Project Management Institute

Freight Expectations

Railroad Companies Launch Project to Match Growing Demands

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Freight trains are chugging along just fine in the 21st century. Increased demand in the United States and parts of Europe is driving shipment tonnage up to record levels. It's not a temporary trend: According to the U.S. Department of Transportation, the growth of the nation's economy and population will result in a 40 percent increase in freight tonnage between 2015 and 2045.

In response, railroad organizations are launching long-term infrastructure improvement programs to upgrade tracks, bridges and tunnels, and to support continued growth. With intermodal traffic rising as well, projects to better connect ports and trucking hubs to rail lines are also multiplying. In the U.S., for example, the state of Maryland's department of transportation and CSX Transportation have proposed a US$425 million project to expand a tunnel so shipping containers can be stacked two-high on freight trains, helping Baltimore's port meet growing demand.

Ensuring U.S. freight rail infrastructure has adequate capacity is a multifaceted challenge for both public and private organizations in the sector, says John Gray, senior vice president of policy and economics, Association of American Railroads (AAR), Washington, D.C., USA. Improvements involve infrastructure upgrade and expansion projects, training initiatives for new personnel, and locomotive and freight car manufacturing projects. “The complexity of these plans is enormous,” he says.

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“Because the government doesn't have sufficient funds to do this in the coming years, we suggested … that we, as Port Authority, would pay a large portion … and execute the project ourselves.”

—Ronald Paul, Port of Rotterdam Authority, Rotterdam, Netherlands

In the Netherlands, the Port of Rotterdam Authority is sponsoring the €275 million Theemsweg Route project to reroute 2.5 miles (4 kilometers) of track near the city's port in order to handle increased freight rail traffic. To get the initiative off the ground, the team at the port—a government corporation primarily owned by the city of Rotterdam—struck an unusual agreement with the country's Ministry of Infrastructure and the Environment.

“Because the government doesn't have sufficient funds to do this in the coming years, we suggested … that we, as Port Authority, would pay a large portion … and execute the project ourselves,” COO Ronald Paul said in a press release last year. The urgency to execute underscores how freight upgrade projects are an economic imperative for organizations competing in global shipping markets.

In the U.S., major freight railroads are accustomed to building and maintaining the sector's infrastructure: They spent US$27.1 billion on capital projects in 2015 and will spend US$22 billion in 2017, according to the American Society of Civil Engineers. But portfolio managers considering a huge infrastructure improvement initiative “must be confident that the market demand for the infrastructure will hold up for 30 to 50 years,” Mr. Gray says. And the need for expansion projects must be balanced against maintenance projects. “It's like a juggler who must add a couple of balls without dropping anything,” Mr. Gray says.

Chicago, Illinois, USA is a prime example of this complicated juggling act. The US$4.4 billion Chicago Region Environmental and Transportation Efficiency (CREATE) program, launched jointly in 2003 by city and state governments and railroad companies, plans to untangle freight bottlenecks with a long-term flurry of projects. The public-private partnership aims to keep in motion the 1,300 freight and passenger trains that every day move through Chicago, where one-fourth of the nation's overall rail traffic passes through. To date, 28 of CREATE's 70 planned projects have been completed, with 13 more in preliminary design and review phases.

U.S. economic and population growth could mean a 40 percent increase in freight tonnage by 2045.

Source: U.S. Department of Transportation

Programs like CREATE, of course, come with their own unique complications that can stretch beyond construction challenges. Past infrastructure projects in Chicago have been publicly criticized for hurting adjacent neighborhoods. So CREATE project teams have moved stakeholder management front and center, focusing on community involvement and communication, and researching how each part of the program might impact the safety and quality of life in adjoining neighborhoods, says Michael Claffey, director of public affairs, Chicago Department of Public Transportation, Chicago, Illinois, USA.

The Atlantic Gateway program is another instance of public-private partnerships working to improve railways; private railroad CSX, federal agencies and the Virginia Department of Transportation are all sponsors. The US$1.4 billion intermodal initiative, slated for completion in 2021, will improve connections between Washington, D.C., and Fredericksburg, Virginia, unlocking substantial time savings for freight trains.

One specific benefit to be delivered: Trains carrying more efficient doublestack intermodal containers will be able to travel in the region. That will help CSX advance toward its larger goal of having taller (and more profitable) trains rolling between the Midwest and mid-Atlantic regions. “CSX has deployed a strategy that allows us to efficiently process containers at terminals,” Dean Piacente, vice president of intermodal at CSX, said during a company presentation last year. —Kate Rockwood

Riding the Eurasian Rails

China and Europe are building new rail ties. Freight traffic between Germany and China has increased tenfold since last year, Volker Oesau, CEO of DHL Global Forwarding Germany and Central Europe, said in a May press release. “In order to meet ever-increasing demand, the onus is on us to grow.” And it did, with the completed construction of a new China Rail Competence Center in Stuttgart, Germany in May to help coordinate freight services between the two countries.

DHL is hardly the only organization trying to meet the surging need to connect China with Europe. In January, DB Cargo completed a project to plan and execute first-time freight service between the U.K. and Yiwu in eastern China. The journey took a train 18 days to pass through eight countries—half the time it would typically take by sea—and costing approximately half that of an air cargo journey.

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