Efficiencies of Rail

NS Rail Corridors: Sustainable Transportation Solutions

Reflecting a trend in U.S. freight transportation, Norfolk Southern’s intermodal rail traffic has been one of our fastest-growing business segments over the past few years. That growth is expected to continue as congested highways, truck driver shortages, rising fuel costs, and environmental concerns lead shippers to intermodal transport as an alternative to the highway.

Over the past decade, Norfolk Southern has positioned the company to take advantage of these business opportunities through investments in our intermodal corridor network. By improving the efficiency and capacity of these corridors, the company is advancing goals on all three pillars of sustainability – environmental, economic, and social. The corridors promote fuel conservation and greenhouse gas reduction, create good-paying jobs and tax revenue for communities, and expand opportunities for economic growth.

At-A-Glance

Our Four Primary Intermodal Corridors

Crescent: Forming a 2,500-mile backbone for the company’s rail network, the Crescent Corridor spans 11 states, from Louisiana and Tennessee to New Jersey. Four new terminals opened during 2012 and 2013 have given us increased freight capacity, positioning our trains to compete head-to-head with long-haul trucks and opening substantial market potential for highway-to-rail conversions in our East Coast markets. In early 2013, we opened 30 new lanes of truck-competitive service on the corridor, including 18 lanes that expanded business opportunities for trade in consumer and manufactured goods between Mexico and the United States.

Heartland: Opened in 2010, the Heartland connects the coastal Port of Virginia with Columbus, Ohio. This corridor primarily serves international import and export freight, efficiently moving goods on double-stack container trains between the port and Midwest markets. The Heartland was the rail industry’s first multistate public-private partnership and a feat of modern railroad engineering, requiring heavy construction to raise the heights of 24 tunnels through the Appalachian Mountains. For customers, the corridor shaved an average of 250 miles and a day’s transit time between the port and Chicago markets.

Pan Am Southern: This corridor was created by a 2009 joint venture with Pan Am Railways. The corridor expanded the company’s reach into New England markets between Albany, N.Y., and Boston, and taps markets in Connecticut, Massachusetts, New Hampshire, New York, and Vermont.

Meridian Speedway: Created through a 2005 joint venture with Kansas City Southern Railway, this corridor runs 320 miles, linking Meridian, Miss., and Shreveport, La. The corridor offers customers the shortest, fastest rail route between the Southeast and the West Coast. It shaves two days of transit between California and Atlanta, giving us a quicker transit time than single-driver trucks and allowing us to compete with team-driver trucks for transcontinental freight service.

Learn more about our corridors here.

“Projects like the Heartland Corridor are models for the future. They reflect the public-private cooperation needed to enhance access to global markets and stimulate economic growth across the country. Without efficient access to intermodal, many firms would be locked out of business opportunities in an increasingly competitive global marketplace.”

Scott Hercik, transportation and international trade advisor for the Appalachian Regional Commission

NS Helps BMW Reduce Emissions

Making a business case, meeting sustainability goals

Most people probably wouldn’t think about Norfolk Southern when they see a BMW sports activity vehicle cruising down the road. In fact, our double-stack intermodal container trains are transporting the parts and components that go into every SAV manufactured at the luxury automaker’s Greer, S.C., assembly plant.

Another thing people might not realize: Our business partnership with BMW is good for the environment, the economy, and residents who commute on South Carolina’s Interstate 26 corridor.

Before we began offering intermodal rail service to the BMW plant in fall of 2013, all of its car parts and components moved in boxes on 18-wheel tractor-trailer trucks to and from the Port of Charleston and the BMW plant. That added to congestion on Interstate 26 and to the automaker’s supply-chain carbon emissions – something the company monitors closely.

In Greer, we now provide BMW with a truck-competitive service that is economical and eco-friendly.

“Our goal is to reduce emissions and support our sustainability targets, and rail is one way to do that if there’s a business case,” said Alfred Haas, the BMW plant’s department manager for material control and transportation control. “This was a business case, and it supported our sustainability targets with reduced emissions that rail service provides in comparison with trucking.”

