Supply Chain Spotlight: Freight Rail

What do you do?

I do planning and policy for the city with respect to freight rail operations and development. This means I make sure that the city has options when it comes to rail freight transportation and that there’s competition in the city among different freight rail carriers. I also do asset management work with the city’s three separate facilities that we own. The City has rail assets in Sunset Park in Brooklyn, at the New York City Terminal Produce Market in Hunts Point in the Bronx, and then the Staten Island Railroad (PDF) on the western shore of Staten Island, which was rehabilitated in 2007 by the City and the Port Authority.

How did you first get interested in rail infrastructure?

I’ve always loved transportation. My father’s a locomotive engineer, who recently celebrated 40 years on the railroad. He worked for the Southern Pacific Railroad in northern Utah and now works for the Union Pacific Railroad. So I grew up loving transportation, but never fully realized I could make a career out of it. After getting into urban planning in college, I found work in traditional transit planning. I worked for two different transit authorities, one in Salt Lake and one in Seattle. And after studying transportation planning in graduate school, an opportunity came up here, at New York City’s Economic Development Corporation, to work with freight rail. It’s a unique position: most cities don’t have somebody devoted to issues of freight rail exclusively. Most often, the planning functions associated with freight happen at the state level, not necessarily the municipal level.

How does rail compare to other modes of freight transport?

In terms of transporting freight, rail is most often compared to truck. There are some other alternatives, like inland waterway movements, but by and large, it’s rail versus truck. There are significant benefits to using freight rail. First, there is the technological advantage: a locomotive pulling a train of 100 rail cars can be operated by two individuals, an engineer and a conductor. A truck carries 1/3 of what a single rail car can carry, and each truck requires one driver. So you need 300 trucks and 300 drivers to transport the equivalent amount of cargo as one 100-car train. Freight requires a fraction of the labor, which translates into significant cost savings for the customer.

Second is the environmental advantage. Rail is more fuel-efficient than trucking. Of course, locomotives pollute. But replacing 300 tractor-trailers with one or two locomotives is obviously going to provide a net benefit in environmental terms. Overall, the big advantage is rail’s ability to transport a lot of stuff very cheaply over a very long distance.

A common concern is that railroads, because they’re inherently monopolistic, often don’t provide the levels of customer service that people require. So, here in New York, we’re constantly working with all of our freight rail partners to make sure that the businesses that do receive services from the railroads are getting what they need.

How does freight rail interface with other modes of freight? Particularly the maritime infrastructure, like tugboats and barges?

When people think of freight transportation, they often think of container ships, which is what we call intermodal containerized service. The premise of intermodal transportation is that when you’re switching between modes (say from ship to truck or to rail) you don’t have to unload a whole bunch of product from a ship and individually load it into a boxcar for rail transport. Instead, you just put everything in one container that stays closed and is picked off that ship, put directly onto a railcar, and taken to wherever its final destination is in the middle of the country. While containerization in the maritime industry had its origins in the late ’50s, the intermodal revolution on the rails has really come about in the last twenty years, alongside the booming trade with China. Southern Pacific Railroad introduced the first double-stack container car in the late 1970s, which made handling intermodal containers extremely cost-effective for the railroads. By the late 1980s, the technology was fully embraced by the railroads and intermodal really took off. Today, intermodal traffic accounts for approximately 20% of revenue for U.S. railroads.

Before intermodal, you had to unload the ship by hand, break bulk, and then get that cargo into a boxcar. If that boxcar was terminating in a place where there’d be a truck trip to a final destination, then all those goods would have to be unloaded manually and put into the truck. It was extremely costly and the multiple “touches” always led to the potential for damaged goods.

Here in New York, we have a unique operation where there’s a much more direct interface between the maritime world and the rail world, and that’s in the “car-float” operation that takes place between Greenville, NJ and Sunset Park in Brooklyn. It’s the last vestige of this huge network of barges and tugs that used to be owned by all the private freight rail carriers in the city. Because of the lack of bridges across New York Harbor, these railroads actually put rail cars onto the barges and used tugboats to deliver them to pier sheds all throughout the city, and also to interchange with other railroads.

In New York City, how does most imported cargo get to market?

The vast majority, by tonnage, is trucked into the city. According to a 2004 report by the New York Metropolitan Transportation Council, which is our local Metropolitan Planning Organization, freight rail’s share of the cargo flow is right about 1%. It’s very small when you compare it to everything else.

So 99% of our cargo is trucked from our ports?

Pretty much. Most goods don’t travel from port to the end user immediately; it’s not like it goes from a boat straight to your local Target. Often, goods move from the port facilities to a distribution center, many of which are off exits 7 and 8a on the New Jersey Turnpike, and also in Eastern Pennsylvania. Everything gets consolidated in these big distribution centers, and then trucks take the goods from there to make deliveries throughout the city.

It’s important to note that there is a difference between cargo that terminates in the Port of New York and New Jersey, 100% of which is trucked to these distribution centers, and cargo that passes through the port. Approximately 10-15% of the cargo that enters the Port of New York and New Jersey on its way to, say, Chicago, Cleveland or St. Louis, leaves the port by rail on its way to other destinations.

