Rail Links Lift Industrial Growth at Intermodal Hubs

Intermodal logistics hubs that are major transfer facilities for containers shipped by rail are expanding as fast as they can to meet growing demand from shippers who are choosing rail over trucks due to the surge in per-mile trucking rates. 

The supply-chain gridlock at West Coast ports has caused unprecedented congestion in logistics networks across the US, especially at the handful of hubs where all five Class 1 railroads intersect, including the intermodal inland ports in Chicago and Memphis.

Containers are stacked up in every nook and cranny at CenterPoint Intermodal Center, North America’s largest inland port, a 6,400-acre master-planned intermodal development about 40 miles southwest of Chicago that can handle more than 3 million TEU shipping containers annually.

The unprecedented demand for warehouse space in the largest US shipping hubs, which is driving the growth of last-mile logistics facilities, also is spurring the expansion of smaller intermodal facilities and the development of new inland ports, on-dock rail facilities and logistics parks that all will require an expansion of regional industrial space capacity.

According to JLL’s US Ports and Global Infrastructure Group, locations that are ripe for intermodal project development include Denver, Salt Lake City and Des Moines.

Intermodal facilities that service rail shipments from Gulf Coast ports and Mexico also are growing.

The Wylie Intermodal Terminal, a $64-million, 500-acre development in a northeastern suburb of Dallas, now provides 181 interchange points with all US Class 1 railroads (as well as rail links with Mexico), servicing more than 140 transload centers and 11 intermodal ramps.

The supply-chain gridlock at ports in Southern California has eased slightly in recent weeks—primarily on the water, where cargo ships are anchoring further off shore to avoid adding to the pollution over Los Angeles—but freight carriers are projecting that the logistics backlog will continue throughout 2022.

The stress on the nation’s shipping arteries, fueled by the burgeoning expansion of e-commerce during the pandemic, also is being exacerbated by a nationwide shortage of truck chassis that can carry 20-ft containers.

The five US Class 1 railroads—including BSNF, CSX, Kansas City Southern, Norfolk Southern, and Union Pacific—each are deploying surplus rail cars that can carry containers to move goods from backed-up West Coast ports to inland hubs.

The railroads say they’re confident they can handle more freight traffic without derailing train schedules.

Supply-chain experts are anticipating increased rail-freight contract costs in coming months as demand grows. They warn that on-time delivery will determine whether rail shipments maintain their competitive edge over trucking when the cost of diesel fuel for trucks—now hovering close to $6/gallon—eventually comes down.