A Norfolk Southern analysis – using Federal Railroad Administration data that compares average emissions of double-stack intermodal rail and dry van trucks – shows that we will help the BMW plant reduce its supply-chain CO2 emissions by around 64 percent. Our analysis shows that moving 20,000 containers by rail over the 235-mile journey between the BMW factory and the Charleston seaport generates about 3,195 metric tons of CO2 emissions annually. That’s nearly two-thirds less than the 8,895 metric tons emitted when using trucks.

In addition to reducing greenhouse gas emissions, the shift to rail is expected to enhance the commute on I-26, easing truck-traffic congestion and making it safer for passenger vehicles. BMW has estimated that shipping parts by rail will remove 20,000 to 25,000 trucks a year from the interstate.

Opened in 1994, the Greer plant now employs about 8,000 and produces around 300,000 SAV X models annually. The plant, the automaker’s first full auto factory outside Germany, reflects BMW’s commitment to sustainability. About 50 percent of the facility’s energy requirements, for example, is supplied by recovering methane gas that is collected, cleaned, and piped from a regional landfill about 10 miles away, significantly reducing the plant’s CO2 emissions and saving energy costs. Today, the plant is the only one in the world making the X3, X4, X5, and X6 models.

In the early 1990s, when BMW was searching for a U.S. site, Norfolk Southern’s industrial development group joined with South Carolina economic development officials to promote Greer as an ideal location. A Norfolk Southern rail spur at the site was a key factor in BMW’s decision to settle there, BMW officials said.

From the start, Norfolk Southern has transported finished vehicles in multilevel railcars to the Port of Charleston for export to global markets. We gained the ability to offer intermodal service with the opening in October 2013 of the South Carolina Inland Port intermodal terminal, which was constructed and is owned and operated by the South Carolina Ports Authority. Recognizing the economic benefits of an inland port in the state’s growing Upstate region, Norfolk Southern partnered with the ports authority. We provided rail, signal, and other track infrastructure to support the nearly $50 million terminal project.

The inland port is located near Interstate 85 and is less than two miles from the BMW plant. We offer BMW overnight intermodal service, moving containers loaded with parts and components between the factory and the Charleston seaport. The traffic includes import containers shipped on ocean carriers from Europe and also export containers from Greer that are loaded with parts and components for markets such as Russia and India, where final assembly is done. On each end of the move, trucks dray the containers between our rail line and the factory or the port, a trip of about two miles or less.

A Norfolk Southern subsidiary, Thoroughbred Direct Intermodal Service, is responsible for managing these movements, either by rail or truck, and ensuring just-in-time delivery of parts to the BMW plant, making this a unique Norfolk Southern product.

Short Hauls Add to Norfolk Southern’s Edge

While trains have a clear environmental edge over trucks, rail companies have had a harder time competing on cost with over-the-road transport on freight moves of less than 500 miles – known in the business as short hauls. Historically, trucks had a cost-structure benefit over rail and were able to compete better on price and service delivery times in shorter-haul markets. In the intermodal market, containers typically must be trucked over the “last mile” between a rail terminal and the customer’s door, which has inhibited rail routing to match truck pricing and still provide value for railroads over shorter distances.

The current trucking environment, however, is changing this balance. Higher fuel and insurance costs, a tight driver market, and new government regulations on a driver’s hours of service and safety performance are pushing up truck costs. In addition, growth of international cargo volume at the East Coast ports Norfolk Southern serves is putting more pressure on available truck capacity. Finally, environmental stewardship is driving more shippers to look to rail wherever they can to reduce their carbon footprint.

The conversion of freight from truck to rail on long-haul moves of more than 500 miles is a focus of Norfolk Southern’s corridor development strategy. However, the company is making inroads on short-haul markets as we improve operating efficiencies and service times and promote innovative business partnerships. Given the proximity of key consumer markets to the East Coast ports, a number of short-haul markets could benefit from a shift to rail.

Norfolk Southern’s business with BMW and the South Carolina Ports Authority in Greer, S.C., is just one example. We have used existing terminal and train capacity to reduce our cost structure in other short-haul East Coast markets.

These include: