IntermodalReport FINAL

North American Intermodal Transportation:
Infrastructure, Capital and Financing Issues

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LISA A. LEVINE, EXECUTIVE DIRECTOR, CAE
North American Intermodal Transportation:
Infrastructure, Capital and Financing Issues
OUNDATION
NORTH AMERICAN INTERMODAL TRANSPORTATION: INFRASTRUCTURE, CAPITAL AND FINANCING ISSUES
Table of Contents
EXECUTIVE SUMMARY ..........................................................................................................................................3
INTERMODAL TRANSPORTATION IN NORTH AMERICA

The Intermodal Freight Transport System ..............................................................................................................5
Deregulation of the Intermodal Transport Sector ....................................................................................................5
North America and the Global Economy ................................................................................................................6
The “China Effect” ..................................................................................................................................................6
The Intermodal Transport Agenda ..........................................................................................................................7
TRANSPORT TERMINALS AND EQUIPMENT

Nature and Function of Intermodal Terminals ........................................................................................................7
Ports ........................................................................................................................................................................9
Rail Corridors and Terminals ................................................................................................................................10
INTERMODAL INFRASTRUCTURE DEVELOPMENT NEEDS

Capacity Issues ......................................................................................................................................................11
Advances in Terminal Design and Operation ........................................................................................................12
Terminals and Equipment Needs ..........................................................................................................................13
Intermodal Equipment Pools ................................................................................................................................14
Transloading ..........................................................................................................................................................15
Freight Distribution Centers and Distribution Clusters ........................................................................................16
FINANCING MODELS
Private Participation in Transport Infrastructure ..................................................................................................16
Causes and Forms of Public Divestiture ................................................................................................................17
Privatization and Financing Models ......................................................................................................................18
Limitations of Private Capital ................................................................................................................................19
Challenges to Existing Funding Practices in Freight Terminals ............................................................................19
Private / Public Partnerships ..................................................................................................................................20
CONCLUSION: OPTIONS AND RECOMMENDATIONS ......................................................................................21
ABOUT THE RESEARCHERS..................................................................................................................................23
REFERENCES ..........................................................................................................................................................24
EQUIPMENT LEASING & FINANCE FOUNDATION

EQUIPMENT LEASING & FINANCE FOUNDATION

Executive Summary
More than 25 years of fast growth in international trade has left the North American freight transport
system with serious capacity challenges. The growth of containerized traffic took place at a rate faster
than global trade, which was itself growing faster than the gross global economic output. As an out-
come, many intermodal terminals such as ports and rail facilities are running close to, if not above,
design capacity. Although containerization has been a significant factor in the improvement of the effi-
ciency of transport systems, maritime and inland alike, the current context underlines serious limits
in existing practices. Logistics has placed intense pressures to manage containerized freight distribu-
tion in a more time dependent manner, placing additional challenges for intermodal terminal opera-
tors. A new wave of investments in intermodal transportation is currently underway, but yet the
inherent fluctuations in market conditions and the private character of the industry make such en-
deavors quite prone to risks and uncertainties. For instance, the economic slowdown and volatility in
energy prices have been relatively unexpected and have substantial consequences on global commod-
ity chains and intermodal transportation. Thus, outside existing terminals that have a long standing
history of generating traffic, private capital is reluctant to commit investments. Yet, intermodal trans-
portation as a system also requires investments in new locations along the supply chain to improve its
overall throughput and efficiency, namely through satellite terminals and freight distribution clusters.
These new terminals and the additional capacity will also require the financing of intermodal equip-
ment servicing their operations. The purpose of this report is to assess the financing models related to
the next generation of intermodal terminals equipment. A particular emphasis is placed on the feasi-
bility of public / private partnerships.
EQUIPMENT LEASING & FINANCE FOUNDATION 3

4 EQUIPMENT LEASING & FINANCE FOUNDATION

Intermodal Transportation in North America

The Intermodal Freight Transport System imminent collapse. For instance, by 1960 one third of the
The major freight markets concern bulk and intermodal American rail industry was bankrupt or close to failure as
transportation with the intermodal segment being the most service levels and fare structure were regulated by the In-
flexible. Intermodal transport terminals are an essential terstate Commerce Commission and could not be changed
part of global, national and regional trade, all of which has without approval. The key question was freeing entry lev-
seen a substantial increase in the amount of freight traffic els into specific transport sectors, since in many regulated
being carried. In addition to being locations where freight industries, the regulators restricted entry. There was a
is consolidated or deconsolidated, terminals are points of growing acceptance for a solution based on a relaxation of
transfers between different systems of circulation. For in- regulatory control which resulted in a series of laws and
stance, international trade commonly relies on the efficient reforms through the 1980s and 1990s (see Table 1).
interface between maritime and inland freight transport
systems. In addition to being a piece of real estate, termi- Table 1 Major Deregulation Legislations of Intermodal Transportation in North America
Year Country Legislation
nals require substantial infrastructures taking the form of
1976 USA Railroad Revitalization and Regulatory Reform Act
fixed assets (piers, rail tracks, warehouses, paved surfaces, 1980 USA Staggers Act; Motor Carrier Act
road and rail access, etc) and equipment (cranes, holsters, 1984 USA Ocean Shipping Act
containers, chassis, etc.), both of which are capital inten- 1987 Canada National Transportation Act; Shipping Conference Exemption Act;
sive. Unlike bulk terminals, intermodal equipment has a Motor Vehicle Transport Act
1991 USA Intermodal Surface Transportation Efficiency Act
better relocation potential, although balance can be diffi- 1995 USA Interstate Commerce Commission Termination Act
cult as trade flows fluctuate (often with currency fluctua- 1996 Canada Canada Transportation Act
tions) but rarely coincide. There are also different types 1998 USA Ocean Shipping Reform Act
of intermodal traffic with different weights and other 2001 Canada Canada Shipping Act
characteristics. However, the equipment itself, within
limits, has interoperability characteristics since the effi- The first round of policy change was the Railroad Revi-
ciency of intermodal transportation resides on globally talization and Regulatory Reform Act of 1976 which eased
followed standards. regulations on rates, line abandonment, and mergers. Four
Freight distribution is a physical activity where the years later, when the political tide of deregulation was in
transportation component is of prime importance. Para- full motion, Congress followed up with the Staggers Rail
doxically, because of its efficiency, freight transportation is Act of 1980. The most important features of the Staggers
almost invisible to the end consumer as the outcome (re- Act were the granting of greater pricing freedom, stream-
tailing) is seen, but not the process (distribution). Such a lining merger timetables, expediting the line abandonment
perspective often permeates public policy where the im- process, allowing multi-modal ownership, and permitting
portance of freight transportation is often understated. confidential contracts with shippers. The railroads imme-
Still, the global economy is based on the backbone of diately divested themselves of their unprofitable passenger
freight distribution, which in turn relies on networks es- business, and began to concentrate on their core freight ac-
tablished to support its flows and on gateways that are reg- tivity, the business which was most profitable and least
ulating them. Networks, particularly those concerning subject to competition from other modes was bulk freight.
maritime shipping and air transportation, are flexible Railroads began abandoning tracks, with over 100,000
entities that change with the ebb and flows of commerce miles being abandoned between 1975 and 2000. Because
while gateways are locations fixed within their own re- there was a relaxation in controls over entry and exit, the
gional geography. post deregulation period has been marked by a significant
development in mergers and acquisitions. From 56 Class I
Deregulation of the Intermodal Transport Sector railroads in 1975 the number has been reduced to 7 in
The North American transport sector has traditionally 2005 (two of which are Canadian). Two key examples of
been heavily regulated since it was perceived as of national privatization of major freight rail assets involve the selling
economic importance. There has been a significant shift in of the federally owned Conrail to NS and CSX in 1987 and
public policy concerning the funding, oversight and man- the privatization of CN (Canadian National) in 1995. This
agement of transportation infrastructure. The need to re- has helped the industry achieve scale economies and
form the industry was made necessary because of its boosted their economic performance. Finally, the restric-

