A view of the container terminal operated by APM Terminals in Mobile.al.com
The recent announcement of a new “Alabama-USA” rail corridor holds out the tantalizing, and lucrative, possibility that the state could help solve the nation’s supply-chain problems. But it also illuminates an awkward reality.
Alabama has a booming container port in Mobile. Over the last decade it has been among the nation’s fastest growing, and it has benefited from an ongoing series of expansions. Alabama also has major developments happening inland, such as growth of a massive steel mill in Calvert, the Hyundai plant in Montgomery and the new Toyota-Mazda plant being built in Huntsville.
The potential for in-state intermodal rail shipping, with trains carrying containers between the port and Alabama businesses, seems obvious. But as of right now, almost none of the containers handled by the port are bound from or to Alabama companies.
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The new A-USA corridor isn’t a new rail line. Instead it’s a collections of nuts-and-bolts improvements: Raising bridges, adding sidings, improving signals. Individually, they would hardly generate any public notice, aside from construction detours. Collectively, though, the work will open up existing rails to container trains that will flow between the Mobile waterfront and economic development sites as far north as the Birmingham and Gadsden areas.
In a time when stories about fleets of container ships waiting off West Coast shipping terminals have become commonplace, and major East Coast ports have also begun to experience congestion, it’s natural to wonder if Mobile could capitalize. That’s easily said, but it will take some work to make it happen — and the A-USA Corridor is a big part of that work.
“We are not cheering for anyone to have congestion issues,” said Beth Branch, Chief Commercial Officer for the Alabama State Port Authority. But as the situation has dragged on, she said, “We’ve had quite a number of customers look to switch their supply chain and use routing through Alabama and the Port of Mobile.”
You can hardly attend an industrial groundbreaking or ribbon-cutting in Mobile without hearing someone tout the fact that the port has access to five Class I railroads. The designation is based on scope of business: Class I carriers have revenues of more than half a billion dollars per year.
The Port of Mobile also has a container terminal operated by APM. Over the past 15 years its volume has been on a fast upward trajectory: A multi-stage expansion program by APM and the Port Authority has added more acreage to store containers, more and bigger cranes and more dock space, so that the facility can now service two 1,000-foot-long ships at the same time. In 2016 APM opened an Intermodal Cargo Transfer Facility (ICTF) to transfer shipping containers on and off rail cars.
It sounds like all the pieces are there, but it turns out you can’t take anything for granted. In 2020, John Driscoll became director and CEO of the Port Authority. Improving intermodal rail service was high on his list of priorities. While it was true the port connected to five Class I railroads, only one was carrying significant volume in containers.
That’s still true in 2022. If you see a train carrying double-stacked containers westward out of Mobile, you’re almost certainly looking at a Canadian National train headed across Mississippi and then north.
“The CN runs from Mobile straight up the spine of the middle of the country,” said Branch. “The Canadian National has been a fantastic partner since the ICTF opened in 2016,” she said. “They’ve really grown the business from Mobile up into Memphis and then Chicago.”
But.
“Right now there is no intramodal service via Mobile that serves Alabama on a Class I railroad,” Branch said. The exception would be occasional, and rare, trains put together by CSX.
Shipping containers are made to be stacked. If a line can’t accommodate double-decker loads, then a container training is running at 50% efficiency at best, and that’s just not a competitive proposition. So while Birmingham does have container rail service, it doesn’t come out of Mobile.
“Birmingham right now is served, but it’s served in a way that, when you look at the mileage and you look at the routing, it’s served over Charleston, it’s served over Savannah,” said Branch. “It is inevitably going to be more costly from a couple of perspectives.”
Port Authority officials think they can make the case that a rail connection to the Port of Mobile will shave days off the transit time and dollars off the bottom line. But first that connection will have to be open for business.
Tuesday’s announcement from the office of Gov. Kay Ivey said that the A-USA Corridor plan calls for more than $230 million in investment. Phase I, costing $71.6 million, will enable container service from Mobile to key economic sites in Calvert, site of a major steel mlll and other industry; McCalla, south of Birmingham; and the Little Canoe Creek mega-site near Gadsden. A small fraction of the money, $5 million, is coming from the state. Norfolk Southern is putting up more than half, and the remainder is to come from federal Department of Transportation grants.
Phase I work will affect “12 specific track, signal and yard improvements on Norfolk Southern rail lines between Mobile, Selma and Birmingham,” according to the announcement.
“It’s crossover, it’s upgrading and extending existing storage track, there’s clearances,” said Branch, referring to the heigh clearances needed for the double-stack trains. “Those clearances are really critical because that’s what gets us the service between Mobile and Birmingham.”
