Inland Port Study: Feasibility Analysis of Locating an Inland Port in the Commonwealth (House Document No. 2)
Summary
This 2023 report to the General Assembly of Virginia (House Document No. 2) by the Virginia Economic Development Partnership Authority and the Virginia Port Authority is the Inland Port Study, a feasibility analysis of locating an inland port in the Commonwealth. It states that Item 125 Q of Chapter 2 of the 2022 Acts of Assembly directed the Virginia Economic Development Partnership and the Virginia Port Authority to assess feasibility in the Central Virginia Planning District, the Mount Rogers Planning District, and the City of Bristol. From August through October 2022, VEDP and The Port of Virginia contracted with Moffatt & Nichol for the assessment. Moffatt & Nichol determined that, at this time, the Central Virginia region does not currently have the demand to justify the development of an inland port.
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REPORT OF THE VIRGINIA ECONOMIC
DEVELOPMENT PARTNERSHIP AUTHORITY AND
VIRGINIA PORT AUTHORITY
Inland Port Study: Feasibility
Analysis of Locating an Inland
Port in the Commonwealth (2022
Appropriation Act, Item 125.Q.)
TO THE GENERAL ASSEMBLY OF VIRGINIA
HOUSE DOCUMENT NO. 2
COMMONWEALTH OF VIRGINIA
RICHMOND
2023
Virginia Inland Port, Front Royal
Inland Port Study
Feasibility analysis of locating an inland
port in the Commonwealth
Table of Contents
EXECUTIVE SUMMARY 2
THE BUSINESS OF RAIL INTERMODAL 4
Defining the Intermodal Business Segment for Railroads 5
Railroaders and Truckers Collaborate in Intermodal 5
International/Domestic Intermodal Market Segmentation 6
Factors That Allow for Success in the Intermodal Rail Market 8
Rail Intermodal: A Market-to-Market Business 10
Who Controls the Freight? 10
Market Reach 10
WHAT IS AN INLAND PORT? 11
HIGHLIGHTED INLAND PORTS 13
Inland Port Greer 15
Appalachian Regional Port 17
Virginia Inland Port at Front Royal 18
Heartland Intermodal Gateway 19
IDEAL MARKET CONDITIONS FOR A SUCCESSFUL INLAND PORT 20
IDEAL PHYSICAL/TECHNICAL CONDITIONS FOR A SUCCESSFUL INLAND PORT 24
ECONOMIC IMPACT OF AN INLAND PORT 28
METHODOLOGY OF THE INLAND PORT MARKET DEMAND FEASIBILITY ANALYSIS 30
RESULTS OF THE INLAND PORT MARKET DEMAND FEASIBILITY ANALYSIS AND 32
RECOMMENDATIONS
Central Virginia Region 36
Mount Rogers/Bristol Region 37
CONCLUSION 39
ENDNOTES 41
Executive Summary
Item 125 Q of Chapter 2 of the 2022 Acts of The study team also held community meetings in
Assembly, Special Session I (the 2022-24 Biennial the three study areas to engage stakeholders on the
Budget) directed the Virginia Economic Development assets, challenges, and opportunities within each
Partnership (VEDP) and the Virginia Port Authority region for intermodal development. A summary of
(Port of Virginia) to assess the feasibility of locating findings from the assessment is described below.
an inland port in the Central Virginia Planning The detailed report that follows explores each of
District (formerly known as Region 2000), the Mount these items in greater detail.
Rogers Planning District, and the City of Bristol
(which falls within the Mount Rogers Planning By definition, an inland port is an intermodal
District). From August through October 2022, VEDP facility for the transfer of containers from truck to
and The Port of Virginia contracted with the firm rail and the inverse. An inland port is connected
Moffatt & Nichol, a global infrastructure advisory to a maritime port (The Port of Virginia, in this
firm with extensive experience in the economics of instance) and is dedicated to supporting and
inland ports and intermodal freight, to conduct the growing import/export freight. It can be a regional
feasibility assessment. This study is prepared by driver of economic growth by attracting businesses
VEDP and The Port of Virginia but relies heavily on that require intermodal rail movement to a region,
analyses, insights, and recommendations provided leveraging the convenience of trucks for the short
by Moffatt & Nichol, consisting of both public data haul with the competitive economics of rail for the
and data that is confidential due to its competitive long haul.
nature. Moffatt & Nichol conducted a confidential
analysis that included company interviews and a
sites analysis for each region.
According to Moffatt & Nichol, there are two recommended that the Mount Rogers/Bristol region
overarching determinants of whether an inland continue to pursue other rail-centric development
port is feasible: market demand and the availability strategies to grow target industries that would be
of a site on which to develop the facility. Not future users of an inland port facility.
every condition on the market or the physical side
must be met exactly, but too many diversions or Relevant to both Central Virginia and Mount Rogers,
departures from the requirements would prevent the an effort should be undertaken to pursue strategies
successful development of an inland port. This report that will cultivate growth in target industry sectors
will detail the primary market-driven and physical most attractive to the regions. The top priority for
requirements for a successful inland port, how any industry growth strategy is to develop attractive
each region stacks up against those requirements, sites ready for immediate investment when the
steps the regions can take to improve their position, opportunity arises for a company to locate or expand
and alternative development opportunities. in the region. Such a strategy can be costly and
requires that local and regional officials be willing
Moffatt & Nichol individually assessed the Central to secure, invest in, and market attractive industrial
Virginia Region and the Mount Rogers/Bristol sites. To be successful, they must be willing to play
Region on their potential market feasibility. The the long game. Especially for rail-centric industrial
market feasibility assessment leveraged Freight development, sites should be identified, protected,
Analysis Framework (FAF) data, jointly generated and enhanced along the routes of both of Virginia’s
by the Federal Highway Administration (FHWA) Class I rail carriers, CSX and Norfolk Southern (NS).
and the U.S. Bureau of Transportation Statistics Building a robust rail-and-freight-centric economic
(BTS), aligned against U.S. Bureau of Economic engine entails a broader industry view that
Analysis (BEA) population data. In addition to encompasses intermodal and other non-intermodal
market feasibility, Moffatt & Nichol conducted a market opportunities that, with careful planning and
manufacturing/industrial-derived demand analysis regional collaboration, can yield long-term success
through confidential interviews to determine the and growth in the region. VEDP would be essential in
viability of an inland port in each region. partnering with stakeholders in the regions to pursue
target sectors for development and identify project-
Based on the analysis of both the market ready sites for prospects.
feasibility and manufacturing/industrial-derived
demand, Moffatt & Nichol determined that, at this If a region decides to pursue an inland port,
time, the Central Virginia region does not currently coordination with The Port of Virginia will
have the demand to justify the development of an be necessary moving forward. The commercial
inland port. While this assessment details current and market nature of an inland port requires that
demand, this study acknowledges that the region the port drive decisions about additional market
could take steps to attract and grow companies that assessments. The port is in the best position to
would increasethe freight demand in the region. consider what market space an inland port could
At this time, the Central Virginia region is best occupy and how an inland port could extend its
positioned to pursue other rail-centric development market reach. Since the inland port would be a Port of
opportunities to attract industries dependent on rail Virginia entity, the port would be best able to guide its
and grow freight demand. physical layout. VEDP would be essential in targeting
business investment for regional development and
The analysis conducted by Moffatt & Nichol identifying sites for projects. VEDP would also be
determined the Mount Rogers/Bristol region meets in the best position to determine how to market the
enough market-driven and physical conditions availability of an inland port as an additional tool in
to warrant additional assessment. It is also the economic development strategy of the region
and Commonwealth.
