Of 198 warehouses in the state, only part of one uses rail
By Joanna Marsh for freightwaves.com
Should Nevada, which has only one warehouse actively using a rail siding, be relying more heavily on freight rail? The answer is yes, according to the state’s draft 2021 rail plan.
The plan, currently under review by the Federal Railroad Administration, lists several reasons why public and private stakeholders should consider building out Nevada’s freight rail infrastructure. Nearshoring or reshoring provides potential support to Nevada’s manufacturing and mining activities as companies seek to source more materials and parts within North America, while transferring more freight from truck to rail could reduce statewide emissions.
Stakeholders should see the $740 million needed for freight rail infrastructure projects not as a cost but as a business opportunity, the plan argues.
According to the draft, the plan’s “central goal is to enable as much future freight traffic to move by rail as is practical. The point is not to limit the viability or success of the trucking industry. While encouraging the expansion of rail service, Nevada cannot afford to pit highway, air, pipeline, and railway transport modes against each other, either in public policy or the marketplace. Integration and coordination for maximum efficiency and utilization of assets must now guide planning and investment.
“The goal is not, as is often stated, to ‘take trucks off the road.’ Truck transportation is a critical component of goods movement that should be integrated with its complementary transportation partner — railroads. But given each mode’s relative impact on energy consumption, emissions, highway congestion, safety, road maintenance costs, noise, light pollution, and land use, sensible planning is now critical. Achieving a new sustainable balance will require thoughtful integration alongside useful competition. The only way to advance this level of collaborative, shared success between trucking and railroading is to create it together.”
Freight rail carries 23% of Nevada’s freight tonnage, with trucks carrying the remaining 77%, according to the Nevada Department of Transportation (NDOT) and the draft 2021 plan. The majority of those trucks are moving to and from California.
Freight rail routes in Nevada consist of three east-west main lines, a few branch lines and no short line railroads, the plan states. Intermodal and carload service between Nevada and California and Nevada and the rest of the country are limited, according to the executive summary. Eighty-three percent of rail service in Nevada is through traffic and serves commerce outside the state.
According to the plan, 41.4% of privately owned sidetracks are not used and 96.4% of sidetracks owned by Union Pacific (NYSE: UNP) are not needed for linehaul and switching operations. About 139 truckload shippers adjacent to a UP track could readily build a private sidetrack but haven’t done so, while 500-plus truckload-quantity shippers near rail lines do not use rail at all.
Furthermore, of the 198 warehouses in Nevada, only part of one warehouse is using rail, even though half of all of the state’s warehouses have rail sidings, according to Michael Sussman, founder of think tank OnTrackNorthAmerica and president and CEO of Strategic Rail Finance. Sussman was involved in writing the rail plan.
“We know the big railroads — the Class I railroads — don’t provide many services for shorter haul, so that distance from California to Nevada is very attractive to the trucking industry and unattractive to the Class I railroad industry,” Sussman told FreightWaves. “So, we knew that many of the warehouses in Nevada were likely being filled by trucks coming from California. What we suspected might be the case since California has a much greater population … [is] that the goods put into those warehouses were taken out of those warehouses and trucked right back to California. And that’s one of the things we looked to pinpoint, and indeed that’s exactly what happens.”
Despite trucks’ dominance, Nevada sees big opportunities for freight rail. The plan, which included input from more than 200 rail, economic development and government leaders, outlines more than 50 potential passenger and freight rail infrastructure projects in eight regions of the state potentially eligible for federal grant funding.
“By optimizing freight distribution across Nevada, rail transportation can contribute to more reliable and safer roads. Ultimately, the statewide rail plan will paint a blueprint for potential rail improvements to augment our existing freight systems and provide jobs, tax revenue and business opportunities, not to mention enhance mobility, traffic safety and the environment for Nevada’s families,” said NDOT rail planning manager Lee Bonner last month. “It sets us on a path to fully utilize rail for an integrated and sustainable statewide freight transportation network.”
For freight rail needs in-state, the pan calls for a “shortline approach” in which warehouse or distribution centers, as well as shippers and logistics providers, take advantage of existing sidetracks and transloading opportunities. When developing industrial properties, stakeholders should also consider the physical and geographic factors that influence modal choice, such as building design, site layout, volumes, destinations and timelines.
“With such a large initial cost for new rail infrastructure, it is difficult for shippers and receivers, particularly small ones, to test rail service or to justify rail investment without sharing costs of connectivity. This underscores the importance of using existing assets to incubate new rail shippers,” the plan said. “In particular, rail/truck transloading can provide the economical introduction for new rail bulk shippers and receivers. There are already public transloading terminals in Sparks, Darwin, Elko and North Las Vegas, with another on the way in Hawthorne. The 83 existing and underutilized UP sidetracks can serve as new transloading sites, particularly for accommodating early-stage rail shippers.”
While the plan was created to serve state interests, it could also be a jumping off point for regional supply chain collaborations between Nevada and California, according to the executive summary. The creation of a California-Nevada Supply Chain Alliance could serve as a forum in which businesses, governments and communities engage in whole-systems transportation and land-use planning and investment.