Something we’re exploring, which is part of the Sunset Park vision plan and part of the Community Board 7’s 197(a) plan and in the latest update to PlaNYC, is turning two railyards in Brooklyn into “transload” facilities, places where you can bring in a railcar of goods and transfer all those goods to truck. That way, someone who doesn’t have a rail spur right into their building or their backyard can nonetheless pick up their goods by driving a truck, say, a mile and a half into Brooklyn, rather than moving their goods hundreds of miles by truck entirely. The city really lacks those kinds of facilities, and we think it’s important to develop them.

Tell me a little bit more about the three freight rail assets that the City maintains.

The Staten Island Railroad opened in April of 2007 and, for all intents and purposes, has been a huge success. When they did the initial projections for how much traffic they thought they would generate, I think it was 1/3 of what it’s generating today. The trackage formerly belonged to the Baltimore and Ohio Railroad (B&O) and, later, CSX Transportation. In recent years, the only customer was the Proctor & Gamble facility at Port Ivory, on the northwest shore of Staten Island. After Proctor & Gamble ceased operations there, the City acquired the right-of-way with the intention of reactivating the rail line. The City also saw the route as a means of effectuating its 2006 solid waste management plan.

The Port Authority and the City partnered and put $72,000,000 into the rehabilitation of the railroad in order to create direct access to the Howland Hook container port facility and also to the newly constructed Staten Island waste transfer facility in the Fresh Kills area. The container port really relies upon on-dock rail service and, of course, the Department of Sanitation definitely benefits from being able to export the waste by rail as opposed to truck. Now the City can shift its solid waste disposal out of Staten Island while retaining a significant number of jobs connected to solid waste disposal industry on the Island. And, besides saving money, the railroad eliminates about 90,000 truck trips, on average, from our roads every year. So that’s a big deal.

Then in the Bronx, the City maintains a relatively short spur that leads to the Hunts Point Produce Market. This line is important to us, and to the cooperators of the produce market, because it provides an alternative to truck. Five days a week, about 3-4% of the produce in the market comes in by rail as opposed to truck. The City is very focused on expanding the Produce Market and giving the cooperators what they need to continue to provide the valuable services that they do to all the restaurants, bodegas and grocers across New York City.

The cooperators of the market like rail because it’s cheaper by a significant price differential, but not all products can handle the long transit time. It takes about ten to twelve days for a boxcar of produce to make its way across the country, so the kinds of fresh produce that are still good after that kind of journey are what we call “hardwear”: potatoes, onions, sometimes carrots, coming from the growing regions of Eastern Idaho, Western Washington and sometimes California.

The third of the City-owned freight rail assets, in Sunset Park in Brooklyn, is what we call the Brooklyn Waterfront Rail system — and I think this is the most exciting piece of the freight rail puzzle right now.

It’s comprised of components of a number of different old railroads: the Bush Terminal Railroad and the New York Connecting Railroad, which was operated jointly by the New York, New Haven & Hartford Railroad and the Long Island Railroad (when previously owned by the Pennsylvania Railroad). What’s left of these networks is some trackage between 29th and 65th Streets to the west of 1st Avenue in Sunset Park. It’s a system that was all under private ownership until the Port Authority bought it in 2008, and it is in need of significant capital upgrades. So we’re working with the Port Authority on updating the railroad’s old service contract with modern legal terms; bringing everything into a state of good repair on the Brooklyn waterfront; and making capital improvements to enhance our ability to market the rail line and to market parcels within the Sunset Park area to companies that would be interested in rail service.

What kind of companies are those?

For example, one of the companies that will be relocating to the South Brooklyn Marine Terminal (SBMT) is the Axis Group, an auto import/export distributer. They’ll be bringing in import vehicles via deep-draft ship and using the Marine Terminal area as a distribution facility. A portion of those vehicles will leave SBMT by rail. Another tenant is Sims Metal Management, which is building a municipal recycling facility in partnership with the NYC Department of Sanitation and they want to be able to ship out repurposed recyclables by rail. So those are two totally different kinds of operations: one ships out recycled tin cans and baled waste for sale on the domestic commodity markets, and the other ships out shiny, brand new automobiles.

What do you wish people understood better about freight rail and why it’s important for New York?

What I would encourage people to do is to think about their supply chain in general. When you’re on line at Duane Reade or the grocery store, take a look at whatever you have in your hand and ask yourself: “Where did this avocado come from? And how the heck did it get here?” By and large, when people think of transportation, they think of it in terms of something they don’t want around them: they don’t want trucks or freight trains rumbling past their door. But at the same time, they want a huge variety of consumer products when they walk into the store, and they want cheap prices. I think freight rail, for New Yorkers, is a totally unseen part of life in the city that the average person doesn’t think about, but it’s definitely there. And although it doesn’t handle a large portion of the overall traffic that we have coming into the city, it’s still very important.

I think that the more that we can encourage rail freight activity, the more transportation options small businesses will have and the more competitive the city will be. It’s a much more positive approach to the city’s supply chains, not only in relation to consumer products, but to anything that is manufactured, either on greater Long Island or within the city.

Does encouraging usually mean expanding the infrastructure?

I think in some cases it means expanding infrastructure, but it also means maximizing and leveraging what you already have. In a lot of cases, when we talk about the proposals for the 65th Street Rail Yard and the 51st Street Rail Yard to develop these transload facilities, this is land that the City owns that could be utilized in a much more robust way. It’s less a question of building railroads or building new infrastructure than it is about bringing everything to a state of good repair and then marketing the facilities we have to utilize them to their full potential.