3
The Business of Rail
Intermodal
4
The Business of Rail Intermodal
The requirements described in later sections for Railroaders and Truckers Collaborate in
determining the feasibility and site requirements
Intermodal
of an inland port facility are based heavily on the
market dynamics of the intermodal rail business. In transportation, over-the-road describes the
This section outlines the factors that enable trucking space competing with rail. While railroads
railroads to compete in this market and what makes and truckers collaborate extensively in the market
intermodal sites, equipment, and operations unique as partners in the intermodal space, this separate
in the railroad business. term “over-the-road” is often used to describe when
rails are competing with trucks for the movement
of freight.3 Many years ago, some traditional trucking
firms transformed into intermodal companies,
such as J.B. Hunt and Schneider. This transition
Defining the Intermodal Business Segment means that most of the equipment owned and
for Railroads managed by these truckers are intermodal containers
that move on a truck chassis when on the road and
Intermodal in the railroad business means something can also be lifted onto intermodal railcars for long-
very specific: It is the movement of containers and haul distances. This conversion from strictly over-
trailers on and off trains. For example, when a trucker the-road, traditional trucking to intermodal allows
states that one of their units is intermodal, that companies like J.B. Hunt and Schneider to benefit
means that it will travel or has traveled a portion of from the lower costs of rail for long-distance. In
its movement via rail. Even the equipment used by addition to reducing costs, it allows the companies
truckers for intermodal freight is a specific type of to maintain their direct customer service touch
container that sits on a chassis for the purpose of rail of careful pickup at the origin and delivery to the
movement rather than a trailer attached to its wheels. destination. Intermodal-focused trucking model also
Additionally, all intermodal moves require a truck means more flexible lifestyle choices for truck drivers
move at each origin and final destination. Intermodal (i.e., driving shorter distances).
moves originating or terminating directly on-dock at
a port, even when the rail is located immediately on-
dock, often require at least one hostler1 move.
Approximately 92% of intermodal moves today
are done using containers, as opposed to trailers.
Truck trailers are more prevalent for cargo moved
domestically. Traditional truck trailers have wheels
that are attached to the cargo compartment.
Intermodal containers differ from truck trailers
because they are detached from a wheel bed so they
can be placed on a specialized chassis pulled by a
J.B. Hunt Container
truck tractor or placed on an intermodal railcar. At
27% of all revenue, intermodal today is the largest
J.B. Hunt is an example of a traditional trucking company that has
single commodity carried by railroads in the United shifted its business model from over-the-road movements to more
States.2 intermodal-oriented service.
5
For railroads, intermodal operates only on portions destination truck movements, the intermodal move
of a given railroad’s overall network, which differs via rail will typically be at a transit time disadvantage
from traditional railroading. Intermodal is a market- relative to over-the-road. Also, every cargo
to-market business, while traditional railroading can manipulation incurs additional costs, which will have
consist of a network of local trains that travel around to be borne by the parties involved in the movement,
a given region (i.e., picking up one or more railcar whether the customer, the railroad, or the port. Thus,
shipments at multiple businesses and gathering railroads make an effort to reduce the number of
cargo for long-haul trips). Intermodal is uniquely times the cargo needs to be handled. To achieve
point-to-point and generally not moved through minimal manipulations of cargo, intermodal facilities
distribution hubs like large classification yards in require a specific terminal layout/design that allows
traditional railroading.4 cargo at rest to remain at rest until the next departure
via truck or rail.8
There is always a non-rail option for the Beneficial
Cargo Owner (BCO)5 on every intermodal move,
which makes intermodal facilities, like inland ports,
International/Domestic Intermodal Market
attractive to railroad companies. While there is
generally a truck option for most merchandise, the Segmentation
economics of many commodities, such as steel coils, The rail intermodal market is generally divided into
kaolin, or grain, make rail more attractive than trucks. two overarching components, international and
As a result, these commodities generate higher domestic.9 While domestic is today somewhat larger
relative demand for rail versus truck in those market than international, international intermodal service
spaces. Intermodal, on the other hand, because of developed earlier as a business. Domestic and
how the cargo is loaded into containers, always international intermodal are distinct businesses for
has a viable non-rail alternative (as it can move the railroads.10 When a railroader refers to domestic,
over-the-road). Therefore, intermodal operations they are also referring to the equipment used in
are deregulated because shippers always have an transporting domestic goods, and the same holds
alternative if they are not satisfied with the rates or true for international. For intermodal equipment,
service conditions offered by the railroad.6 the containers for domestic are a different size than
those for international and are not interchangeable.
Because of this market-based, competitive reality, The majority of domestic moves occur in larger 53-
intermodal has historically been a low-margin foot containers. International intermodal is moved
business for railroads. Through recent technology in containers of 20-foot, 40-foot, and 45-foot length.
and service offerings, the railroads have substantially Although most international containers are 40-foot
increased their profit margins on intermodal. Still, (referred to as FEU—forty-foot equivalent unit),
it remains a highly competitive business and much the standard unit of measurement in the maritime
more service-sensitive than other markets in which container business is TEU—twenty-foot equivalent,
railroads compete.7 The potential profitability of any with one forty-foot container equating to two TEUs.11
intermodal service opportunity is, therefore, heavily In the rail business, the railroads typically refer to
scrutinized by the railroads. How service is handled, intermodal containers as units, not TEUs, and they
how terminals are worked, and how much capacity count how many units are moved, international or
is afforded to the more service-sensitive intermodal domestic.
trains to operate across the rail network are key to
success in the intermodal business for a railroad.
Since intermodal involves an additional transfer of
cargo, compared with pure over-the-road origin to
6
Standard international intermodal containers come in
two heights, 8.5 feet high and 9.5 feet high.16 Certain
segments of track or rail routes are cleared for a
high-cube doublestack, which means that you can
stack two 9.5-foot boxes and still clear all overhead
obstructions along that route.
Each container moved on a railroad handled at
an intermodal terminal/ramp, whether inbound or
outbound, represents a lift when either loaded or
unloaded from the railcar. In the business, one will
also often see intermodal terminals referred to as
ramps. Inland ports, typically owned and controlled
by a marine port (and not a railroad), are one type of
intermodal ramp. The number of lifts is the standard
capacity measurement for an intermodal yard or
inland port.
International intermodal is somewhat less service-
A 45-foot container sits atop a 40-foot container
sensitive than domestic. A container that has been
on the water for three weeks can typically allow a few
extra days in transit to arrive at its final destination. A
In addition to container sizes, the rail service domestic intermodal move is more service- and time-
associated with domestic intermodal is generally sensitive.
different from international intermodal rail service,
with the railroads running separate trains or networks
for each market component. This is relevant because
in assessing market demand for any intermodal
facility, domestic freight in the region cannot be
served by an inland port or international intermodal
facility and does not contribute to the profitability
potential of an inland port.
International containers (ISO12 40-foot containers)
often arrive at maritime terminals and are drayed13
to a facility where their contents are unloaded and
reloaded into larger 53-foot domestic containers for
inland distribution.14 When any 53-foot container is
moved via rail, the railroad considers this a domestic
move. This applies to all product, including imports
or exports, which has been transloaded from 40-
foot containers to 53-foot containers near maritime
terminals at any maritime facility in Canada, Mexico,
and the United States.15 Doublestack moving on an intermodal train
7
A railroad’s economic viability is key to the feasibility East Coast ports continue to gain market share
of any inland port proposal. Ultimately, intermodal rail from West Coast ports. Shippers and controllers
competes on service and price. To be competitive, of freight have shifted some traffic to the east,
it usually needs to price below an over-the-road given the disruptions that have occurred on the
truck movement, which requires an inland port to West Coast. This shift likely commenced with the
meet several conditions so that the railroad can labor disruptions of 2000 and, more recently, U.S.
clear operational financial hurdles for the service. tariffs against China and economic shifts from the
An inland port that allows the railroad to meet its COVID-19 pandemic, resulting in massive supply
financial thresholds to be competitive with over-the- chain bottlenecks. Moffatt & Nichol is currently
road movements in the intermodal market will be projecting a continued modest market share shift for
successful. the near-to-mid-term from the West Coast to the East
Coast and the Gulf.
Steamship vessel size has continued to grow.
Factors that Allow for Success in the Currently, vessels in the 16,000 TEU range are calling
Intermodal Rail Market on East Coast ports. Vessel owners are therefore
Multiple factors dictate if a railroad will be profitable motivated to optimize the cargo they are moving.
on a given service,17 the most important being the As vessel size grows, more cargo must be stowed
length of haul and density/volume. Because of the onboard to maximize vessel profitability. This has
competitive market nature of intermodal, the longer meant that more discretional cargo21 is being loaded
the length of haul, the more likely a railroad can on vessels calling on the East Coast. East Coast
compete against the over-the-road option. The longer ports and their supply chain partners, in this instance
the length of haul, the greater the distance over Eastern rail carriers CSX and Norfolk Southern, have
which the additional necessary cargo manipulation, needed to penetrate further inland as a response to
and its associated costs, can be subsumed within the this change in ocean traffic patterns.
rate structure for the overall move.18 However, there is
no length of haul so short it cannot be compensated A region’s balance of imports and exports is
for via sufficiently large volumes in a defined lane.19 relevant to an inland port effort. Where lanes are
balanced (loads vs. empties; inbound vs. outbound),
Historically, conventional industry wisdom was railroads are more efficient, and costs are reduced.
that rail intermodal could not effectively compete For example, a region that produces a great deal
against over-the-road carriers at distances below of containerized products but consumes little, or
750 miles. In more recent years, railroads, especially imports little, is challenging because it requires
both eastern carriers, have successfully been moving empty containers to be brought back to the region
substantial intermodal freight at distances of only at a net cost to the parties involved in the move.