tions on intermodal ownership and operation have led to a ported by the setting of long distance intermodal trans-
revitalization of the general freight business. For the first portation chains have significantly changed in recent years.
time, intermodal traffic accounted for the majority of rail The current macroeconomic context is uncertain, volatile
revenues in 2003 (Slack, 2008). and prone to risks. It must be acknowledged that the surge
The maritime segment also saw a significant deregula- of American imports was based on a debt driven process
tion beginning with the Ocean Shipping Act of 1984 which supported by a massive wave of asset inflation, namely in
granted an easier access to American ports to foreign mar- real estate, enabling many consumers to borrow against
itime shipping lines. The Ocean Shipping Reform Act of the paper value of their equity. As long as this process was
1998 expended on this deregulation by providing shippers taking place international trade and transpacific container
and ocean carriers greater choice and flexibility in entering flows were growing, placing pressures on the North Ameri-
into contractual relationships with shippers for ocean can intermodal transport system to cope. From 2006, as
transportation and intermodal services (Valenga, 2000). the real estate bubble started to deflate, intermodal traffic
From a regulatory standpoint, there is a clear emergence of leveled off. By late 2007, the global financial system began
an intermodal perspective underlined by the Intermodal a phase of deflation with massive defaults and downward
Surface Transportation Efficiency Act of 1991 which iden- revisions of asset prices. This, in conjunction with an on-
tified strategic long distance corridors and placed freight going debasement of the US dollar led to a notable drop in
planning within the agenda of regional planning agencies. port and rail traffic, but an increase in exports. Oil prices
The early 21st century leaves the North American inter- have also surged, making long distance trade more costly
modal market firmly in private hands and with growing and forcing many suppliers to reconsider their strategy
sign of integration between modes as well as between that have over the last two decades depended in low input
global, national and regional freight distribution systems. costs, particularly from China.
North America and the Global Economy The “China Effect”

Historically, the setting of national rail and highway sys- The emergence of China in the global manufacturing
tems has permitted the emergence of a North American market had profound impacts in terms of the volume and
freight distribution market. Yet, this scale is being ex- pricing of a wide variety of goods. Several factors must be
panded further by the North American Free Trade Agree- considered in the rapid and massive emergence of China.
ment (NAFTA) as well as the by the globalization of From an internal market perspective, China is going
production. Jointly, they have created an environment through its peak years of demographic growth with a stabi-
where the transport sector is coping to adapt to higher vol- lization of its population expected to reach 1.5 billion by
umes, particularly at major gateways, as well as more strin- 2040. Thus, about 10 million new workers are entering the
gent requirements in terms of frequency and reliability. labor market each year, placing intense pressures on finan-
Globalization is certainly a dimension that has been dis- cial, economic and industrial policies to accommodate this
cussed in length and from many different perspectives growth. From an historical perspective, China is eager to
(sources). Among the most common factors identified are reclaim its former status as the world’s dominant economic
related to the exploitation of comparative advantages, power, a role it held until the 18th century. All these fac-
mainly in terms of labor, information and telecommunica- tors provide a strong impetus, either implicit or explicit to
tion technologies, foreign direct investments and technol- undertake strategies, many potentially macro-economically
ogy transfers. All these have helped create a clustered and unsound, aimed at accelerating economic growth and the
spatially diffused global economy, particularly in terms of modernization of China.
production and consumption. A very powerful and widely This strategy turned out to be highly successful in turn-
acknowledged trend in recent years has been the rapid in- ing China into a major manufacturing center and exporter,
dustrialization of Pacific Asia, particularly China, and the particularly along its coast where the major container port
enduring growth in the consumption of foreign goods in facilities are located. China also applied an export-oriented
North America and Europe. Global trade is thus steadily currency debasement strategy particularly because the
growing despite the increase in the average distance of the Yuan was kept devaluated compared with other currencies;
involved trade relations. Parallel to this growth, the need it “lost” almost 50% of its value in comparison with the
to reconcile spatially diverse demands for raw materials, USD between 1993 and 2003. During that period, China
parts and finished goods has placed additional pressures mostly focused on the lower range of the added-value
on the function of freight distribution and logistics. manufacturing process in addition to have low labor costs.
Yet, the conditions behind globalization that were sup- Still, this strategy is now undermined by a surge in com-

modity prices, namely energy, creating inflationary pres- • Technological improvements. The current intermodal
sures on Chinese production costs. These pressures have technology is mature and most terminals have been
incited China to reevaluate its currency, making its exports operating for decades with now standard equipment
less competitive. and management practices (Notteboom and Rodrigue,
The usage of China as a privileged location in the global 2008). To meet potential growth in traffic and more
manufacturing system has thus been linked with low input stringent supply chain management requirements, ter-
costs (mainly labor) as well as low long distance transport minals will have to significantly improve their produc-
costs brought by containerization. When oil prices where tivity, mainly by handling containerized freight in a
low (in the $30 per barrel range), the longer distances of manner that will improve its velocity. With more tech-
shipping freight from China were positively compensated nologically advanced equipment the same terminal
by lower input costs. This explains why integration could double its design capacity with a higher
processes in North America, namely the use of Mexico as a throughput. Thus, the current capacity constraints at
low cost manufacturing base, were mainly by-passed in the terminals are more than simply an infrastructure issue,
last decade. However, from 2005 the price of surged which but would also imply a shift in the type of infrastruc-
eroded the comparative advantages of China in freight in- ture as well as their operational context. This will in-
tensive goods (such as steel and other ponderous goods). volve an appropriate balance of infrastructure and
The Mexican economy may be positively impacted by such technology as well as an appropriate level of invest-
a trend which will put a greater emphasis on NAFTA as a ment. It goes beyond a capital intensive perspective
comparative advantage structure. Changes in the structure (hard assets) to include knowledge-based issues (soft
and direction of freight flows in North America are to be assets) linked to logistics and supply chain manage-
expected. ment.
The Intermodal Transport Agenda • Security. Due to the current geopolitical context, secu-
Issues related to the capacity and reliability of the North rity issues are high on the agenda and are likely to re-
American freight transport system are increasingly getting main as such. However, a variety of additional security
the attention of public officials since long term economic measures are imposing several constraints on freight
prospects are at stake and linked national welfare. From a movements, which can cause unforeseen delays. For
public policy perspective, the main agenda for intermodal instance, less than 5% of all containers entering the
transportation in the United States specifically covers (Bar- United States are inspected. Investments in new inter-
rett, 2007): modal terminal equipment, particularly those directly
linked with international trade, must consider the im-
• Intermodal integration. In spite of 25 years of deregula- pacts of security regulations on their design and opera-
tion of the transport industry, an intermodal perspec- tion.
tive on freight distribution is still limited. Most
transport operators are dominantly focused on their Transport Terminals and
segments of the system, so it is often challenging to
have them realize that investments and improvements
Equipment
on other segments tend to have positive impacts not Nature and Function of Intermodal Terminals
only on that segment, but system-wide. New invest- Intermodal freight handling requires specific loading and
ments will thus need to focus on the crucial links be- unloading equipment. In addition to the facilities required
tween transport systems and are likely to involve to accommodate ships, trucks and trains (berths, loading
different modal stakeholders. There is an increasing bays and freight yards respectively) a very wide range of
willingness for investors to fund infrastructure down handling gear is required to handle containers between
(or up) the transport chain, particularly if it is directly modes. There are three major types of intermodal termi-
related to the productivity of terminal they have a nals each having their own locational and equipment re-
stake in. The emergence of global transport firms, such quirements (Figure 1):
as maritime shipping companies and port operators is
a strong factor imposing intermodal integration, partic- • Port terminals. They are the most substantial inter-
ularly between maritime and inland freight transport modal terminals in terms of traffic, space consumption
systems. and capital requirement. A container sea terminal pro-
vides an interface between the maritime and inland

