In mid-August, top port and railroad executives gathered at APM Terminals Virginia for a meeting that was virtually unprecedented. Those around the table included representatives of Norfolk Southern Corp. and CSX Corp., the two big East Coast freight carriers that serve APM’s facility, along with officials from Commonwealth Railway, the shortline railroad whose locomotives pull Norfolk Southern and CSX trains in and out of APM’s terminal. They were joined by executives from the Virginia Port Authority and Virginia International Terminals Inc., or VIT, which operates the authority’s facilities, including APM’s terminal.
“I don’t think in my 33 years here I’ve ever been in a meeting with all three of those guys sitting in a room at the same time,” Joe Dorto, VIT’s president and CEO, said of the three railroads.
What brought them together on such short notice was this: The weekend of Aug. 11-12, APM’s state-of-the-art container facility in Portsmouth had been hit with the railroad equivalent of a giant highway-tunnel backup. Around noon the day after the weekend, a nearly 2-1/2-mile-long empty intermodal train, meant to carry ocean-going cargo containers, still sat motionless on one of the two tracks in the median rail along Va. 164. Nothing else on the other track or anywhere else near APM’s terminal was moving by rail.
“This is a first,” said Joe Harris, a Port Authority spokesman. “It’s the first time we reached a point of gridlock.”
Things got so backed up at one point that CSX diverted a train to Portsmouth Marine Terminal, unloaded it and trucked containers to APM. The officials who met afterward to discuss the problem had reason for concern: The linchpin of Hampton Roads’ port growth strategy is rail – its ability to funnel cargo to and from inland markets such as the Ohio Valley and Chicago.
While Norfolk International Terminals, the port’s other container terminal, can handle more boxes and has a bigger rail operation, APM is the only terminal in the port with on-dock rail connections to both Norfolk Southern and CSX, via Commonwealth. The expansion of APM’s facility, including doubling the size of its railyard, is one of the components in an unsolicited proposal APM submitted to the state in the spring, offering to take over the operations of the port for 48 years. APM estimates that its offer, one of four options being weighed by the state, could be worth nearly $4 billion in current dollars. While ownership of its terminal would transfer to the Port Authority at the outset of a deal, APM would become the operator. No matter who controls the terminal, rail congestion at APM – which is currently leased by the port authority and run by VIT – could pose a significant challenge for a port that touts its first-rate train connections.
Hampton Roads, located in the center of the mid-Atlantic, lacks a population base that can compete with New York/New Jersey or Savannah, Ga., which boast huge local consumer markets. As a result, it must excel at moving cargo to other destinations by train.
“We firmly believe that the future of the port’s growth is going to come predominantly from rail,” Dorto said. Surges in cargo have resulted in rail congestion before at APM.
“It may have been once or twice in the past,” said Bill Jasper, president of Commonwealth Railway. “It certainly is not a common event.”
August’s surge, however, was significant.
“I don’t want to minimize it,” he said. Port and rail officials attribute the Aug. 11-12 backup largely to the difficulty of accommodating long, single-stack container trains during busy periods.
Because longer trains may need to be broken up into more pieces, loaded and reassembled, handling them is more labor-intensive and can cut efficiency.
“You had very long trains, and they came in on a weekend, and they were one behind each other,” Dorto said. Such a situation requires “a pop-off valve, and that’s what we’re trying to establish.”
“What you saw was, of course, not a mirage,” Harris said of the long train parked on the median. “The issue is that APM is absolutely maxed out when it comes to its rail capacity.”
“If you look at our numbers,” Dorto said of the port, “our rail is growing much larger than our normal flow of business.”
Last month, the volume of rail containers handled portwide grew nearly 23 percent from a year ago. While APM was designed to handle about 22 percent of its cargo by rail, it’s actually doing about 26 percent, according to the Port Authority.
As one of the port’s two container terminals, APM could see the pressure intensify in the weeks to come. The port has responded to a looming dockworkers’ strike, now set for Oct. 1, with a plan to cram as much cargo through its terminals as possible before the deadline. The August meeting resulted in an operating plan to address any rail congestion at APM that might develop with the ramp-up of cargo.
“We can move business around,” Dorto said. “It’s going to take flexibility on everybody’s part. We’ll have to improvise.”