500 miles and, in very specific circumstances, have Someone needs to absorb the cost, ultimately most
succeeded in structuring profitable services at short likely the customer. A situation can also exist where
distances of 200 to 500 miles.20 At 236 rail miles, a region is inbounding all its input products from
the Inland Port at Greer is notable for short-haul rail domestic or regional sources but then exporting
intermodal success. The more recent Appalachian a large proportion of its output. In this instance,
Regional Port located in Murray County, Georgia, equipment is still imbalanced for the international
northwest of Atlanta, is another example of short- move. Said a different way, the payload pays the
haul success at 388 rail miles. This facility was freight. The ideal situation has payload moving
developed by the Georgia Port Authority and is served in both directions. If the container needs to be
by CSX railroad. repositioned a great distance for its next load, that
empty move (repositioning the “empties”) is a cost
that someone in the supply chain will need to bear.
8
Norfolk Southern Train, Radford
Equipment management represents an additional chassis locally near the port and inland locations is
factor that railroads consider. Most international another important element in the supply chain since
containers are owned or controlled by the steamship chassis are required at both ends. Ideally, chassis are
lines. In times of supply chain stress, steamship not loaded with a container atop, waiting long periods
lines may seek to force transloading intermodal for their next move, whether on the road, rail, or ship
containers near the port to secure empty containers (i.e., a loaded chassis waiting for too long with its
which can more quickly be delivered back overseas, sitting container is a chassis that is not earning
particularly to Asia, to reload. Provision of adequate money). This wait time represents additional capital
container supply to inland locations, particularly low- costs. Chassis supply is key and, ideally, is fluid, not
volume ones, can be challenging for the ports and stationary.
their steamship line customers. Similarly, managing
9
Rail equipment varies, and marrying up the correct equipment with the characteristics and volume of demand
in a given lane is critical for the railroad. A railroad incurs operating costs without generating revenue whenever
it moves empty rail equipment, making lanes that are heavily imbalanced challenging. The rate charged on the
headhaul move, the demand-derived move that carries the payload, must be sufficiently lucrative to cover the
costs of the empty backhaul move. This reality is relevant for all the players in the supply chain.
Rail Intermodal: A Market-to-Market Business22
Rail Intermodal is market-to-market and is identified by lanes. In the case of The Port of Virginia, service is
strictly controlled; each Class I railroad (CSX and Norfolk Southern) offers a handful of intermodal lanes to the
port and provides service from the port’s facilities in Hampton Roads to those specific destinations and back.
Any inland port attached to The Port of Virginia must make sense not only from a demand perspective but also
from the rail carrier’s operating network. To the extent an inland port can fit logically into an existing train plan
without major modification or disruption, the more likely it will succeed.
Who Controls the Freight?
In intermodal, the overwhelming majority of the freight is controlled by third parties. This holds true for both
domestic and international intermodal businesses. Most international container traffic is managed through
steamship lines as the third-party supply chain providers. It is the aggregating steamship line that holds the
contract with the railroad. Thus, generally speaking, the railroad sees the steamship line as its customer while
respecting and understanding the ultimate BCO.23 Due to the involvement of third-party shippers, shifting
business to a new inland port would be a multi-step process to achieve.
Additionally, if a given shipper considering an inland port wishes to shift their traffic to a Port of Virginia-inland
port, it would also be necessary that the shipper’s steamship line was calling at The Port of Virginia to and from
the target market of the shipper. Thus, different friction points exist, such as contractual obligations, which must
be managed over time to effectuate the successful launch of an intermodal ramp. This takes time to effectuate.
Market Reach
The catchment region for an intermodal ramp can be fairly large geographically, especially in regions where
there are not many intermodal ramps.24 A rail carrier will avoid establishing intermodal ramps too close to one
another to avoid cannibalizing traffic already available to the given railroad. However, competing railroads may
place competing facilities within the same geographic space.
10
What is an Inland Port?
11
What is an Inland Port?
A rail-served intermodal inland port is a facility in
which maritime containers are transferred from
chassis pulled by truck tractors and placed on
trains. By definition, an inland port is connected
via its serving rail carrier to an actual marine port.
Specialized lift equipment is required at the inland
port to transfer the containers, also called units or
loads, from the truck chassis onto the railcars. The
railcars, themselves, are specialized rail equipment
used exclusively for the intermodal business of
moving containers. The type of intermodal rail
equipment used will vary by the type of business,
including whether the business is international, as in
this study, or domestic, and by volume of business.
Thus, an inland port is a type of intermodal terminal or in a ground stack, for later placement onto the
or ramp. The majority of intermodal ramps served by train.25
railroads are owned and operated by the railroads.
Usually, the railroads contract out the operations. Rail moves are typically cheaper for shippers over
An inland port is owned and controlled by an actual long-haul distances and have a softer environmental
marine port. The port authority also handles and impact. Intermodal facilities, like inland ports, allow
oversees the operation of an inland port, including a shipper to have the benefit of direct service from a
its pricing (which it will assess after consultation trucker yet still utilize rail for the long-haul portion of
with its serving railroads, truckers, and, of course, the cargo movement.
customers).
As with all rail intermodal facilities, inland ports are
Every rail intermodal move requires manipulation measured by the number of lifts26 they can handle
of the containers at both ends of the move. At the per year. Every lift represents an element of cost as
marine port, containers are moved from the ship it represents additional physical manipulation of the
and loaded on the railcar, which may involve a cargo. Ideally, the trucker would be able to have the
marine terminal truck for a short-haul move from container lifted immediately onto a railcar, but this
the shipyard to the railcar. After the rail moves cargo is not always achievable. Idle containers in the yard
inland, a local truck is required to move a container represent a considerable expense in time, occupied
from the inland port to its final destination, which is real estate, and equipment for the parties involved.
typically the final customer. This local truck move
is referred to as a dray, either from the inland port
The above represents an overview of the inland
to the final destination or from its point of origin to
port business. This report will briefly describe some
the inland port. Often, the local dray trucker delivers
inland ports to provide context for the feasibility of
the container to the inland port, where it is left on its
establishing an additional inland port in the Central
chassis awaiting the next train. A container can also
Virginia or Mount Rogers/Bristol regions.
be lifted off its chassis and stored on the ground,
12
Highlighted Inland Ports
13
Highlighted Inland Ports
Table 1: Characteristics of inland ports
Distance Anchor
Maritime Serving from Port Annual lifts Tenant/
Inland Port Port Railroad Highway (miles) Acreage and/or capacity Target Market
Greer, SC Charleston NS I-85 236 100 total (50 160,234 lifts BMW
Developed) (2021)
Dillon, SC Charleston CSX I-95 150 40 (inside a 29,412 lifts Multiple
3,400-acre (2021); 116,000
industrial park) capacity
Front Royal, Norfolk NS I-66/I-81 220 161 31,282 lifts Multiple
VA (2021); 78,000
capacity
Appalachian Savannah CSX I-75/US 411 388 42 50,000 capacity Carpet
Regional, industry;
Crandall, GA GE Appliances
Cordele, GA Savannah CSX I-75 185 40 (expansion 20,000 capacity South-central
opportunity) GA
Prichard, WV Norfolk NS US 52 485 90 Reached 1,100 Not in
(closed) lifts operation
Gainesville, Savannah NS I-85/I-985 325 104 150,000 planned Atlanta Metro;
GA capacity growth area
(planned)
Table 1 selects seven existing or planned inland ports as illustrative examples. There are a few others and a
myriad of intermodal ramps serving both international or domestic markets. The seven selected are all in the
eastern United States, served by the two major Class I railroads in the East (CSX and Norfolk Southern), and
connected to an east coast port (either Virginia or its east coast competitors, Charleston and Savannah).
Where available, the table provides actual lifts recorded for a specified year; otherwise, it lists solely the built or
planned lift capacity. Principal anchor tenants are also highlighted where that information was available.
