of;items;on;double-decker;container;cars,;fine,;but;if;you;need;a
short line to your manufacturing plant that will ship twice a week,
rail implementation is cost prohibitive.
“The railroads don’t really want that business,” asserts Chris
Teesdale, SIOR, executive vice president of the industrial
division and Supply Chain Real Estate Advisors for Colliers
International in Dallas, Texas. “Where the rail companies make
their money is on containerized shipments and commodities like
coals that take up an entire train. If you have a plant where traf-
fic;has;to;be;switched;to;a;short-line;carrier,;the;tier-one;carriers
don’t want that.”
The irony, Teesdale jokes, is that one of the biggest industrial
deals to recently occur in the metro area was a build-to-suit for
Whirlpool;Corp.;on;the;Union;Pacific;line.;“This;was;the;first
transaction in a long time where rail was coming to a building,”
says Teesdale.
Whirlpool is building one million square feet to distribute
product that was rail-carried from assembly plants in Mexico.
Over in South Carolina, McCutchen has had mixed success
with rail. He had one client, a manufacturer of building materials,
that wanted rail service, but the rail lines wanted to charge too
much to get a short line built, so the client opted to truck his goods
to an intermodal yard where it would be placed on rail.
Another client, a metals recycler ran into the same problem,
but then a second rail line said it would redo a turnout at a reasonable cost in less the time.
Port Calls
South Carolina is home to one of the major ports on the East
Coast, in Charleston, where paper is a primary export, and it is
served by two rail lines, CSX and Norfolk Southern. Charleston
suffers from a lack of big, functional, distribution buildings,
however, and the port is “undeserved by rail,” observes Hagood
Morrison, SIOR, CCIM, co-manager and a principal in Colliers
International of Charleston.
That can all change quickly with the widening of the Panama
Canal. Container ships, which now unload in California ports and
ship east, will in a couple of years be able to transport through the
canal and unload in places on the East Coast such as Charleston.
Charleston is already seeing some growth.
“Rail use is on the uptick, particularly on the export side, as
more paper is being sent out of Charleston,” observes Morrison.
Although;the;paper;fills;warehouses,;rail;and;intermodal;devel-opments are very active. The biggest build-to-suit, a 1. 1 million
square-foot distribution center for the TBC Corporation, was on
a rail line. Morrison has completed one rail deal recently, and that
was the sale to a chemical company of an empty, cement terminal
with existing rails.
Also expecting better days ahead with the Panama Canal
expansion is the port of Baltimore, which also sits on the main
line for CSX and Norfolk Southern. However it too has logistical
difficulties;to;overcome.
“We have developed rail lines through Baltimore, but one
of the issues we have here in Baltimore is that they are underground,” notes John Skoglin, SIOR, a vice president with CB
Skoglin represents a rail-served building on the east side
of Baltimore, not far from the ports. “We had some distributors and heavy commodity companies look at it, but it
would need an activated short line to get to the major rails,”
Skoglin says.
Not every company can use rail because the big rail-roads;won’t;service;a;client;unless;it;has;sufficient;volume
to justify making that delivery, Skoglin asserts. “You just
can’t say, ‘hey, I’m going to ship two cars a month, I want
rail.’ Unless you can couple with another operation, that
won’t be enough. Rail carriers like to have at least 20 cars
a week.”
The Intermodal Factor
“When the expanded Panama Canal opens up in about
four;years,;it;will;produce;a;lot;more;inflow;to;the;eastern
U.S.;ports;and;there;is;a;significant;rail;component;to;that,
but anything that goes from the port by rail ends up on a
truck at some point,” observes Gabriel Silverstein, SIOR,
president of Angelic Real Estate LLC in New York. The
inflection;point;of;where;freight;moves;from;rail;to;trucks
usually happens at an intermodal center that could be a
thousand miles from a port.