Norfolk Southern tracks that will get upgrades via the Alabama-USA rail corridor initiative are shown in red.Norfolk Southern
Headroom isn’t the whole story, said Rob Legge, director of industrial development for Norfolk Southern.
“There are some clearance issues that need to be resolved and part of this project is to resolve those,” he said. “But really, you can’t pick or choose one piece of the project or another. It’s all part of a network.”
“We’ve got to be able to build longer longer trains” to add containers, he said. “We’ve got to be able to move trains more efficiently and faster.”
That means extending sidings so that they can hold more rail cars off the main line. It means adding new signals and automated switches to “dark territory” where engineers have to check in with dispatchers to see if the track ahead is clear. It means other improvements to handle containers at their destination sites.
This particular Norfolk Southern line doesn’t hit Huntsville, but the state’s fastest-growing city won’t be left out.
“That particular line runs from Birmingham over to Chattanooga, then you have to make a left-hand turn to head to Huntsville,” said Legge. “Our route does not head straight north through the Huntsville area. At Birmingham you either go east towards Chattanooga or west toward Sheffield. And then the line between Sheffield and Chattanooga, Huntsville’s kind of almost in the middle of that.”
Norfolk Southern’s Memphis East line, which runs from Memphis through Sheffield and Huntsville to Chattanooga, connects to an intermodal terminal in Huntsville. It also serves the new Toyota-Mazda plant.
Legge said discussions with the state about the A-USA Corridor Plan go back at least a couple of years, though recent developments have given them fresh impetus.
“We’re just trying to be a partner with the state, being proactive and identifying ways to address the supply chain issues that have happened over the last 18 months or so,” he said.
The announcement of the A-USA corridor isn’t the only development under way. The port and a partner have been developing a new terminal that allows vehicles to be rolled on and off of ships. That could be an attractive option to Alabama-based automakers, especially as rail connections to Mobile are improved. And the U.S. Army Corps of Engineers has begun work on a project to enlarge the Mobile Ship Channel, deepening it and in places widening it to allow bigger shiploads of containers to reach the port.
A year and a half ago, Driscoll said that inland container depots would be needed to handle intermodal rail shipments, and that establishing one near Montgomery was a key priority. A push is under way to establish one, which would be served by a CSX line running from Mobile.
It’ll all take a few more years to come together. Legge estimated that the Norfolk Southern line will be open to container service in late 2024 or early 2025.
That doesn’t make the A-USA a quick solution to the supply-chain issues of the past year, and nobody wants those to last another couple of years. But if nothing else, the current situation is a lesson in why developments like those planned in Alabama are important.
“The throughput of a terminal depends on the velocity with which you can move cargo,” said Branch. “And if you all of a sudden start backing up your supply chain, you don’t have the workers to strip the containers in the warehouse in Chicago … all of a sudden that customer in Chicago tells you to hold those containers at the port.”
The ripple effect continues: Container terminal storage yards can become logjammed. The trucking operations that move containers around locally can become overwhelmed. Branch praised the operators of the APM container terminal in Mobile, which she said hasn’t had to keep ships waiting.
A-USA is part of a long game. Why doesn’t Alabama have more container-ready rail lines? Because the port’s APM-operated terminal didn’t open until 2008, after years of effort by Driscoll’s predecessor, Jimmy Lyons, to find a partner to help build and run it. Up to that point, Alabama was facing a chicken-and-egg situation where it didn’t have the chicken or the egg.
“Mr. Lyons really had a vision for this,” said Branch.
Now there are a lot of eggs in the A-USA basket, some of them more than 250 miles inland from the port.
Legge said that Norfolk Southern has invested several million dollars in the Little Canoe Creek mega-site, taking advantage of the Growing Alabama tax credit program. Administered by the Alabama Department of Commerce, it gives companies tax credits if they invest in approved economic development initiatives.
The program helps sites “that may have been passed over for projects in the past because of a deficiency,” he said.
“In the past you would drive up to the property and see a lot of wooded area and you had to be really creative in your mind” to picture locating a manufacturing or warehousing operation there, he said. “Today you can go to that area and see a very open cleared area that just shows what the potential is for that site.
“We’ve worked really closely together on economic development projects, attracting new companies to the state or existing companies, helping them to expand,” Legge said. “Part of this is to create the capacity needed to support our existing customers, and then have both Norfolk Southern and the state prepared to attract future industries that want to locate in the state.”
When it comes to making that case, A-USA ties a lot of things together.
“We’re very excited about it,” said Branch.
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