14
HIGHLIGHTED INLAND PORTS:
Inland Port Greer • South Carolina
The South Carolina Ports Authority facility located in Greer/Spartanburg, South Carolina, is what some might
consider the poster child for a successful inland port. In collaboration with the serving railroad, NS, the South
Carolina Ports Authority proposed to BMW that the auto company consider moving its containers via rail
intermodal to the Port of Charleston. All three organizations had established working relationships. BMW was
already using the Port of Charleston to ship the plant’s vehicles overseas. NS had collaborated with BMW and
the state years earlier in site work related to BMW’s initial selection of Greer. More importantly, NS was already
handling BMW’s export-finished vehicle traffic. The company was exporting approximately 70% of its finished
vehicles overseas, which moved via NS rail to the Port of Charleston.
Greer is a chief example demonstrating the market dynamics that allow a railroad to serve an inland port over
a short length of haul where shipping over the road is financially competitive compared to direct truck over-
the-road. Greer shows that no rail haul is too short if it can be compensated by a sufficiently large amount of
committed traffic. At about 236 rail miles from the Inland Port Greer to the Port of Charleston, the short length
of haul is extremely challenging economically from a railroad perspective. In the instance of the Inland Port
Greer, BMW was willing to commit 24,000 annual lifts to the proposed inland port. It is key to note that BMW
committed to actual numbers along a set timetable, not merely expressed an interest in using the inland port
were one to be established. The commitment was also married to rate and service conditions negotiated by the
port and the railroad, including proposed lift fees at the inland port.
Inland Port Greer’s facility in South Carolina
15
An identified anchor tenant was the triggering concept for the proposed inland port. From there, the parties
sought to establish the inland port as close as possible to BMW since the company would supply the bulk of
the inland port’s container traffic. Inland Port Greer is just under five miles from the auto plant. The facility also
sits fewer than five miles from an interchange on Interstate 85, allowing efficient access to other potential
customers.
Based on the BMW agreement, the South Carolina Ports Authority was able to craft a financial structure for
Inland Port Greer that was feasible. Had BMW not committed its traffic, justifying an inland port in Greer
would have been challenging. With BMW’s lift commitment and a decision to move forward to launch, other
manufacturers and product distributors were able to use the facility. Importantly, the Inland Port Greer is located
in the Upstate region of South Carolina. South Carolina is a heavy manufacturing state, and its manufacturing
base historically has been concentrated in its Upstate region. Thus, the BMW commitment and placement of the
facility in Greer succeeded due to the volume strength of the anchor tenant, the concentration of other shippers,
and, at that time, the absence of other nearby international intermodal ramps. This last element meant that the
catchment reach for Greer was fairly wide geographically, and some users today still transport cargo more than
150 miles to the ramp.
Greer far exceeded its projected annual lifts from year one, and its 160,000 lifts in 2021 constitute a significant
intermodal volume. Both the facility and the railroad’s mainline have been expanded based on Greer’s
successes. This expansion has been supported by competitively-secured federal transportation grants.
Today, in the broader geography, NS and CSX have intermodal ramps in Charlotte, and the Georgia Port Authority
(GPA) is establishing an inland port in Gainesville, Georgia, which NS will serve. CSX operates two GPA-owned
intermodal ramps in Georgia, including in Murray County in northwest Georgia and Cordele in central Georgia,
south of Macon.
16
HIGHLIGHTED INLAND PORTS:
Appalachian Regional Port • Georgia
The Appalachian Regional Port (ARP) in the hamlet of Year-over-year growth at ARP has been steady.
Crandall in Murray County, Georgia, sits a few miles Total actual lifts in 2021 were about 35,000, with
north of Chatsworth and 20 miles from Interstate 75, an anticipated volume of 40,000 for 2022. With a
which is further from an interstate than typical for current annual lift capacity of 50,000, it is reasonable
an intermodal ramp. It is approximately seven miles to anticipate a planned expansion to 100,000 lifts.
south of the Tennessee state line and northwest of With only about two million greater population
the very important Atlanta market. Intended initially than Virginia, Georgia is 39% larger physically than
to attract Volkswagen (VW) business from VW’s Virginia, at over 59,000 square miles. Notably, the
Chattanooga plant, the ARP has been successful Atlanta metro region is the third largest market east
with a combination of some modest VW business of the Mississippi, a driver of much economic activity
and especially the regional volume density afforded for the state and, logically, a key market element for
by the carpet and flooring business in the region. GPA. Because of its geographic location and close
For example, the facility sits seven miles from the market relationship relative to Atlanta, GPA occupies
Mohawk Industries plant. In part, thanks to the a somewhat different market space than The Port
availability of intermodal rail, this region of Georgia of Virginia. GPA has a multi-inland port strategy that
attracted a new GE Appliances facility nearby, which includes ARP and the CSX-served Cordele facility in
is now planning an expansion. central Georgia, south of Macon, and the planned
Gainesville ramp, northeast of Atlanta, which Norfolk
CSX is the rail carrier serving ARP. The mainline Southern will serve.
serving the inland port is not CSX’s primary route in
the region. However, reliable CSX service has proven As in the case with Greer, the ARP has been able
adequate for extending the market reach of the GPA to attract BCO traffic from relatively substantial
through this relatively small inland facility. distances.
The Appalachian Regional Port facility in Crandall, Georgia
17
HIGHLIGHTED INLAND PORTS:
Virginia Inland Port (VIP) • Front Royal
The Virginia Inland Port at Front Royal
When first conceived in the late 1980s, the Virginia Inland Port
(VIP) at Front Royal in northern Virginia was envisioned as a
means by which The Port of Virginia might siphon container
traffic moving on the interstate to other ports (e.g., Baltimore) and
induce the traffic to move to Hampton Roads via rail. The facility
opened in 1989.
Due to its broader relationship with The Port of Virginia, NS agreed
to provide service to Front Royal, which sits two miles away
from an interchange on Interstate 66. The original concept of
attracting Baltimore’s port traffic did not initially materialize in the
market. There was only one large shipper already located in the
region: Dupont. Their facility was in close proximity to the Front
Royal Inland Port, but its volumes were not significant. However,
with the existence of the ramp and continued service by the rail
carrier, several other distributors, along with a few manufacturers,
located in the region over time due to the availability of reliable rail
intermodal service connected to The Port of Virginia.
After its initial 20 years, the volumes generated by VIP grew
to a point where the operation began to prove remunerative to
the rail carrier, largely thanks to the new distribution and other
businesses attracted to the ramp. While the Virginia Inland Port
at Front Royal’s roughly 35,000 annual lifts is a sizable number, it
The Virginia Inland Port sits approximately two miles
is still modest compared to most intermodal facilities served by from an I-66 interchange and has attracted multiple
Class I railroads. shippers to the area.
18
HIGHLIGHTED INLAND PORTS:
Heartland Intermodal Gateway • West Virginia
Heartland Intermodal Gateway, located in Prichard, West Virginia, is an inland port that is no longer in operation.
This facility was pursued by the State of West Virginia and located within easy reach of Huntington and,
potentially, Charleston. The facility was made possible by the tunnel clearances provided by the Heartland
Corridor, connecting Columbus, Ohio, and The Port of Virginia.
The facility was designed and launched despite not having identified adequate demand. Although some
shippers expressed interest, none were committed in advance, and the demand profile never generated anything
near the 20,000 lifts that would represent a successful launch. Located on the NS line, the railroad provided
service three days a week for a couple of years. Still, traffic did not materialize and the facility was forced to
close as it could not sustain its operating costs.
The Heartland Intermodal Gateway in Prichard sits south
of Kenova, West Virginia, along the Big Sandy River
19
Ideal Market Conditions
for a Successful Inland Port
20
Ideal Market Conditions for a Successful Inland Port
In considering the market conditions necessary to launch a successful inland port, it is important to recognize
that not every condition needs to be met perfectly for a region to succeed. However, the prospects of success
for a proposed facility become more challenged as more conditions are not present and/or cannot be generated
or induced. The inverse also holds true: the potential for commercial success increases with the number of
conditions met at a proposed location.
The primary market-driven factors for a railroad to be As stated above, not all conditions need to be met.
an interested partner and, therefore, for an inland port The case study examples show that some shortfalls
to be feasible are listed below. These factors are can be ameliorated through the development process.
consistent with the background provided earlier with Still, too many shortfalls suggest that the regional
respect to the intermodal market: economic growth strategy should focus on alternative
■
Length of haul – A length of haul above 250 miles is growth opportunities, such as growing import/export
preferable for the serving railroad (competitive market density, developing a rail-centric distribution
versus over-the-road truck movement) and logistics hub, or pursuing other cutting-edge
logistics opportunities.
