.
The Port of Jacksonville handled 826,580 TEUs in 2010 and projects volumes to be close to 900,000 TEUs this year. It has on-dock rail at its Blount Island terminal, which handles a modest amount of container traffic. Containers from Dames Point that need to move by rail are trucked to rail yards across town.
CSX spokesman Gary Sease said the company is working closely with the port to help put together funding applications and would serve an ICTF if it is built. ' Eric Kulisch