HD23 - Desirability and Feasibility of Establishing Additional "Intermodal Transfer Facilities"

Executive Summary:
As directed by HJR 704, the Virginia Department of Transportation (VDOT) and the Department of Rail and Public Transportation (DRPT) collaborated to prepare a study concerning the desirability and feasibility of establishing additional intermodal transfer facilities in the Commonwealth. The study evaluated the location and traffic patterns at major production and market centers within the Commonwealth (Northern Virginia, Hampton Roads, Richmond, and Roanoke), as well as locations with ports operated by the Virginia Port Authority (Norfolk, Portsmouth, Newport News, and Front Royal). The primary purpose was to ascertain if additional intermodal facilities would help divert significant portions of truck traffic from congested interstate highways, such as 1-95 or 181. Anticipated ancillary benefits of such an expansion would include reduced shipping costs and enhanced competitiveness of the Commonwealth relative to other locations in the region.

The report analyzes long-haul truck traffic using Virginia highways. In evaluating the factors that improve the competitiveness of rail in comparison to freight trucking, analysts recognized the following points:

• The distance between origin and destination should exceed 500 miles;
• Some goods are more likely to be diverted from trucks to rail than others;
• Intermodal transfer facilities must be available at both origin and destination;
• Rail service must be responsive to the needs of both businesses and market;
• Businesses and market should show some degree of growth or stability (e.g., positive changes in demand, population, income, employment, etc.); and
• External conditions should lower or stabilize costs of doing business (e.g., availability of financing, effects of trade agreements, degree of regulation, etc.).

Nine regional centers encompass the Commonwealth of Virginia (Washington, DC - Baltimore; Salisbury MD; Richmond. VA; Staunton, VA; Roanoke, VA; Winston-Salem, NC; Norfolk, VA; Johnson City, TN; and Lexington KY). These regions are known as Bureau of Economic Analysis Economic Areas (BEA). BEAs recognize economics rather than political boundaries, and represent a more meaningful method of monitoring activity in a given area. Of these nine BEAs, only Richmond is concentrated entirely within the boundaries of the Commonwealth. The others include counties in the surrounding states.

The study listed factors that influence the decision to establish one or more intermodal facilities. These include the following:

• The presence of large sea ports;
• A large population providing a consumer base;
• A large manufacturing or distribution traffic base;
• A distance of over 500 miles between origin and destination;
• A minimum of 25,000 shipments annually to and from no more than 2 or 3 geographically similar BEAs; and
• Generally balanced volumes (return trips).

Many of these criteria are met under current conditions. The Commonwealth has five ports, three in Hampton Roads, one at Front Royal, and one at Richmond. (Note: Due to limitations in the ability of the database to discriminate among traffic volumes at every port, Richmond was not explicitly addressed in the study.) Hampton Roads is ranked twenty-seventh in the nation for population. Major production and market centers are located in four Virginia BEAs (Northern Virginia/Washington, DC/Baltimore; Hampton Roads; Richmond; and Roanoke). Finally, due to its location and width, Virginia attracts truck traffic from many BEAs throughout the mid-Atlantic, the Midwest, and elsewhere.

However, some criteria are not met. One criterion was whether the minimum requirement of 25,000 trips annually for an intermodal facility was satisfied at any of the BEAs. Of the nine BEAs associated with Virginia, five already have intermodal transfer facilities. Of the remaining four, none have enough traffic going to or coming from three or less other BEAs which are relatively close to each other. The table below presents specific information:

Table 1
Annual Inbound / Outbound Trips for Richmond and Roanoke

Richmond's Top 3 Inbound
Inbound Total: 13,000
Outbound Total: 2,600
Sum of Inbound and Outbound Totals: 15,600

Richmond's Top 3 Outbound
Inbound Total: 2,250
Outbound Total: 7,700
Sum of Inbound and Outbound Totals: 9,950

Roanoke's Top 3 Inbound
Inbound Total: 7,000
Outbound Total: 2,700
Sum of Inbound and Outbound Totals: 9,700

Roanoke's Top 3 Outbound
Inbound Total: 2,200
Outbound Total: 4,800
Sum of Inbound and Outbound Totals: 7,000

All of the totals in the far right column are far below the 25,000 trips required to warrant the construction of a new intermodal transfer facility. Furthermore, there is an inadequate balance between inbound and outbound trips, indicating a high number of empty returns. Therefore, two decision-making criteria were not met, based on the data examined.

Of course, economic factors fluctuate markedly with the business cycle, the nature and extent of regulation, choices of financing, technological innovation, foreign and domestic events, and other operational and strategic decisions made by stakeholders. Therefore, the study should be repeated at regular intervals to ensure that the conclusions reflect the most current conditions.