systems of circulation. The growth of long distance This can be done by switch carriers or trucking con-
maritime container shipping has also favored the emer- tainers from one terminal to the other. Eventually, ded-
gence of offshore hub terminals, even if many do not icated rail-to-rail terminals are likely to emerge.
have an "offshore" location. Their purpose is mainly to
transship containers from one shipping network to the • Distribution centers. They represent a distinct category
other and they essentially have little, if any, hinterland of intermodal terminals performing an array of value
connections. The terminal is used as a buffer while added functions to the freight, with transmodal opera-
containers wait to be loaded on another ship. The con- tions dominantly supported by trucking. Distribution
tainerization of inland river systems, particularly in centers can perform three major types of function. A
Europe, has led to the development of an array of transloading facility mainly transfers the contents of
barge terminals linked with major deep sea terminals maritime containers into domestic containers (or vice-
with scheduled barge services. At the maritime conversa). It is common in North America to have three
tainer terminal, barges can either use regular docking 40 foot maritime containers to be transferred into two
areas or have their own terminal facilities if congestion 53 foot domestic containers. Sometimes, shipments are
is an issue. Although in the North American context, palletized as part of the transloading process since
intermodal barge transportation and short sea shipping many containers are floor loaded. Cross-docking is an-
are very small markets, they are likely to see in the other significant function that commonly takes place
coming years a substantial development in infrastruc- in the last segment of the retail supply chain. With
ture and equipment, mainly because of energy and en- very limited storage, the contents of inbound loads are
vironmental issues. sorted and transloaded to their final destinations.
Warehousing is a standard function still performed by
• Rail terminals. At the start of the inland intermodal a majority of distribution centers that act as buffers
chain, rail terminals are linked with port terminals. and points of consolidation or deconsolidation within
The fundamental difference between an on-dock and a supply chains.
near-dock rail facility is not necessarily the distance,
but terminal clearance. While for an on-dock rail ter-
minal containers can be moved directly from the dock
PORT TERMINALS
(or the storage areas) to a railcar using the terminal's

own equipment, accessing a near-dock facility requires
clearing the terminal's gate (delays), using the local
road system (congestion) and clearing the gate of the
near-dock rail terminal (delays). Near-dock facilities
RAIL TERMINALS
tend to have more space available however and can

thus play a significant role in the maritime / rail inter-
face, particularly if they are combined with transload-
ing activities. The satellite terminal, the load center
and the interline (transmodal) terminal all qualify as a
DISTRIBUTION
form of inland port. For the satellite terminal, it is

CENTERS
mainly a facility located at a peripheral and less con-

gested site that often performs activities that have be-
come too expensive or space consuming for the
maritime terminal. Rail satellite terminals can be Figure 1- Types of Intermodal Terminals
linked to maritime terminals through rail shuttle or
truck drayage (more common) services. A load center A feature of most intermodal freight activity is the need
is a standard intermodal rail terminal servicing a re- for storage. Assembling the individual bundles of goods
gional market area. If combined with a variety of logis- may be time-consuming and thus some storage may be re-
tical activities, namely freight distribution centers, it quired. This produces the need for terminals to be
can take the form of a freight distribution cluster. The equipped with specialized infrastructures such as refriger-
surge of inland long distance containerized rail traffic ated warehouses, or simply space to stockpile containers.
also require transmodal (rail to rail) operations as Containerization, because of its large volumes, has forced a
freight is moved from one rail network to the other. significant modal and temporal separation at terminals as

well as a variety of transloading activities in the vicinity of 50

terminals.
Terminals are important activity systems which fall into 40
two categories, core and ancillary (Table 2). While core
characteristics refer to what a terminal needs to operate, 30
such as infrastructure and equipment, ancillary character-
istics tend to be more value added. They also play an im- 20
portant role in the differentiation of terminals since they
shape their functional and operational characteristics. Core 10
characteristics are replicable as they imply capital invest-
ments in relatively standard technologies, infrastructure 0
and equipment. Ancillary characteristics are more linked
81
83
95
97
99
85
87
89
91
93
01
03
05
07
19
19
19
19
19
19
19
19
19
19
20
20
20
20
with a policy framework as well as the regional economy, Pacific Coast Atlantic Coast Gulf Coast
local initiatives and clustering effects. Figure 2 Container Volume Handled by Main North American Maritime Range,
1981-2007
Table 2 Main Characteristics of Intermodal Transport Terminals
Core Infrastructure Modal access (dock, siding, road), unloading areas growth of containerized traffic has placed intense pressures
(Operations) Equipment Intermodal lifting equipment, storing equipment on port facilities and the rail and road access, particularly
Storage Yard for empty and loaded containers in major metropolitan areas. Many contemporary port ter-
Management Administration, maintenance, access (gates), information
minal developments in North America must offer better
systems
Ancillary Trade facilitation Free trade zone, logistical services
connection with the hinterland such as with the setting of
(Added Value) Distribution centers Transloading, cross-docking, warehousing, light manufactur- on-dock (or near dock) rail facilities and inland terminals
ing, temperature controlled facilities (cold chain) (load centers).
Storage depot Container depot, bulk storage
Container services Washing, preparation, repair, worthiness certification St. John's
Vancouver (BC)
Fraser
SeattleTacoma
Ports Portland (OR) Montreal

Saint John Halifax
The last decade was characterized by a cycle where con- Toronto Boston
tainerized trade surged, particularly along Pacific Asia – New York/New Jersey
Camden
Oakland
North America trade routes. From 1996 to 2007, North Baltimore
Richmond
American container volume essentially doubled to reach Hampton Roads
Long BeachHueneme
52.6 million twenty-foot equivalent Units (TEUs) (Figure Los Angeles