■
Volume – Identification of a minimum of 20,000 lifts
per year is a key threshold to demonstrate the
A region that does not meet the market requisites for
market demand necessary to engage a Class I
an inland port can still adopt an aggressive rail-centric
railroad
and site-centric economic development strategy if
— The volume must be international, import/
it has the right business environment, is well-served
export, not just domestic-driven demand
by a railroad, and can identify viable rail-served
— Shippers/BCOs must be willing to commit
competitive sites. This rail-centric, site-based strategy
traffic, not just express interest in intermodal
service can still be connected to a marine port for import/
export activity but is less constrained in mixing
Location – Proximity to an interstate highway is
domestic and international business as its product
■
important as intermodal is a truck-and-highway
(inbound or outbound) will not be moved via
dependent service
containers but via other rail equipment types. The
— Location on a rail mainline that already carries site’s characteristics are somewhat less exacting
intermodal freight, preferably with the marine than the requirements for an intermodal ramp
port in question
(see next page) but still require substantial effort.
■
Freight Demand – Freight demand must be dense, Further, while not an intermodal project, a well-
concentrated, and not geographically dispersed conceived rail industrial park can include capacity
— Freight demand is initially concentrated in a reserved for transload activity. These are locations
small number of shippers and not dispersed where the physical transload of product is done from
amongst a large number of shippers truck to rail at the site, moving from a traditional truck
— Traffic is generally balanced, imports versus and loaded onto a traditional railcar. This is called
exports and empties versus loads amultimodal operation. As such, this multimodal
■
Available Additional Properties – Developable operation allows local shippers and BCOs to combine
property is reasonably proximate such that the short-haul convenience of trucks with the
additional generation of demand can locate near long-haul, more competitive rail rate (resulting in a
the inland port smaller carbon footprint).
21
There are other relevant factors for success, such as determined that an inland port could be successfully
land costs and labor pool size, but these other factors established, the size of the facility would be defined by
are essential and relevant to most economic an annual lift capacity.27
development initiatives in a given region and are not
limited to pursuing a successful inland port. Anything smaller than 20,000 annual lifts would not
be economically viable for a railroad. Identification of
The farther the inland port is from Hampton Roads, 20,000 annual lifts must constitute actual demand
the more likely the rail move can compete and make that can be committed by companies. Demand at this
a profit. As indicated earlier, a shorter haul can be level should be adequate for a railroad to be interested
compensated by large amounts of existing cargo in further study of an inland port’s potential, and they
demand. A distance shorter than 500 miles requires would expect additional discretional volume to be
very careful specific assessment to determine its attracted to the facility.
success. A distance less than 250 miles can be
successful if an international freight demand of at Because of the different equipment required for
least 20,000 annual lifts specifically for intermodal is moving 40-foot international containers compared
achieved. with a 53-foot domestic container, all identified
lift demand for an inland port must be for import
Ideally, an inland port should be in close proximity and export traffic only, not domestic. Additionally,
to a rail line already in intermodal use connected a key element of cost, including for the port, is
to The Port of Virginia. It is more costly for a railroad the balance between imports and exports.28 If an
to go out of its current international network intermodal ramp is seriously out of balance for
route, especially for a nascent intermodal operation inbound movesversus outbound moves, it will be
that generates only modest freight traffic. challenging to balance container equipment. The Port
of Virginia would be in the best position to advise on
In order to reach the most minimal thresholds, a what level of imbalance their business model can
proposed inland port strategy must have identified sustain or how they otherwise would address such a
at least 20,000 annual lifts. Generally, in smaller challenge.
operations with about 20,000 annual lifts, the site
should be designed to allow the containers to rest Interstate highway access is important to an
on their chassis in the ramp or the terminal to avoid intermodal ramp for its ability to unlock more
having to ground the containers, which would force distant geographical markets that could utilize the
additional cargo manipulation and added costs. inland port.29 The railroads can see a lack of interstate
as a challenge because it could limit the potential
Additionally, the fewer number of shippers necessary lift demand of the inland port. Trucks must easily
to reach a 20,000 minimal threshold for the access the inland port from long distances, which is
initial number of committed lifts, the more likely especially important in the larger catchment area to
deals can be negotiated such that the facility will gather adequate freight volume. Absent an interstate,
successfully launch. the ramp needs to rely on a proximate limited
access highway as similar to an interstate as possible.
The closer to an interstate, the better. However,
After identifying lift commitments of a narrow set
there are exceptional examples in this respect, such
of existing companies or growing and attracting
as Georgia’s Appalachian Regional Port, which is
a sufficient set of rail-centric distribution companies
20 miles from the nearest interstate and located on a
that can supply at least 20,000 container lifts per year,
two-lane portion of US Route 411.
a further, more detailed assessment of developing an
inland port would be warranted. If this further study
22
Graph 1: The greater the dispersion of the freight, the less likely to accumulate at an inland
port, but qualified by the length of the rail haul.*
Finding multiple parcels/lots of developable property near inland ports is extremely important. In addition to
the inland port facility’s site, other developable properties nearby (mostly not rail-served) should be identified
to attract and grow potential users. There is no hard minimum, but this factor should be evaluated when
comparing potential site locations for an inland port. Having additional developable property accommodates the
proximate economic growth of shipping-oriented firms, which induces additional freight demand that will bolster
the longer-term market success of the facility.
To the extent possible, the facility should locate where demand is most densely concentrated. The greater the
distance of the supporting truck moves and the more dispersed the demand profile, the less likely shippers will
use the facility. The longer dray is not only a factor of time but also cost: the given shipper must assess their
total costs for the move, not just the facility charges and the rail rate.
The graph above provides an illustrative framework demonstrating the likelihood that a BCO to use
an intermodal facility based on the distance to a destination port and local drayage to the intermodal facility. A
given facility’s degree of market reach and the local tolerance for dray distance can be graphed as shown below
but will vary enormously due to a variety of factors. For example, a local dray will happily travel a couple hundred
miles in Wyoming to load onto a railcar at an intermodal facility; in northern New Jersey, drayage tolerance on
distance would be magnitudes lower.
*Numbers are illustrative
23
Ideal Physical/Technical
Conditions for a Successful
Inland Port
24
Ideal Physical/Technical Conditions for a Successful
Inland Port
The ideal location for an inland port will meet most For an inland port, an identified site should be
or all the following conditions. As with the market approximately 100 acres. Facilities below 100 acres
preferences described above, not every condition are possible, and perhaps even 70 to 80 acres can
needs to be met precisely. However, the more work efficiently, but a property too small will make
departures from requirements, the less likely a facility the operation unworkable. Additionally, the location
is to achieve success. Some unmet requirements can of an inland intermodal port facility should not be on
be overcome, but this generally is at a high cost to acreage that would be “outgrown” in a short period
the developer. For example, a site could be in an area of time. The site location must not be landlocked or
with limited flat land, but significant funds would be inordinately restricted from potential future expansion
needed to grade the site. by nearby, pre-existing built development or blocking
roadways or topography.
This study looked at the characteristics of a modest
inland port with a typical facility capacity of 50,000 The property for the ramp should be relatively flat;
annual lifts. These characteristics include: the more topographically challenged a property is,
■
Approximately 100-acre site, which is not the greater the amount of fill and grading that will be
landlocked (i.e., the land is proximate to additional necessary. No amount of excess topography is too
land developable for shippers); a smaller site may great, but a high cost may warrant a reconsideration
function but must be perfectly linear of the site or the project. Even what appears like a
modest amount of “roll” on a property can translate
Flat land into millions of dollars for site preparation. The
■
■
Located on a straight section of railroad mainline investors in the facility will need to determine their
that carries intermodal business, preferably with financial capacity. The grading cost, for this reason,
the target port; the rail mainline should have should be assessed early on in the site determination
adequate rail capacity, including clearance for process.
containers moving in rail high-cube doublestack
configuration The site must be located on a mainline that is ideally
■
Adjacent, serving railroad tracks must be level with already serving intermodal business to the target
the site and with minimal approach and departure port. Once a site is identified, the railroad must
grades incorporate the site and some estimated level of
■
Rectangular site that sits contiguous and not service, or frequency, into its train operating plan
perpendicular to the rail mainline with at least and ensure that it has adequate rail capacity on the
9,000 feet length for the rail mainline to efficiently serve the site. There is no
mainline capacity challenge that cannot be fixed with
No at-grade crossings for the full length of the money, but the ideal site will not require additional
■
track mainline rail capacity.30 The container trains must
■
Site lays with the serving rail mainline on one side; also be able to move in a doublestack configuration
the access/egress roadway on the other on these lines. Additionally, the inland port facility
should not be located proximate to where the rail
mainline has a curve; the longer and straighter the
mainline at the point of the facility, the more efficient.
