Every day, giant container ships chug into the nation's ports and disgorge their contents: 20-foot boxes, 40-foot boxes and 45-foot boxes packed with mer- chandise bound for every corner of the nation. Once unloaded, those containers are swiftly transferred to trains or trucks, which whisk them off to destinations across town and across the country.
At least that's how it's supposed to work. In recent years, things haven't always worked out that way. Freight volumes have exploded over the decades, putting severe pressure on the aging transportation infrastructure. As a result, it's become all too common for intermodal freight to encounter backups and delays at the ports, on the highways and at intermodal terminals. "Our highways, waterways, railroads and aviation networks are simply not keeping up with ordinary demands," says Mike Eskew, chairman of UPS.
Lately, the rails have become a particular concern. Thanks to an upsurge in imports, the railroads are handling more intermodal containers today than at any time in their history. But they're not doing it well. Average train speeds have dropped, and service levels have slipped, prompting public criticism from some of their biggest customers. In recent months, both Scott Davis, chief financial officer of UPS, and Bill Zollars, chairman of YRC Worldwide, have assailed the railroads' poor record of on-time performance. And in April, UPS, the rails' biggest customer, announced that it had reluctantly begun shifting some of its freight from the rails back to the already congested highways.
An Interstate on steel?
The looming infrastructure crisis has generated more discussion than solutions to date. But one long-time railroad executive, regulator and now academic observer has come up with a compelling answer to the problem. His vision? He calls it Interstate II. As he sees it, Interstate II would be a 21st century parallel to the Interstate Highway System developed in the 1950s and 1960s, with one important difference. The system he envisions would be based not on pavement, but on steel rails.
Who is this visionary? He's Gilbert Carmichael—known to most of his colleagues as Gil. Carmichael is one of the founders and senior chairman of the Intermodal Transportation Institute at the University of Denver. Appointed by President Ford to the National Transportation Study Committee, he served as chairman of the National Highway Safety Advisory Committee from 1973 to 1976. In 1997, he chaired the North American Intermodal Summit, which brought together highranking transportation officials from the United States, Canada, and Mexico to discuss intermodal policy. In 1990, he received the Founder's Gold Medal Award from the Pan American Railway Congress for a paper he wrote on the role of rail transportation in the 21st century.
In Carmichael's view, high-speed rail isn't just the best answer. It's the only answer. The railroads' current problems notwithstanding, rail represents the nation's sole hope for handling huge volumes of freight. "There is no way highway capacity can increase 2 to 3 percent a year for the next 20 years," he says. "No matter how many billions of dollars we spend, we cannot increase capacity by more than 1 or 2 percent." In contrast, he contends, railroads could double their capacity in that time.
Carmichael believes the technology for creating a highspeed train network is already available. He points to the high-speed passenger rail systems in Europe as an example of what might be. If the United States is willing to invest in the necessary infrastructure, he says, we could be seeing freight trains running at 80 miles per hour (and being passed by passenger trains streaking by at 120 miles per hour) before long.
The future is now
In fact, Carmichael argues that the development of a speedy and reliable rail system is already under way. "It's started," he says. Railroads are already making huge investments in their own systems.
As evidence, he points to the Alameda Corridor, a freight rail "expressway" for containers moving to and from the ports of Los Angeles and Long Beach. He also cites the Burlington Northern Santa Fe's investment in double track from Los Angeles to Chicago, and a joint venture between the Norfolk Southern and the Kansas City Southern to increase capacity on KCS's Meridian Speedway, a major east-west link in the rail network.
Carmichael also foresees the continued development of large multi-tenant distribution complexes with on-site access to road, rail and in some cases, ocean and air connections.
"New intermodal yards are becoming industrial parks, where trains and trucks swap containers and where companies are building distribution centers," he says. For example, early this year, CSX Corp. announced that it intended to build a 1,250-acre integrated logistics center in Winter Haven, Fla., which it describes as a truck, rail and warehousing hub and intermodal transfer facility. And the Wall Street Journal has reported on a similar development in tiny Rochelle, Ill., where Target, Lowe's and toy-maker RC2 Corp. are all building large DCs in close proximity to the Union Pacific's four-year- old Global III intermodal transfer yard.
Workin' on the railroads
Right now, the railroads are funding these capital projects on their own. But Carmichael would like to see the government step in and encourage them to continue investing. "I just hope that we come up with incentives, like tax-exempt bonds," he says.
Providing those incentives would be good for the nation, not just for the railroad industry, he argues. Railroads, which are easily the most fuel efficient of all the transport modes, can move freight nine times farther than a truck can on the same amount of fuel. With diesel fuel prices closing in on $3 a gallon, he believes it's in the national interest to improve rail performance. "The railroads are just so damned fuel efficient," he says. "And if oil goes to $100 a barrel, they can electrify if they want to."
But incentives alone won't be enough. The long-term development of an intermodal network depends on changing the way transportation executives and policy makers think about transportation issues, Carmichael says. "The old highway lobby hasn't begun to think intermodally yet," he says. "Even congressional committees are still structured by mode. The mindset is just not there yet to do these new intermodal facilities." Despite his Republican roots, he admits to frustration with the current administration. "They do not have a transportation program at all," he laments. He believes leadership on the issue is more likely to emerge from state governments.
Despite the obstacles, Carmichael remains optimistic about Interstate II's prospects. "I may be a little bit Pollyannaish, but with oil at $70 a barrel, we have to have the railroads as part of the solution," he says. "If we can hook rail and highway together, we can make an ethical transportation system, one that's both fuel efficient and environmentally sound. I'm talking about a whole new, safer and more secure transportation system. If we do it just right, the container will become a warehouse in motion."