San Diego Charleston
Wilmington (NC)
Ensenada Savannah
2). The issue not only concerns the growth in volume, but Fernandina
Mobile
also the growth in the imbalances of the transpacific con- Houston
Freeport
Gulfport
New Orleans
Panama City
Tampa
tainer flows, which accounted for 9.3 million TEUs in Palm BeachMiami
Port Everglades
2006.Transatlantic trade shows a similar, albeit less exten- TEU (2006)

Less than 0.5 M Mazatlan San Juan (FY)
sive imbalances with imports to the U.S. growing 6.1% an- 0.5 to 1.0 M
1.0 M to 2.0 M
Altamira
Progreso
nually for the same period and exports to Europe growing 2.0 M to 3.0 M
Manzanillo
Veracruz
Lazaro Cardenas
at a much lower rate, 3.5% annually. It remains to be seen More than 3.0 M
to what extent past growth trends will endure in the future

F
since containerization has achieved prevalence within the Figure 3 Traffic at major North American Ports, 2006
majority of supply chains. It is expected that container
traffic growth has peaked and will likely decline until Along with established gateways, such as New York and
macroeconomic conditions, namely those linked with Los Angeles / Long Beach, the recent years has seen at-
trade imbalances, are corrected. tempts to establish new container ports that would act as
The North American port system tends to be character- alternatives. Two notable attempts are the Port of Prince
ized by major port clusters where several large port termi- Rupert in North British Columbia (not shown on map 3)
nal complexes are in proximity (Figure 3). While some are and Lazaro Cardenas in Mexico. The Port of Prince Rupert
competing directly with one another, there is also an exist- came online in 2007 has a current design capacity of
ing complementarity if they offer access to specific hinter- 500,000 TEUs and offers a shorter alternative for transpa-
lands through high capacity rail corridors. Significant cific trade through its direct rail connection to Chicago in

less than 100 hours. For Lazero Cardenas, operated by the Rail Corridors and Terminals
global terminal operator Hutchinson Port Holdings, its ca- Rail is of primordial importance to support long distance
pacity has recently been upgraded to 500,000 TEUs and it trade corridors in North America. It accounts for close to
is expected that 2 million TEUs could eventually be han- 40% of all the ton-miles transported in the United States,
dled by the port (Randolph, 2008). while in Europe this share is only 8%. Rail freight in the
However, there is growing evidence that the boom in United States has experienced a remarkable growth since
container volume handled at North American ports is deregulation in the 1980s (Staggers Act) with a 77% in-
coming to an end, or at least reaching slower growth rates. crease in tons-km between 1985 and 2003. The North
While traffic growth figures vary substantially by port and American rail transport system shows a high level of geo-
their maritime ranges, a stabilization and even a downward graphical specialization with large rail carriers servicing
trend is emerging. This trend is dominantly linked with large regional markets (Figure 6). Rail companies have
the slowdown of the American economy as it enters a re- their own facilities and customers and thus have their own
cessionary stage linked to large amounts of accumulated markets along the segments they control. Each rail system
debt and higher energy prices. The Port of Los Angeles is is the outcome of substantial capital investments occurring
an excellent example of a port terminal complex that rode over several decades with the accumulation of impressive
the growth of transpacific trade and its associated con- infrastructure and equipment assets. However, such a char-
tainerized volumes. Since 1995, its traffic has more than acteristic created issues about continuity within the Ameri-
tripled to reach 8.4 million TEUs in 2007. Yet, traffic can rail network. Mergers have improved this continuity
trends for the port are shifting (Figure 4). but a limit has been reached in the network size of most
450,000
rail operators (Figure 7). Attempts have been made to syn-
Out Empty
chronize the interactions between rail operators for long
400,000
Out Loaded distance trade with the setting of intermodal unit trains.
350,000
In Loaded Often bilateral, trilateral or even quadrilateral arrange-
300,000
ments are made between rail carriers and shipping compa-
250,000 nies to improve the intermodal interface at the major
200,000 gateways or at points of interlining between major net-
150,000 works. Chicago is the largest interlining center in North
100,000
America, handling around 10 million TEUs per year. Its lo-
cation is at the junction of the Eastern, Western and Cana-
50,000
dian rail systems (figure 5).
0
5 5 6 6 7 7 8 9 9 0 0 1 2 2 3 3 4 4 5 6 6 7 7 8
9 9
9 9 9 9 9 9 9 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0

n g ra tc ya
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b

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v

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n

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ya

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b

p r
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aJ u O e Ju e
F e
S
p
A o u
J aJ u a c
O e Ju e
F e
S
p
A o u
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A M M D N A M M D N
Figure 4 Monthly Container Traffic Handled by the Port of Los Angeles, 1995-2008
F
Since 2006, a downward trend is emerging for container-

ized imports, while loaded container exports have in-
creased by about 50% on a monthly basis, surpassing for
the first time in about 10 years exports of empties. The
drop of empties is correlated with the drop of imports. The
surge of exports is linked with the debasement of the US
dollar making American manufactured goods and com-
modities more attractive on global markets. Another
emerging pattern concerns a disconnect that began in 2008
for the export of empties. While some empties have been
filled for the backhaul through Los Angeles, it also appears
that they are being repositioned elsewhere in North Amer- Figure 5 The North American Rail System
ica instead of being exported through Los Angeles. Still,
the domestic market share and exports are not yet large The main growth factors for rail activity in recent years
enough to compensate for the import collapse. The Port of have been linked with a growth in international container-
Long Beach, which is adjacent to the Port of Los Angeles, ized trade, particularly across the Pacific, a growth in the
shows a closely similar traffic structure. quantity of utility coal moving out of the Powder River

basin and a growth of the Canadian and Mexican transbor- trade. For instance, shipping a forty foot container from
der trade. Intermodal and coal represent the two most im- New York to Korea cost about $3,000 if the all-water mar-
portant sources of income for most rail operators. itime route through the Suez Canal is used and $9,000 if
The emergence of landbridges is a good example of the shipped by rail to a West Coast port and then across the
setting of an intermodal freight distribution system relying Pacific. Thus, this form of rail intermodalism appears to
on long distance rail freight corridors. A landbridge has have reached a phase of maturity. Still, the market segment
many definitions but can be summarized by a long dis- of domestic (North American) rail intermodalism is ex-
tance rail corridor servicing at least one major port gate- pected to grow substantially as the only available alterna-
way. The main North American landbridge is linking two tive to long distance trucking. This will lean on the setting
major gateway systems; Southern California and New of a variety of inland terminals acting as load centers for
York/New Jersey via Chicago. This represents the most effi- the respective market areas.
cient Landbridge in the world, which considerably reduces The United States has about 2,270 intermodal rail facili-
distances between the East and the West coasts. Thus, the ties able to move freight from rail to trucks (Figure 7). Al-
North American landbridge is mainly the outcome of though this appears to be a large number, only about 20%
growing transpacific trade and has undergone the con- of these facilities handle a significant intermodal volume.
tainerized revolution; container traffic represented approx- The rest are local facilities fulfilling specific industrial, re-
imately 80% of all rail intermodal moves. Landbridges are sources or manufacturing needs.
particularly the outcome of cooperation between rail oper-
ators eager to get lucrative long distance traffic and mar-
itime shippers eager to reduce shipping time and costs, 73
11
20 51
particularly from Asia. The two largest North American 58
41 4 1
13
railroads, UP and BNSF, derive a sizable share of their oper- 16 36 41 57
105
5
ating revenue from long distance intermodal movements 12
73 104 53
38
(landbridge) originating from the Pacific Coast (Figure 5). 6
8 189 80
147
21 11
146 30 5
64 83 39
40
KCSM 59
53
29
22 5 30 30
FXE
21 49 79
KCS
119
36
CP
56
CN
CSX
NS
BNSF Figure 7 American Intermodal Rail Terminals (number per state)

