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New port missing rail connection

Train Trouble

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Depending on where you stand on the issues of lifestyle and economic development, talk of increased port traffic is either the sweet drum of river water on the belly of a port ship or the disquieting sound of more container trucks rumbling down Interstate 26.

An explosion of new and planned development by eight national and international firms promises to transform the 70-mile stretch of Interstate-26 from Charleston to Orangeburg into a "distribution center corridor."

An estimated 20 million square feet of industrial and warehouse space is already in the works, with speculative buildings ranging in size from 200,000 to 1.5 million square feet slated for construction in and around Jedburg within the next year.

The new sites are expected to be a bonanza for logistics firms, as the individual projects, coupled with the development of a new container terminal at the Navy Yard, will finally put Charleston on equal footing with Savannah when it comes to luring large-scale imports and exports to the region.

"The magnitude of world-class product going on-line in the next year alone is something I have never seen before," says John Scarborough, long time economic development director for Berkeley County and now with the S.C. Department of Commerce.

Trucks look to remain a vital component of South Carolina's international trade industry. But, in the interest of sustainability, some say it's high time to rationalize the state's rail system, from Charleston to Greenville and Spartanburg.

Everybody's talking about rail

That the rail "solution" should so quickly come to mind when talking about the cargo flowing into and out of Charleston is something of a revolution in the conventional wisdom about trade and how to live with it.

Once the navy base terminal is completed, neither that nor the Wando Welch terminal in Mount Pleasant — the two largest Charleston port sites — will have rail access.

Wando Welch doesn't have rail because of a memorandum of understanding with the surrounding community. In the case of the navy base, a similar memorandum of understanding with the City of North Charleston prohibits rail from exiting out of the north end of the terminal site, while a rail connection to the south, owned by CSX Transportation, ends on a piece of private property slated for development into a commercial shipping transfer facility.

That said, those attending a recent developers' growth forum hosted by the Charleston Metro Chamber of Commerce considered rail's stock on the rise.

The rail industry has increased promotions recently, touting the relative fuel-efficiency of rail compared to trucks over the long haul, positioning rail as the "green" way to do logistics.

"If Savannah is any indication, the distribution centers will increase the volume of cargo coming through Charleston," says Dana Beach, executive director of the Coastal Conservation League (CCL), which has been suing the U.S. Army Corp of Engineers and others for more than a year, hoping to void the permits for the new terminal and an access road connecting the new terminal to I-26.

"Every box we take off the road will provide a benefit to commuters and residents," he says. "In the absence of rail, these facilities will worsen already unacceptable air and congestion problems."

Also bolstering rail and its possibilities in the public's consciousness is the S.C. Department of Commerce's new effort to review the impact of rail transit — both by passengers and by freight — on economic development and its role in making the state more attractive to relocating businesses. Consultant Wilbur Smith Associates is expected to present its findings to state officials in January.

Kara Borie, a spokeswoman for the Commerce Department, says a revamped railroad plan will include upgrades to the existing rail system's access from the Port of Charleston and the future Jasper Port to large industrial sites, particularly in the Upstate, that have the potential to be developed into mega sites.

"Historically, the plan was simply an inventory of the rail system; today we have to go beyond that and look at where we need to be 10, 15, and 20 years from now," Borie says.

Seizing an opportunity

Brandi Hanback, managing director of the Rockefeller Group's Foreign Trade Zone services, says her New York-based company, which is owned by the $8 billion Mitsubishi Estates Company of Japan, is already sold on South Carolina as "a model for attracting new business."

That's why the company bought 400 acres near Jedburg earlier this year and is now just a few permits and a few months away from raising its first building on the site.

Hanback says the Rockefeller Group's vision is not just keyed to imports, but will also focus on opportunities tied to the booming export market.

"To do that, you need good transportation systems," she says.

The challenge is how to move cargo, foster economic development, and preserve the Lowcountry lifestyle.

The ability of trucking firms to have vehicles travel between distribution sites and the Port of Charleston several times a day — the distance being no more than 25 miles one way — makes moving goods by truck a very attractive proposition for distributors.

No surprise then that when Hagood Morrison, director of the industrial brokerage of the Colliers Keenan real estate firm, offered an overview of the current scope of development, most of the renderings featured very large buildings next to equally large truck courts.

In Orangeburg, where economic developers have been hailing the arrival of Dubai's Jafza International as the kick-start the region needs for its economy, reliance solely on trucks would make the area's growing "Global Logistics Triangle" less competitive over time and ultimately prevent the creation of thousands of jobs for its historically underemployed population.

Rod Moseley, president of Bulldog Highway Express sums it up succinctly by stating, "where distances are longer and costs higher, importers simply will not buy."

But Moseley says the solution is to widen I-26 all the way to its intersection with Interstate 95, a prospect that would no doubt cost taxpayers a pretty penny, but is based on the fact that currently almost all cargo destined for markets within 200 miles of the Port of Charleston is transported by truck.

Marion Bull, manager of advertising, publications, and market research for the State Ports Authority, seemed to agree, telling chamber members that "rail today is a 250 to 300 mile proposition."

"Inside of that, you will almost absolutely use trucks to move containers," he says.

But others argue that given the intensity of traffic the new distribution centers will generate, the pressure is on, now more than ever, to finally realize a freight rail system around Charleston to prevent road congestion.

"Widening Interstate 26 to Interstate 95 is not the solution because it would be extremely expensive, and the additional capacity would only stimulate additional development in Berkeley and Dorchester counties that will consume the new capacity," says Beach.

One Horse Port

Chief among most rail wish lists is dual rail access to the Port of Charleston. With the only feasible way out on a CSX line, either Norfolk Southern or S.C. Public Rail would need its own direct access to cargo from the new terminal.

That, however, is a sticky proposition. John Koch, managing director of international sales and marketing for CSX Transportation, said in comments to the Charleston legislative delegation in March, that "it is not ours to offer dual access as part of any settlement or development on private CSX property."

Dual access to the new terminal is critical for the state to remain competitive and to reduce road traffic, says Jeffrey McWhorter, president of the state Commerce Department's public railways division. Without it, shippers through the Port of Charleston who have goods destined for a location CSX doesn't serve, would have to have their containers transferred to the Norfolk Southern train at a transfer facility, a transfer that not only takes time but would also currently cost about $480 per rail car being switched.

"The bottom line is, no competition ... results in the potential for higher freight rates for shippers and possibly the loss of business for the port," McWhorter says.

McWhorter says CSX is seeking a quid pro quo: securing dual access to Norfolk Southern's tracks in Norfolk, Va., for access to CSX's tracks near the new port terminal.

Similar agreements have been in place for decades, allowing Norfolk Southern to access the Columbus Street terminal over CSX's rails, and for CSX to traverse Norfolk Southern's lines along Highway 78, McWhorter says.

"In this case, I've said, 'I understand your position, but from the perspective of a member of the Commerce Department's staff, can't you just leave your Virginia issues in Virginia and deal with your South Carolina issues here?'" McWhorter says. "So far the answer has been no, and there's nothing we can do about it."

A spokesperson for CSX transportation did not return a call requesting comment. McWhorter says the company is considering a role for the state in its proposed transfer facility beside the new port.

Asked if condemnation of CSX's rail connection to the Macalloy site was possible, McWhorter quickly said no.

"However, we are exploring whether there is some other way we can compel them to consider dual access," he says.

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