25
The most grade a freight train can efficiently accommodate is 2.5 percent, compensated. To keep the combined
resistance of grade and curve from overwhelming trains, grades are compensated by being reduced on curves,
so resistance remains constant. An efficient intermodal ramp will have an on/off grade for the serving railroad
lower than 2.5 percent. Relatively flat land is a necessity for a potential site.
For a modest intermodal facility with a 50,000 annual lift capacity, the property needs to sit contiguous to
the rail mainline, allowing for a 3,000-foot-long facility. This contiguous location of the property relative to the
rail line is essential such that a train can make a headhaul move into and out of the facility regardless of its
traveling direction to avoid switching back and forth. Additionally, a train operating in and out of an intermodal
ramp cannot extend onto the rail mainline, obstructing through-rail traffic as it works the given intermodal ramp.
Figure 1: An ideal property for an inland port cannot sit in a perpendicular or otherwise oblong
direction relative to the mainline
In order to properly switch31 a facility, 3,000 feet of track is optimal on each end of the facility, meaning 3,000
feet to enter the facility and 3,000 feet to exit at either end. With a minimum of 3,000 feet for the facility
itself, the ideal location is at least 9,000 to 10,000 feet in length. As with other ideal conditions, specific
circumstances will need to be assessed. If a facility locates where there is a double mainline track, there is likely
a lower requirement for 3,000 feet to enter or exit. If a facility locates on a lower-density mainline,32 operating
circumstances can be more forgiving.
26
An inland port cannot be located in proximity to grade crossings. Truck versus rail conflicts must be avoided
with regard to facility access and inside facility operations. Access/egress to and from the facility cannot be
inhibited by grade separations representing any conflict between roadway and train movements.
The ideal ramp configuration has highway access on one side and the contiguous rail on the other. Rail/truck
conflict for access/egress must be fully eliminated. In instances where rail and highway run on the same side
with the property or site on the other, the roadway will need to be elevated for access, presenting a design issue
and an element of capital cost.
In addition to the site requirements noted above, the inland port should be built relative to current, and near-
term expected demand. It should be configured in such a manner as to be expandable but without incurring
unnecessary costs in advance of market demand. Providing too much capacity in advance of demand is a recipe
for financial stress for an inland port.
Lastly, ongoing operating costs are important and are often overlooked when establishing an intermodal ramp.
Additional assessments would be needed to determine ongoing costs for any potential inland port before an
inland port facility can be developed.
Figure 2: The ideal ramp configuration has highway access on one side and the contiguous
rail on the other
27
Economic Impact
of an Inland Port
28
Economic Impact of an Inland Port
As a component of the study, Moffatt & Nichol hired This analysis is illustrative in nature. Actual
Insight Research Corporation (IRC) to undertake an performance will vary, potentially a great deal,
analysis of the economic impact of a modest-sized depending on the selected placement and local
inland port facility. market dynamics. For example, the economic
impact will depend on the business cycle and
IRC established a series of assumptions whether an inland port opens during a recession or
reviewed and approved by Moffatt & Nichol. economic expansion period. Performance would
Those assumptions start with the delivery of a also be impacted by the effectiveness of economic
50,000 annual lift capacity facility on a 100-acre lot, development tactics to attract business investment.
which costs a total of $55 million ($5 million in the
first year for engineering, followed by two years of Over a 20-year period, the cumulative economic
construction costing $50 million). This illustrative impact is estimated to be $1.75 billion. This
total cost of $55 million includes the equipment analysis defines economic impact as the benefit
needed to operate the inland port but does not to the general economy of a defined rail prospect
include the cost of the land. catchment study area, calculated using multipliers
from the U.S. Bureau of Economic Analysis (BEA)
In this scenario, the facility opens in year four specific to the Commonwealth. This impact would
and handles 15,000 annual lifts in its first full year be driven by all areas of new expenditures for
of operation, growing to 25,000 by year six and construction, payroll, maintenance, and operating
45,000 by year ten. activities of both the public and private sector
investments.
The following economic impact described is
for a modest-sized generic inland port.33 In the The analysis estimates a total of 1,370 permanent
analysis, IRC assumes that the market threshold new jobs would be generated by the operations
and physical requirements for a facility have been of the inland port facility alone, with 675 jobs
met. This approach is illustrative only and assumes directly at the inland port and 695 indirect jobs.35 As
that the market conditions for both regions are the port facility and the five new businesses (or
virtually identical. The market conditions would vary expansions) are being built, an estimated 1,363
considerably between the two regions, and actual construction (temporary) jobs are generated. The
numbers would also be driven by the site selected. IRC analysis does not attempt to estimate the
permanent employment impact.
IRC also makes the following assumptions: in the
first year of full operation, the inland port would Tax revenues are another component depending
attract a 100,000-square-foot manufacturing facility on local tax rates. Therefore, those estimates will
near the newly opened port. Over the first ten years, be site-specific and would be a component of a site-
two more manufacturing plants of the same size specific study.
land in the given region, along with two warehouse/
distribution operations of 450,000 square feet
each.34 IRC assumes none of these investments
would occur in the absence of the inland port.
29
Methodology of the Inland
Port Market Demand
Feasibility Analysis
30
Methodology of the Inland Port Market Demand
Feasibility Analysis
Item 125 Q of Chapter 2 of the 2022 Acts of Assembly, Special Session I (the budget) included the Central
Virginia Planning District (formerly known as Region 2000), the Mount Rogers Planning District, and the City of
Bristol as areas to determine the feasibility of locating an inland port. Each region was analyzed independently
based on market reach. The City of Bristol was incorporated within the overall Mount Rogers region assessment,
as Bristol does not constitute a separate freight market.
To assess the demand-level feasibility of an inland port, Moffatt & Nichol ran Freight Analysis Framework
(FAF) data using BEA assumptions to test macro-demand. The FAF data is published by the Federal Highway
Administration (FHWA). The data attempts to capture a comprehensive picture of freight movement among
states and major metropolitan areas by all modes of transportation. The FAF integrates data from a variety of
sources incorporating multiple commodity types, including data from the Commodity Flow Survey (CFS) and
international trade data from the U.S. Census Bureau. The FAF is produced through a partnership between
the U.S. Bureau of Transportation Statistics (BTS) and FHWA, both agencies of the U.S. Department of
Transportation.
Moffatt & Nichol ran the FAF data capturing movements between the two respective regions and East Coast
ports running from Savannah through the Port of New York/New Jersey, which included The Port of Virginia.
Moffatt & Nichol also ran the FAF data against each region’s population and market assumptions drawn from
BEA data.
Figure 3: The study regions named in Item 125 Q Chapter 2 of the 2022 Acts of Assembly,
Special Session I
31
Results of the Inland
Port Market Demand
Feasibility Analysis
and Recommendations
32
Results of the Inland Port Market Demand
Feasibility Analysis
Meeting the market demand is essential to demonstrate the feasibility of an inland port. The ability to identify
20,000 lifts annually is an absolute minimum to make an inland port economically viable for the Class I railroads
and for the railroad to be an interested partner. The short length of haul is a huge challenge against a pure truck
move to The Port of Virginia. Therefore, the freight demand must meet certain criteria described more fully
above.
Both the Central Virginia and Mount Rogers/Bristol regions are relatively low in population, with low population
density. Moffatt & Nichol’s initial review of the publicly-available data as described above indicated that based
on population-derived consumer demand, neither region had adequate freight demand to meet the 20,000
annual lift threshold that would make an inland port economically viable for the Class I railroads.
Figure 4: There is a large geography that encompasses both regions without any rail
intermodal facility
33
Since Moffatt & Nichol determined a lack of existing consumer demand that would not justify an inland port in
either region, they looked at manufacturing- or production-derived demand.36 Because of the absence of any
existing intermodal facilities in the larger geography surrounding all of central and western Virginia, including
regions of adjoining states, it is reasonable to expect that any intermodal ramp located in either region would
have a market reach extending beyond these regions as defined in the budgetary language establishing the
scope of this study.
For the purposes of including all potential manufacturing-derived demand for an inland port, each region was
extended to include geographically proximate areas where shippers would see advantages to using an inland
port. Extending the regions more accurately captures the potential market of an inland port since an inland
port facility placed in either region would have a broader geographic market reach than the regions defined in
the budgetary language establishing the scope of this study. The extended regions have only a modest market
overlap with competing, existing intermodal ramps. In the case of the Central Virginia Planning District region,
Roanoke County, Roanoke City, Salem, and Botetourt County were added as natural catchment extensions
to a Central Virginia-based ramp. In the case of the Mount Rogers region, Giles and Pulaski Counties, and
northeastern Tennessee, were added to the region.
Figure 5: The study regions are represented in light gray, and the extended regions included
in the analysis are in dark gray
Based on this data analysis of manufacturing/industrial-derived demand, Moffatt & Nichol determined that
the Central Virginia region does not currently have the market demand to financially justify the development of
an inland port. While this assessment details current demand, this study acknowledges that the region could
take steps to attract and grow companies that would increase the freight demand in the region. At this time,
the Central Virginia region is best positioned to pursue other rail-centric development opportunities that would
enable the region to secure the long-term market demand needed for an inland port.
34
Additionally, the analysis conducted by Moffatt & Nichol indicates the Mount Rogers/Bristol region
demonstrates enough market-driven and physical conditions to warrant additional assessment. It is also
recommended that the Mount Rogers/Bristol region continue to pursue other rail-centric development strategies
to grow target industries that would be future users of an inland port facility.
While this study looked at the feasibility of an inland port at present, additional strategic conversations and
analysis should be made by each region to determine if pursuing an inland port is the most effective path to
encourage the growth of key sectors in their region. In addition to medium- and long-term considerations around
developing an inland port, it is important to note there are several paths forward for the regions to support
rail-centric industry development. These include developing strategies to grow import/export market density,
developing rail-centric distribution and logistics hubs, or pursuing other cutting-edge supply chain-driven
opportunities.
In particular, it would make sense for the region to undertake a comprehensive site review to position Central
Virginia to compete for rail-based industry and manufacturing. Many regions can compete for truck-based
opportunities, but Central Virginia has robust rail and could pursue a targeted strategy to secure companies
that require rail service. Adequate sites for such opportunities are much more limited. Further, the region could
include multimodal, transload elements within a rail-centric, site-specific economic development strategy.
Example of a rail-centric distribution and logistics hub
35
If a region decides to pursue an inland port facility, coordination with The Port of Virginia will be necessary
moving forward. The commercial and market nature of an inland port requires that The Port of Virginia drive
decisions about additional market assessment based on specific customer targets. The port is in the best
position to consider what market space an inland port could occupy and how it could extend its market reach.
Since the inland port would be a Port of Virginia entity, the port would be best able to guide its physical layout.
VEDP would be in the best position to market the availability of an inland port as an additional tool in an
economic development strategy.
It is important to note that one region’s development of an inland port does not disqualify the other region from
developing an inland port later if adequate demand exists. This is because the likely market reach for an inland
port in each region probably would not extend into the other’s inland port market.
While this study looked at the feasibility of an inland port at present, additional strategic conversations
and analysis should be made by each region to determine the most effective path to cultivating industrial,
manufacturing, and distribution/logistics clusters and growing other key sectors in the region. The following
section will detail specific assets and recommendations, including information on other types of intermodal
facilities, rail-centric development, and innovative logistics investments each region could consider.
Assets and Recommendations for the Central Virginia Region
The Central Virginia Planning District, centering around the City of Lynchburg, has many assets and
opportunities, starting with attractive communities and an excellent quality of life. This study is complementary
to other, more conventional reviews of economic attractiveness. It is not intended to replace other factors such
as labor pool, academic institutions, educational opportunities, and training programs. These other factors are
present and robust in the region. The current assessment focuses solely on the market demand factors and
physical characteristics of an inland port. Thus, any observations in the current report should be complemented
with other economic and regional factors and public policies intended to bolster the same, and findings here not
be viewed in isolation from those broader regional features.
While an interstate is generally preferred, US Routes 29 and 460 run through the region and provide the most
robust highways. As noted previously, being above 250 miles from a marine port is desirable. The City of
Lynchburg sits approximately 200 roadway miles from The Port of Virginia’s Norfolk International Terminal (NIT).
The Town of Bedford, the farthest population center in the region from The Port of Virginia, is approximately 220
miles from NIT. However, as stated before, distance preferences can be offset by adequate demand.
Both NS and CSX, the two Class I railroads that serve The Port of Virginia, are present in the Central Virginia
region. The CSX mainlines running through the Central Virginia region do not currently handle any intermodal
traffic. The region sits on the Heartland Corridor of the NS railroad. This very robust, high-capacity rail line is
cleared for high-cube doublestack, which NS uses to serve The Port of Virginia, connecting it to inland markets.
36
Central Virginia’s regional economic development organization, The Lynchburg Regional Business Alliance,
identifies five target industries where strategic efforts are focused. Those industries include Food and Beverage,
Steel and Metals, Nuclear Technology, Wireless Infrastructure and Communication, and Financial and Business
Support Services. Of those target industries, Food and Beverage and Steels and Metals are the industries most
likely to leverage rail opportunities. The region would benefit from pursuing a rail-centric site development
strategy tailored to the needs of those industries in particular. Site development is a high-cost strategy that
can yield significant economic benefits for regions willing to play the long game. Especially for industries that
are frequent rail users like Food and Beverage and Steel and Metals, sites should be identified, protected, and
enhanced along the routes of both Class I rail carriers, CSX and NS. Building a robust rail-and-freight-centric
economic engine entails a broader industry view that encompasses intermodal and other non-intermodal market
opportunities that, with careful planning and regional collaboration, can yield long-term success and growth in
the region.
The region also is served by the Lynchburg Regional Airport. Airports present additional opportunities for export-
oriented industries to move cargo. Some Food and Beverage and Wireless Infrastructure and Communication
subsectors utilize air freight to move their products. Leveraging the regional airport to attract companies that
move cargo by air could be another strategy for the region to consider. While an assessment of air freight
is outside the scope of this report, if the region is interested in the potential to expand target industries that
prioritize international air freight facilities, it is recommended that the region pursue such a strategy after further
study.
If considering this strategy, it is important to note that promoting airports for increased cargo usage often
requires the airport to have advanced facilities for air freight. Elements required for international air freight
facilities include road access, a 24/7 customs operation, on-site customs brokers, a common-use cargo facility,
a main-deck loader, and widebody passenger operations. As with intermodal facilities, a feasibility assessment
and clear business development plans tailored to the airport are key to determining if such a strategy is
recommended. The steps of developing an airport with robust international freight capabilities include
assessing the regional market demand, setting specific capacity targets, and then marketing to companies,
such as Air Carriers (all-cargo and passenger) and Air Freight Forwarders, that would serve freight customers at
the airport.
Assets and Recommendations for the Mount Rogers/Bristol Region
The Mount Rogers Planning District/Bristol region has many assets and opportunities, starting with attractive
communities and an excellent quality of life. This study is complementary to other, more conventional reviews
of economic attractiveness. It is not intended to replace other factors such as labor pool, academic institutions,
educational opportunities, and training programs. These others are present and robust in the region. The current
assessment focuses solely on the market demand factors and physical characteristics of an inland port. Thus,
any observations in the current report should be complemented with other economic and regional factors and
public policies intended to bolster the same, and findings here not be viewed in isolation from those broader
regional features.
37
The Mount Rogers/Bristol region is served by Interstate 81 and 77, which cross the region in Wytheville.
Wytheville sits approximately 355 roadway miles from The Port of Virginia’s Norfolk International Terminal (NIT).
Bristol, Virginia, is just over 400 miles from NIT.
The NS mainline running through the region carries container traffic connecting to The Port of Virginia. The NS
line in question is a high-capacity rail line and is fully cleared for high-cube doublestack. CSX is not physically
present in the Mount Rogers region; its lines run through portions of Virginia west of this region.
While the region is served by three general aviation airports, the region does not have an airport for commercial
aviation at this time and is served by the Tri-Cities Airport in Tennessee and Roanoke Airport.
The Mount Rogers/Bristol regional economic development organization, Mount Rogers Regional Partnership,
identifies five target industries where strategic efforts are focused. Those industries include Plastics and
Advanced Materials, Food and Beverage Processing, Automotive and Transportation Equipment, Information
Technology, and Warehousing and Distribution. All of those industries, with the exception of Information
Technology, are likely to leverage intermodal opportunities. For those industries, the region should continue
to pursue a site development strategy. Site development is a high-cost strategy that can yield significant
economic benefits for regions willing to play the long game. Especially for industries that are frequent rail users
like Automotive and Transportation Equipment, sites should be identified, protected, and enhanced along the
NS mainline present in the region. Building a robust rail-and-freight-centric economic engine entails a broader
industry view that encompasses intermodal and other non-intermodal market opportunities that, with careful
planning and regional collaboration, can yield long-term success and growth in the region.
Given the results of the manufacturing/industrial-derived demand analysis completed by Moffatt & Nichol, the
development of an inland port is one opportunity that should receive further consideration as part of the broader
regional economic strategy. This feasibility assessment is the first step of a larger undertaking that could be
conducted with additional feasibility and site-specific assessments in conjunction with The Port of Virginia and
Class I rail providers in the region. The outcomes of additional assessments and coordination between various
stakeholders will determine whether or not an inland port can be actualized in the region.
38
Conclusion
39
Conclusion
The report provides each region with a broader understanding of the intermodal market and how investments
in the intermodal space, particularly when it applies to inland ports, can be justified. At this time, the feasibility
analysis by Moffatt & Nichol determined that the Central Virginia region does not meet the demand threshold
that would justify the investment for an inland port, however, the Central Virginia region would be well-served
to pursue other rail-centric development opportunities that would enable the region to build long-term market
demand and allow the region to compete in the rail space for economic development projects. The feasibility
analysis by Moffatt & Nichol indicates the Mount Rogers/Bristol region sufficiently meets market-driven and
physical conditions to warrant additional assessment. Any further efforts to pursue an inland port will require
significant coordination with The Port of Virginia. In the medium-and long-term, both regions should consider
an aggressive site development strategy that involves rail-centric site locations, development of other types
of intermodal or multimodal facilities, and/or pursuit of innovative logistics investments to strengthen import/
export-oriented industries prioritized by each region.
40
Endnotes
41
Endnotes
1
A hostler is an off-public-road tractor used in rail yards or on docks for moving containers to position
and reposition.
2
Traditional railroaders often speak in terms of commodities, which makes sense to laymen when
speaking to chemicals or forest products. In this sense, all intermodal containers are the same from the
railroad’s perspective, albeit in different sizes, even though they actually carry multiple, different commodities
inside.
3
In the rail business, for example, people say that “rail competes against over-the-road” versus saying that “rail
competes against trucks.”
4
Note that block swapping, positioning railcars on the train, may occur in specific circumstances for
operational efficiency
5
Beneficial Cargo Owner (BCO): the party that ultimately owns the product being shipped.
6
Because there is always a viable non-rail alternative for intermodal, it was de jure excluded from potential
regulation when the Staggers Act, which largely deregulated rail, was enacted in 1980. In other commodity
sectors, the Staggers Act allows for potential regulation when certain, more narrowly defined conditions exist.
In contrast, the legislation recognized that a container or trailer could always move via truck; therefore, no rail
regulation on rates would ever be necessary. If not satisfied with the rates or service conditions offered by
the railroad, the shipper of a container or trailer could always turn to over-the-road trucking. Thus, the railroad
could never generate a market-abusive situation for the shipper. The “market” for containers and trailers
clearly extended beyond a market in which rail was closer to being the sole defining character. By definition in
the statute (Staggers), a railroad could never be “abusive” toward the shipper or BCO since the shipper always
had viable options.
7
Service-sensitive generally means shorter transit times and a need for higher reliability, meaning, narrower
service or delivery windows within which to determine performance.
8
Cargo at rest can also incur cost—for example, the capital costs associated with the occupied real estate.
9
There is a third component, premium, which refers to shipment moves for companies like FedEx, UPS, and
USPS. As the name implies, premium is the most service-sensitive, with short transit times and very tight
service or delivery windows. Premium trains are accorded the highest priority.
10
In the industry, domestic intermodal includes all of North America. It does not recognize borders between
the United States, Canada, and Mexico. Traffic originating and terminating in all three countries moving in
domestic boxes are domestic moves.
11
In the trade and business press, one will typically read how many TEUs were handled by a given port in a given
month or year. The same standard is usually the case for the steamship lines that call on maritime ports.
12
International Organization for Standardization
13
A dray is the term for any localized truck move
14
A very rough rule of thumb is that one can reload three international containers into two 53-foot domestic
containers.
15
In the industry, domestic intermodal includes all of North America.
16
Containers 9.5 feet in height are referred to as a high-cube
17
A service in the railroad business is often referred to as a product or a service product.
42
18
It is this reason, for example, that we see the huge market share held by rail versus road in the LA to Chicago
market lane (approximately 80% market share). Another example of how distance drives the market use of rail
can be seen by comparing the rail/road ratio of inland container moves for East Coast and West Coast ports.
Containers arriving at west coast ports have a greater distance to travel, with many of them being transported
across the Rocky Mountains to the Midwest or East Coast. Approximately 70% of inland destination moves for
containers arriving on the west coast travel rail intermodal inland, compared to about 20% of inland destined
containers moving over east coast ports.
19
In the railroad industry, a lane refers to the city pair, origin/destination, connected via rail. Unlike traditional
railroading, which gathers traffic from multiple specific beneficial cargo owners distributed over a local region
using local trains (“locals”), intermodal traffic is from major market to major market. In this case, every city
pair is a separate lane. For example, Richmond, VA, to Birmingham, AL, is a separate lane from Richmond, VA,
to Huntsville, AL.
20
Note, this distance is relatively short for railroad intermodal, as opposed to other business segments.
21
Discretional Cargo: cargo that could have moved over Western ports into the interior of North America
22
Traditional railroading is an aggregation business in which local trains (“locals”) pick up individual railcars or
small numbers of railcars, which are aggregated in local yards into blocks. Those blocks of cars are moved to
larger yards, in which trains are built for longer-haul movement. Those inbound trains move to classification
yards in which blocks moving in the same general direction are reconfigured into outbound trains which have
collected or aggregated all the blocks from various local origins. A typical individual shipment (an individual,
loaded railcar) moves through more than one classification yard (“class yard”), adding new blocks to the trains
at each class yard. Most shipments move through several on their journey.
23
In traditional railroading, the given railroad typically deals directly with the BCO of the freight, the actual owner,
who is the customer of the railroad.
24
Typically, the railroads package multiple destinations in a single contract, including in response to this
framework as proposed by their steamship line customers.
25
When this happens, the container is said to be “grounded.”
26
Lift: moving a container off a truck onto a train, or the inverse, from a train onto a truck chassis, constitutes
one lift
27
The lift capacity would be projected based on some outyear determination of shipper product volume.
28
This factor matters to the railroad and the port. An individual customer could still use the inland port for
purely exporting their goods or purely importing.
29
Typically, references by the railroads to the intermodal facilities they serve prominently indicate the number of
miles to the ramp’s serving or connecting roadway and the character or nature of the roadway.
30
A railroad mainline can sustain up to a certain number of trains and a certain amount of freight. Beyond the
current capacity of the mainline, additions must be made to handle increased capacity. These additions often
require significant fixed capital costs to bring the mainline capacity up to a new capacity threshold. There are
no incremental costs that can be incurred to increase mainline capacity. Additionally, capacity additions on a
railroad, like an additional passing siding, are often located at some great distance from the site location. In
what is mostly a single-track railroad in the US overall, and in Virginia as well, the number and length of the
passing sidings dictate the amount of mainline capacity. Intermodal trains are very long, typically 10,000 to
12,000 feet in length, sometimes longer.
31
Switching: when a train drops off blocks of railcars, picks up blocks of railcars, or otherwise rearranges the
railcars
32
Lower-density mainline: a line handling lower volumes of freight
43
33
IRCs computations were provided in 2022 dollars; therefore, not adjusted for inflation
34
If additional development is slower to unfold, the returns will fall short of the projected forecasts.
35
Direct employment refers to full time employment of persons on-site and on the payrolls of these
businesses, while indirect employment, occurring throughout the defined study area, is generated by the
purchase of goods and services by the businesses and their employees.
36
Production-derived demand: freight demand from manufacturing and industrial type activity
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