UP
At this point, very few available datasets provide informa-
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
tion about the volume handled by rail terminals since most
Figure 6 Operating Revenue of Major North American Railroads, 2006 are operated by private interests. Still, the pattern of exist-
(million U.S. dollars) ing locations is a good indication of the demand of the in-
termodal industry. Most terminals are clustered around
Long distance intermodal rail corridors are also planned major maritime gateways (Los Angeles, New York), inter-
in Mexico. Kansas City Southern de Mexico (KCSM, a sub- mediary locations (Chicago, Kansas City) and major man-
diary of Kansas City Southern) is building an $80 million ufacturing and resource extraction areas (Indiana, Iowa).
intermodal terminal next to the port of Lazero Cardenas.
KCSM plans to establish a new International Intermodal
Corridor stretching 1,300 miles across Mexico to the bor-
der crossing at Laredo, Texas. At Laredo, the Kansas City Intermodal Infrastructure
Southern system that connects to major American rail Development Needs
hubs, namely Chicago and Kansas City, takes over (Ran- Capacity Issues
dolph, 2008). ownership structure of rail transport systems in North
However, due to road congestion, infrastructure capacity America involves substantial maintenance costs carried by
issues and a surge in fuel price the advantages of the land- private operators over the infrastructures, the terminals
bridge are being challenged, particularly for long distance and the equipment. The rail industry has one of the high-

est capital expenditure as a share of revenue ratio, in the can be readily been achieved while road accounts for no
range of 18%. Typically, the two most important operating such advantage. Each additional container being carried by
costs are transportation, which includes labor and fuel, road involves the same marginal price increase.
(51%) and equipment (21%). The surge in traffic in recent Delays and disruptions are increasingly costly for supply
years, particularly imports, has resulted in congestion in chains maintaining relatively low inventory levels, particu-
various segments of the North American transportation larly if they involve global freight distribution systems. For
system (Figure 8). For instance, between 1999 and 2007 instance, the 2002 strike at West Coast ports (particularly
the number of containers handled by the intermodal rail Los Angeles / Long Beach) tallied economic costs of about
system increased by 72% to reach 11.9 million units. $1 billion per day. Delays imposed by ports terminals are
While importers have benefited, North American manufac- excessively expensive for maritime shipping companies; a
turers are impacted by greater rail and roadway congestion, 8,000 TEU containership has operating costs of about
which has made it more expensive to service domestic $50,000 to $60,000 per day and must constantly be in cir-
markets and to reach export markets. Constraints on culation to amortize its capital costs. Higher levels of circu-
growth in the trucking industry, including a shortage of lation are linked with higher turnover levels of revenue
drivers, highway congestion, high insurance rates, and in- generating cargo. In 2007, freight rates surged to much
creasing fuel and labor costs, have helped intermodal rail higher levels, such as $100,000 per day, but it went down
operations capture a significant fraction of international to the range of $75,000 during 2008. Overall, it is esti-
freight, yet so far only a small fraction of the domestic mated that congestion in the United States cost about $70
market. billion per year for freight. In view of these challenges it is
acknowledged that new financing models are required as
14 Trailers neither the government nor the private sector appear fully
Containers
12 equipped to address the issue.
M
10 The nature and extent of these investments is very diffi-

8
cult to assess. For instance, investment needs for maritime
transportation have been labeled as “unknown”, particu-
6
larly within the 2005-2020 planning framework (Nelson,
4
2007). For other modes, such as air, road and rail, the Fed-
2
eral Department of Transportation was able provide figures
0 that are judged to be fairly accurate. Yet, no such assess-
1999 2000 2001 2002 2003 2004 2005 2006 2007
ment exists for the maritime sector, namely for ports that
Figure 8 American Intermodal Rail Traffic, 1999-2007
F
are the major gateways for international trade. This is
Although the domestic long distance market is enor- mainly related to the fact that the maritime industry is pri-
mous and growing, the costs associated with intermodal vate and that port terminals are dominantly managed by
transfers, both containers and trailers on flat cars, are a private operators. These actors have their own investment
major factor accounting for the small share of the domestic strategies and sources of capital, which in the recent past
freight market for intermodal rail. As long as capital and did not require much government funding, except for the
capacity remains limited, domestic traffic will be under- issue of dredging. All this represents a unique opportunity
mined by the more profitable long distance international for North America to develop an efficient intermodal
traffic. Intermodal rail service continues to grow, but to at- freight system with significant energy, environmental and
tract more roadway traffic it will require additional capac- competitive advantages.
ity and equipment that reduces the operating costs at the
ports, inland terminals, and the drayage operations serving Advances in Terminal Design and Operation
both facilities. By improving connectivity between the A highly desirable market potential for intermodal
modes, intermodal has the potential to dramatically im- would be to achieve a similar cost structure to rail carload
prove the performance of supply chain and significantly re- service while providing the service level of truckload
duce the volume of truckload freight creating highway freight. This cannot be done without substantial improve-
congestion and consuming large quantities of fuel (Zumer- ment in intermodal terminal design and operations. By re-
chik, Rodrigue and Lanigan, 2008). This performance can ducing the number of times a container is handled, the
be assessed in many ways. In terms of energy performance, number of operations involved in the transfer, the distance
rail has an obvious net advantage over road, particularly over which a container is handled, and the labor, equip-
over longer distances. With unit trains, economies of scale ment and time needed for a transfer, efficiency and pro-

