Demand for Rail Strong, Expected to Rise

June 14, 2022


Read the full article on Expansion Solutions Magazine’s website here.

Like most industries, rail has its share of issues to address: cost controls, supply chain issues, worker availability, the decline of coal, an interesting juxtaposition with the trucking industry and the ubiquitous issue of competition.

Still, long-term, demand for freight transportation  for commodities other than coal  is expected to grow as the population and economy expand. The growth rate, which is projected by most economists to rise about two percent annually, supports the U.S. Department of Transportation estimate of total freight demand growth of 35 percent by 2040.

By the numbers, the Washington, D.C.-based Association of American Railroads promotes an October 2018 study from Towson University’s Regional Economic Studies Institute. It revealed that, in 2017, the operations and capital investment of America’s major freight railroads supported approximately 1.1 million jobs (nearly eight jobs for every railroad job), nearly $219 billion in economic output and $71 billion in wages.

The study also stated that the railroads generated nearly $26 billion in tax revenues and summarized that millions of Americans work in industries that are more competitive in the global economy due to the affordability and productivity of America’s freight railroads.

Expansion Mode

Andrew Ralston, head of economic development at Tulsa Ports, explained the relationship between shipping via barge and rail, as it relates to his location.

“We’re two separate geographic locations, with inland barge and rail ports connected to industrial parks. We ship two million tons of agricultural and steel products via barge, and have increased our rail shipments from 10,000 to 12,000 cars per year from our Catoosa port in the past five years.”

As for the effect of the COVID-19 shutdown on industry, Ralston said they weren’t as heavy as a more casual observer might think. “Even given the recent supply chain issues, via rail we’ve not been as affected since we don’t currently deal with intermodal containers (used for importing/exporting). We mainly handle bulk commodities including grain, chemicals for agriculture and steel (rolled and beamed).”

He said Tulsa Ports’ greatest opportunity for growth will be on the intermodal side. “The ability to receive and export intermodal containers would increase rail traffic by thousands of cars per year,” said Ralston. “This current gap is due to administrative issues, rather than lack of infrastructure.”

“In other words,” he said, “our clients that are going intermodal are trucking in containers to and from Kansas City and Dallas. If a company from Tulsa is shipping outbound or inbound, it will primarily go by truck to those two rail hubs.”

If this all sounds like its time for an upgrade, it is. “So,” Ralston said, “we’re working to build supporting infrastructure for unit trains and intermodal shipments to come in and out of our ports. We’re working with railroads and shipping lines to offer the opportunity for container flow. Because we’re a smaller market, we’d like to eventually be an intermediate stop on the intermodal network and help alleviate the issues we’re seeing today.”

While the nation’s much-publicized supply chain issues have not affected Tulsa Ports, “there are other issues,” he said. “Like many ports and industrial parks, workforce availability (including truck drivers) is something we are spending a lot of time and effort on.”

Once barges and rail cars get in, “they transload to rail and truck, and the product is shipped to up to 23 states,” said Ralston. “If the client is shipping domestically, they typically ship by truck because it’s faster, but often more expensive. They opt for rail when shipping to and from the coasts, especially for heavy commodities and intermodal shipments.”

The evolving needs at Tulsa Ports are resulting in action: underway is its large rail project at the Tulsa Port of Inola, a newly established 2,200-acre rail site and industrial park that was acquired in 2019. A federal INFRA-grant through the U.S. Department of Transportation made the project possible, with monetary matches from public and private partners.

It’s going out-to-bid soon and “we expect the total cost to construct it will be north of $12 million,” said Ralston, noting the rail infrastructure already has its first client. That’s Sofidel America, a tissue paper manufacturer, which built a 1.8 million-square-foot warehouse, cost $400 million and employs 380 workers. The project will cover roughly 5.5 miles of rail and will connect to Union Pacific and be operated by WATCO. 

Read the full article on Expansion Solutions Magazine’s website here.