Options include trucking or barging containers to Norfolk International Terminals to relieve APM, if necessary.
“Whatever it takes, we’ll do it,” he said. One of the solutions to come out of the meeting is Commonwealth’s plan to store Norfolk Southern and CSX locomotives at an offsite location, freeing up a roughly 8,000-foot stretch of railcar storage track.
Intermodal rail service – the hauling of cargo containers that can move interchangeably by rail, truck or ship – is most efficient and economical when trains are double-stacked with boxes. Double-stack trains give shippers more bang for the buck, enabling the transportation of twice the number of boxes of a single-stack train. The two railroad tracks in the median of Va. 164 connect to Norfolk Southern’s Heartland Corridor project, a public-private partnership initiative that enabled the railroad to expand 28 tunnels in West Virginia, Virginia and Kentucky. The result was a kind of “Northwest Passage” for double-stack rail traffic between Hampton Roads and the Midwest that shaved about 230 miles and a day of transit time from existing routes. It opened two years ago. Since January, when a new contract between ocean carrier Maersk Line and CSX took effect, CSX trains – pulled by Commonwealth locomotives – have been moving on the same tracks.
CSX is working on its own double-stack initiative, called the National Gateway, which will connect mid-Atlantic ports, including Hampton Roads, with the Midwest. Until the project is complete, however, CSX can only connect with Hampton Roads using single-stack trains because of a railroad bottleneck in Washington, D.C. – the Virginia Avenue tunnel – through which CSX’s Midwest-linked traffic must pass. The tunnel isn’t big enough to handle double-stack container trains. Work is under way to expand it, though it isn’t projected to be complete until 2014.
CSX’s restriction to single-stack trains at APM certainly “does add to the situation there, but it is a workable one,” Dorto said. Containers are loaded onto train cars at APM by huge cranes that straddle and move up and down the terminals’ six, parallel 2,200-foot-long tracks, taking containers placed alongside the tracks, lifting them and carefully aligning them over the wells in the train cars before nudging them into place. Getting the first car onto a train takes the most amount of time; putting another one on top, piggybacking on the alignment done for the first box, takes half as long.
While it takes a little longer to load a double-stack train, twice as many containers are moved, getting boxes off the terminal onto shorter trains that don’t require as much “switching” – pulling loaded train segments out of the on-dock facility and backing in empties. APM’s on-dock facility was built to handle double-stack trains, said Jeffrey S. Heller, Norfolk Southern group vice president for international intermodal, when asked at a recent port media session at APM how CSX’s single-stack trains affect the rest of the operation.
“The challenge remains: How do you process a significant amount of footage of single-stack train and keep things moving?” Heller asked. “That’s a lesson in Double Stack 101; the trains are much shorter, they’re much more dense and they’re easier to process.”
In an emailed statement, CSX said that rail volumes at APM grew during the summer because of a surge in shipping traffic and because ships were shifted to APM from Norfolk International Terminals. The result was “congestion at the terminal since the rail volumes grew to exceed the terminal’s designed capacity,” wrote Robert Sullivan, a CSX spokesman.
Sullivan, however, stated that since January, when CSX began on-dock operations at APM, it has operated according to a plan vetted by port officials before the railroad started its service.
“CSX presented an operating plan to VIT that outlined the daily plans to operate two daily single-stack intermodal trains up to 9,000 feet long,” Sullivan wrote. “That plan was agreed to by all parties, and the service has operated as expected, without issue, and with rail volumes consistent with projections.”
The railroad has worked with the port and other railroads to find and implement solutions, which “did not involve any substantial or permanent changes to CSX rail traffic or service,” Sullivan stated, adding that the situation has eased, resources have been adapted and ships moved to APM from Norfolk International Terminals have begun to move back.
A top state rail official said that CSX’s trains will require some extra handling of single-stack cars, adding to the complexity, but that it’s a temporary situation.
“The inconvenience of some congestion due to single-stacking has opened the Port of Virginia up to the National Gateway corridor in advance of the Virginia Avenue tunnel,” said Kevin B. Page, chief operating officer of the state Department of Rail and Public Transportation.
“There’s a trade-off there.”
Robert McCabe, 757-446-2327,