ductivity improvements (better asset utilization) can be comes a major bottleneck as each truck must be
achieved. Equally important is vessel and train turnaround processed to insure that the right documentation is
times, and the drayage cost reductions achieved by short- presented. Information technology will be fundamental
ening the wait time from shippers and consignees, particu- to better manage drop-off and pick up as well as the
larly at port terminals, as well as an elimination of management of stacking areas.
deadhead, empty loads and bobtail trips. Great strides have Two recent terminal projects are particularly revealing for
been made in port capacity, spurring additional demands current considerations in design and operation. They are at
and higher requirement in the timing of inland container- the opposite ends of the Heartland Corridor; a rail corridor
ized shipping. A commensurate level of public and private project undertaken by Norfolk Southern (NS) expected to
investment needs to be made in inland intermodal trans- be completed in 2010. The corridor will reduce the dis-
portation. Without improvements in to increase capacity tance of container train trips between the East Coast and
and improve speed, reliability, and the costs associated the Midwest. The Heartland Corridor will initially connect
with intermodal and transmodal transfers (rail to rail), the new port terminal facilities of Maersk in Portsmouth,
goods movement will remain dominantly serviced by Virginia, with rail lines through West Virginia and end in
trucking over increasingly congested highways and taxed Columbus, Ohio. At this point the corridor will link up
by higher energy prices. For instance, a number of East with western rail networks or with the double-stack rail
Coast distribution centers have relocated further inland in corridor to Chicago. Currently, double-stack trains heading
Pennsylvania and Upstate New York to minimize roadway towards the Port of Virginia must go through Harrisburg,
congestion disruption, and to avoid transmodal inter- Pennsylvania because of insufficient tunnel clearance.
change between Western and Eastern railroads: containers Through an increase of the clearance of 28 tunnels at a cost
are trucked from Chicago instead of being railed. of about $266 million, the Heartland Corridor project will
Even after more than two decades of intermodal devel- bypass this loop, cutting 233 miles and 36 hours off the
opments, there is a glaring need for a closer integration be- present route from Virginia to the Midwest.
tween maritime and inland rail transportation. The At the Port of Hampton Roads, Virginia, the new APM
improvement of terminal operations is an ongoing process container port terminal is entirely private and one of the
covering three key dimensions: most automated intermodal facilities in North America. It
• Intermodal and interline efficiency. This can be achieved opened in 2007 with a capacity of 1 million TEUs and it is
in many ways but the most fundamental aspect in- expected that 25% of the volume will be handled by rail
volves better performing equipment. For instance, with a potential of up to 40%. The terminal is equipped
many crane manufacturers are constantly striving to with six super post-Panamax electric portainers with a
develop equipment that performs faster, with fewer stockage area serviced by 30 semi-automated rail mounted
breakdowns and abiding to environmental regulations gantry yard cranes. The terminal is linked with the NS rail
(electric powered as opposed to diesel powered). Addi- network with six on-dock rail spurs able to move contain-
tionally, this requires other intermodal equipment for ers directly to long distance double-stack unit trains.
the storage yard. On the other side of the Heartland corridor in Colum-
• Rail access. While older generations of intermodal bus, Ohio, the Rickenbacker Intermodal Terminal, a $68
yards (or those with small volume) worked on a one- million facility, was opened in 2008. The initial phase of
to-one basis (one trackside space available for loading the intermodal terminal occupies about 175 acres and has
or unloading for each car), new intermodal yards tend the capacity to handle more than 250,000 containers
to operate on a two-to-one basis (one trackside space (COFC) and trailers (TOFC) annually. The setting of new
for loading and one trackside space for unloading). inland rail terminals is commonly taking place in conjunc-
This leads to more space for operations but also re- tion with the setting of logistics parks. In this case, the
quires a more land for terminal operations. Sites in Rickenbacker Global Logistics Park has been planned with
central areas are ill-suited for these additional space re- the expectation of becoming a load center and capturing
quirements. added value freight distribution activities.
• Terminal accessibility. The key problem in terminal op-
erations is often not related to the performance of the Terminals and Equipment Needs
intermodal equipment per se, but with the truck / rail The development of containerization and mechanized
interface. As the volume handled by a terminal gets intermodal equipment in the 1960s was the starting point
larger, highway connectors become increasingly con- in the emergence of a more efficient intermodal rail sys-
gested. Additionally, gate access to the terminal be- tem, particularly in the 1980s when double-stacking rail

cars entered in service. Although the earliest - unsuccess- company and they do not involve any management
ful - attempt at double stacking was made in 1977 by service by the lessor. The goal of leasing company seeks
Southern Pacific Railroad, the first double stack unit train is to amortize its investment over the lease period
started in 1984 between Los Angeles and South Kearny, NJ, which covers about half of the useful life of a container.
under the initiative of APL (American President Lines). • Short term leases. Also called spot market leases since
This created strong pressures in the design and implemen- the lease price is strongly influenced by current market
tation of efficient intermodal cranes as growing quantities conditions pertaining to the volatility of supply and
of containers were handled by rail terminals. demand. Such arrangements commonly take place
A recent comprehensive study of rail infrastructure in- when there is a temporary surge in the demand, either
vestment needs underlined that to meet expected freight cyclical or unforeseen. Because of its volatility leasing
demand and level of service by 2035, about 148 billion companies try to avoid having a large share of their
2007 dollars of new investments would be required (Cam- equipment on the spot market because of the risk of
bridge Systematics, 2007). About 87% these funds would having idle containers, but realize that such a condi-
go to line haul expansion and the construction, repair and tion is unavoidable. Still, with careful planning, con-
maintenance of bridges and tunnels. About 6% would go tainers can be positioned to take advantage of local or
to rail facility expansion, including the expansion of car- regional surges in demand.
load terminals, intermodal yards, and international gate- The recent trend has involved a shift from master leases
way facilities. Each time a new terminal is built or to long term leases, particularly because of acute imbal-
expanded, it represents an additional demand for inter- ances in containerized trade flows, such as between Pacific
modal equipment including loading and unloading equip- Asia and North America, which required the long distance
ment, containers and chassis, and office and security repositioning of empty containers. Under a master lease
equipment (Table 3). agreement, these repositioning costs had to be covered by
the lessor. A substantial growth potential resides in 53 foot
Table 3 Equipment Requirements at Intermodal Terminals containers used for domestic distribution or through
Loading / Unloading equipment Cranes (portainers), overhead cranes (stacking), straddle transloading requirements.
carriers and lifts. (Nature and mix depend on the type
of terminal)
Containers ISO containers (20, 40, 45, 48 and 53 foot), Domestic Intermodal Equipment Pools
containers (53 foot), washing and repair equipment. A prominent tendency in the intermodal industry has
Drayage Container chassis. Holsters and Trucks. been the setting of various equipment pools. Equipment is
Office and security equipment Standard office IT equipment. Security equipment.
usually made available for leasing by freight market,
Construction and maintenance Standard heavy construction equipment and materials.
namely around a major port or rail terminal, a logical strat-
Containers are particularly prone to be leased since egy since drayage markets are highly regionalized. Still,
about 40% of the global fleet is owned by leasing compa- there are also national equipment pools, namely TTX
nies. Leasing arrangements come in three major categories which is wholly owned by the major rail carriers. It leases
(Theofanis and Boile, 2008): rail cars primarily but not exclusively used in intermodal
• Master leases. They are also called full service leases or and automobile transportation. It owns the flat cars and
container pool management plans and involve a com- rail carriers own or lease the “racks” that fit on top and
plex and comprehensive leasing arrangement where hold the motor vehicles. TTX has been a successful busi-
the leasing company assumes full management. This ness model, turning a steady profit while serving the vari-
entails a set of conditions regarding the availability of ety of equipment needs of the rail sector. Rails carriers
containers and an accounting system including debits lease an increasing amount of their non intermodal car
and credits between contracting parties depending on fleet through finance companies such as GE Equipment
the condition of equipment at the time of interchange. Services and CIT Rail. Rail carriers also work through
The leasing company is responsible for the full man- other third parties (e.g. GATX, Union Tank) for their
agement of the container fleet (repositioning, mainte- chemical car fleets.
nance and repair) and for repositioning following off Pools are also slowly being extended to other elements of
hire and contract termination. intermodal transportation, notably container chassis and
• Long term leases. Also called dry leases and are com- container leasing. Usually each steamship line has its own
monly associated with the extended use of the leased chassis, which means duplication of equipment and con-
container by an ocean carrier. This lease normally fol- gestion of available terminal space. For instance, the pri-
lows the purchase of new containers by the leasing vate equity firm Fenway used its Roadlink company (one

