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Economist: NAFTA and 'nafta' Promote Intermodal Growth

It's not just NAFTA that distribution-space builders should be looking at, but also nafta, the Spanish word for gasoline.

By John McCloud | Updated on August 21, 2008

BOSTON-Forget about the reality or non-reality of the so-called NAFTA Superhighway, suggests Torto Wheaton economist Luciana Suran. It’s not just NAFTA, or the North American Free Trade Agreement, that logistics companies and distribution-space builders should be looking at, but also nafta , the Spanish word for gasoline. In a white paper released at the end of July, Suran emphasizes the growing role of long-distance rail transport due to the rising price of oil.

“High gas prices, if sustained for a long period of time, could force some shippers to rethink their distribution routes,” she says. “During the days of cheap gas, nobody gave a second thought to the idea of trucking imported goods from Asia across the country after being unloaded at West Coast ports. But higher fuel prices are making intermodal transportation using multiple modes like rail, truck, and boat look much more appealing.”

As evidence that the change is already occurring, Suran says the locations with the highest absorption levels this year, based on figures from CB Richard Ellis, are inland markets with strong rail connections. Among the top 10 markets for absorption, only Houston was an exception to the rule in that it is a seaport. At the same time, it is “inland” in the sense of being away from the Atlantic and Pacific coasts and also has strong rail connections. The top two cities for absorption were Memphis and Kansas City. Others on the list included Indianapolis, Las Vegas and Nashville.

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