of the largest intermodal drayage company in North Amer- gin would be logistically complex.
ica) to pursue a rollup strategy by buying a set of small • Demurrage. Containers are commonly rented for a spe-
companies in a market that until recently has been heavily cific time period and/or the leasing contract specifies
segmented. The expectation is a better level of usage of ex- that the maritime container cannot leave the vicinity of
isting equipment. On the West Coast new regulations de- the port (or cannot spend more than a specific amount
signed to bring cleaner trucks in to the ports of the San of time inland). Transloading is thus performed to in-
Pedro bay (LA / Long Beach) have brought large players sure that the leased container is handed back to the
like Schneider into the former owner operator market of maritime shipping or the leasing company without ad-
port drayage. Fortress, a noted private equity player ditional charge..
(owner of air and ship assets and RailAmerica/FEC Rail- • Consolidation. In many cases where this is a significant
way) bought Interpool to try to bring some consolidation market for domestic containers and that the domestic
to the container leasing market. The financial and eco- load unit is larger than the maritime load unit, a con-
nomic crisis that began in 2008 has slowed down consoli- solidation of the shipments is often performed. For in-
dation and pooling plans, but they remain a long term stance, in North America the largest domestic load unit
trend in the intermodal industry. is 53 foot, which represents the maximal legal size of a
truck load on the highway. Thus, in distribution cen-
Transloading ters in the vicinity of several major ports the contents
Transloading involves the transfer from one load unit to of three maritime containers are transferred into three
another, which can be a complex task if the load units are domestic containers. This enables cost savings as ship-
significantly different. There are several causes that may ment costs, including terminal costs, are established in
favor container transloading, which tends to take place in terms of loads. A domestic rail terminals charges by
the vicinity of port terminals or inland (satellite) terminals the number of lifts, which means the costs are the
(Table 4). same to handle a 40 foot or a 53 foot container.
• Equipment availability. This often takes place in con-
Table 4 Causes for Transloading Containers junction with demurrage. Transloading enables a more
Cause Outcome efficient use of both container assets (international and
Weight compliance Transferring the contents of heavy containers into loads meeting national domestic) and can facilitate international trade by free-
or regional road weight limits.
Palletizing Placing loose (floor loaded) containerized cargo unto pallets.
ing transport capacity. For instance, moving maritime
Adapting to local load units (e.g. europallet). containers over long distances in the North American
Demurrage Handing back containers to owner (maritime shipping or leasing company) transport system can be considered a suboptimal usage
by transferring its contents into another load unit (e.g. domestic container). of transport equipment. Conversely, the global mar-
Consolidation Transferring the contents of smaller containers into larger containers
itime shipping industry is mainly designed to handle
(e.g. three maritime 40 foot containers into two 53 foot domestic contain-
ers). Cost savings (number of lifts). 40 foot containers.
Equipment Making maritime containers available for exports and domestic containers • Supply chain management. A transloading facility can
availability available for imports. Trade facilitation. act as a buffer within a supply chain, enabling shippers
Supply chain Terminal and transloading facility as a buffer. Delay decision to route freight some room to synchronize the delivery of goods with
management to better fulfill regional demands.
the real time needs of their customers. This is particu-
• Weight compliance. Simply involves shifting the con- larly the case for long distance trade where a shipment
tents of heavy containers into lighter loads such as do- can be in transit for several weeks while the demand
mestic containers or twenty footers. This is conditions at the destination may have changed.
particularly the case for the containerized movement Transloading thus offers an opportunity to delay the
of commodities. decision about routing freight to the final destination
• Palletizing. Very common for the shipment of con- by using the facility as an opportunity to do last
sumption goods. To gain shipment space in imbal- minute adjustments in terms of which shipments
anced container flows many containers are "floor should go to which markets.
loaded" and once arriving near consumption markets, Transloading accounts for a substantial activity at major
the shipments are broken down and assembled into port terminals. For instance, more than 25% of all the con-
manageable pallets. This also gives the opportunity to tainerized traffic handled by the ports of Los Angeles and
adapt to local load units that involve different sizes, Long Beach is transloaded into domestic containers. In
such as the difference between North American and many cases transloading requires specialized equipment
European pallets. Doing such a task at the point of ori- and a facility where it can be performed.

Freight Distribution Centers and Distribution Large distribution centers tend to develop on the princi-
Clusters ple of internal economies of agglomeration (within the dis-
Technological changes impacted over the location, de- tribution center). Freight distribution clusters (FDC; also
sign and operation of distribution centers; the facilities known as logistics parks) expand these advantages
handling the requirements of modern distribution. From a through external economies of agglomeration implying
locational standpoint, distribution centers mainly rely on that the concentration of distribution centers within the
trucking, implying a preference for suburban locations cluster, even if they concern different supply chains, has
with good road accessibility supporting a constant traffic. the potential to reduce an array of costs. The construction
They service regional markets with a 48 hours service win- of new rail terminal facilities is particularly prone to see
dow on average, implying that replenishment orders from the development of logistics parks, particularly because of
their customers are met within that time period. They have the following:
become one storey facilities designed more for throughput • Land. The site of the new rail terminal commonly in-
than for warehousing with specialized loading and unload- volves a suburban location where the availability of
ing bays and sorting equipment. Cross-docking distribu- land (greenfield) is much less an issue than for con-
tion centers represent one of the foremost expressions of a ventional terminals located in built up areas. There are
facility that handles freight in a time sensitive manner. An- thus a variety of sites available in proximity for space
other tendency has been the setting of freight distribution consuming logistical activities. If the development of a
clusters where an array of distribution activities agglomer- logistical park is planned in conjunction with the de-
ate to take advantage of shared infrastructures and accessi- velopment of the rail terminal, then a land reserve can
bility. This tends to expand the added-value performed by be readily set aside.
logistics. • New infrastructure. A new rail terminal is equipped
with the latest and highest performing equipment.
Table 5 Characteristics of Large-scale Distribution Centers Nearby logistical activities are thus able to benefit from
Size Larger More throughput and less warehousing. superior transport services. Additionally, the setting of
Facility One story; Separate loading and Sorting efficiency; Potential for cross-docking. new rail infrastructure and the expectation of the loca-
unloading bays tion of new activities often creates an incentive for re-
Land Large lot Parking space for trucks (often not necessary
due to high throughput); Space for expansion. gional authorities to provide additional infrastructures,
Accessibility Proximity to highways Constant movements (pick-up and deliveries) in namely roads. Consequently, logistics activities have
small batches (often LTL); Access to corridors the double benefit of having access to high quality
and markets. road and intermodal infrastructures.
Market Regional / National Less than 48 hours service window.
IT Integration Sort parcels; Control movements from receiving
• Traffic expectations. A new rail terminal represents a
docks to shipping dock; Management systems substantial capital investment committed when there
controlling transactions. are high expectations that it will handle the traffic level
it was designed for. Since this traffic volume is new, lo-
The setting of large distribution centers, often part of gistical links can be created to form new supply chains
distribution clusters, has been a dominant trend, particu- and new added value activities.
larly among major retailers such as Wal-Mart, Target and
Home Depot, which have set the standard in terms of in-
ventory management of their supply chains. These inter- Financing Models
modal facilities require a large array of equipment which
Private Participation in Transport Infrastructure
can vary based on the freight they handle (Table 6). A dis-
Transportation infrastructure, like several infrastructure
tribution center involved in food and produce distribution
classes, has a significant level of public involvement rang-
will obviously have different equipment needs than a dis-
ing from direct ownership and management to a regulatory
tribution center supplying retail stores.
framework that defines operational standards. This is no-
tably the outcome of a tradition where transportation, par-
Table 6 Equipment Required by a Distribution Center
Storage Racks, bins
ticularly roads, was seen as a public good not to be subject
Sorting Conveyors, lifts to market forces and be free of access. A similar trend ap-
Palletizing De-palletizing and re-palletizing, wrapping plied to port and airport infrastructures that were placed
Temperature control (For cold chain activities) Temperature monitoring devices, under the management of public authorities. Although rail
refrigeration equipment
freight has essentially been a private endeavor in the
Information technologies Computer, network and telecommunication systems, scanning
equipment United States, it was significantly regulated by the Inter-
state Commerce Commission in terms of fares and level of

service. Rail terminals were managed by private rail opera- • Diversification. Intermodal terminals offer a form of
tors while the warehousing / distribution industry is al- functional and geographical asset diversification for a
most completely private. Like many civil engineering holding company and help lower risks. Terminals rep-
sectors, the private sector can be involved in transporta- resent an asset class on their own. They also offer a po-
tion project delivery, which can include design and con- tential of geographical diversification as holding
struction, project management such as maintenance and terminals at different locations help mitigate risks
operations and project financing, namely raising capital. linked with a specific regional or national market. Fi-
The trend towards private involvement in the transporta- nancial problems related to the residential real estate
tion sector has been an enduring one, which initially sector are likely to incite many holding companies to
started with the privatization (or deregulation) in the diversify their assets, even outside the United States.
1980s of existing transportation firms. New relationships
started to be established with financial institutions since Causes and Forms of Public Divestiture
public funding and subsidies were substantially reduced Facing the growing inability of governments to manage
and new competitors entered the market. Then, many and fund transport infrastructure, the last decades have
transportation firms were able to expand through mergers seen deregulation and more active private participation.
and acquisitions into new networks and markets. Some, Many factors have placed pressures on public officials to
particularly in the maritime and terminal operation sec- consider the privatization of transport infrastructure, in-
tors, became large multinational enterprises controlling cluding terminals:
substantial assets and revenues. As the freight transport • Fiscal problems. Thelevel of government expenses in a
sector became increasingly efficient and profitable it re- variety of social welfare practices is a growing burden
ceived the attention of large equity firms in search of re- on public finances, leaving limited options but divesti-
turns on capital investment. The acquisition costs of ture. Current fiscal trends clearly underline that all lev-
intermodal terminals, particularly port facilities, has sub- els of governments have limited if any margin and that
stantially increased in recent years as large equity firms are accumulated deficits have led to unsustainable debt
competing to acquire facilities with secure traffic (low levels. Since transport infrastructures are assets of sub-
risks). A new wave of mergers and acquisitions is taking stantial value, they are commonly a target for privatiza-
place at the global and national levels as equity firms see tion. This is also known as “monetization” where a
terminals as an asset class that has an intrinsic value (real government seeks a large lump sum by selling or leas-
estate), an operational value (rent, income) as well as pro- ing an infrastructure for budgetary relief.
viding a form of diversification and stability: • High operating costs. Mainly due to managerial and
• Asset. Globalization and the growth of international labor costs issues, the operating costs of public trans-
trade have made many terminal assets more valuable port infrastructure, including maintenance, tend to be
since they are key elements in establishing and main- higher than their private counterparts. Private interests
taining global supply chains. Terminals occupy pre- tend to have a better control of technical and financial
mium locations conferring accessibility to either risks, are able to meet construction and operational
maritime, rail or road transport systems. These loca- guidelines as well as providing a higher quality of serv-
tions, such as waterfronts, are rare and cannot easily (if ices to users. Operating deficits thus must be covered
at all) be substituted for other locations. Traffic growth by public funds, namely through cross-subsidies. Oth-
is commonly linked with valuation growth of a trans- erwise, users are paying a higher cost than a privately
port infrastructure since the same amount of land gen- managed system. High operating costs are thus a sig-
erates a higher income. Thus, terminals and some nificant incentive to privatize.
transport infrastructure are seen as fairly liquid assets • Cross-subsidies. Several transport infrastructures are
with an anticipation that they will gain in value. subsidized by revenues from other streams since their
• Source of income. In addition to being an asset, inter- operating costs cannot be compensated by existing rev-
modal terminals also guarantee a source of income enue. For instance, public transport systems are subsi-
linked with the traffic volume they handle. They have dized in part by revenues coming from fuel taxes or
a constant revenue stream with a fairly limited season- tolls. Privatization can thus be a strategy to end cross-
ality (unlike many bulk terminals), which make termi- subsidizing by tapping private capital markets instead
nals particularly attractive in light of substantial traffic of relying on public debt. The subsidies can either be
growth that most terminal facilities have experienced. reallocated to fund other projects (or pay existing
Traffic growth expectations result in income growth debt) or removed altogether, thus reducing taxation
expectations. levels.

• Equalization. Since public investments are often a polit- since existing assets remain untouched. It also confers
ical process facing pressures from different con- the advantage of getting the latest technical and mana-
stituents to receive their “fair share”, many gerial expertise for the infrastructure project.
investments come with “strings attached” in terms of • Management contract. While ownership remains pub-
budget allocation. Earmarks are a common equaliza- lic, management is given to a private operator, com-
tion issue creating serious funding impediments. An monly through a bidding process. This strategy has
infrastructure investment in one region must often be been particularly popular in the terminal operation
compensated with a comparable investment in another business as many rail and maritime terminals are man-
region or project, even if this investment may not be aged by private operators who do not own the facilities
necessary. This tends to significantly increase the gen- but have long term leases. The outcome commonly in-
eral cost of public infrastructure investments, particu- volves efficiency improvements.
larly if equalization creates non-revenue generating Concessions are a simple and fair strategy involving a
projects. Thus, privatization removes the equalization bidding process, which underlines the importance to have
process for capital allocation as private enterprises are it take place in a transparent and open way. This is particu-
less bound to such a forced redistribution. larly relevant in the current context as retirement funds,
One of the core goals of privatization concerns the de- sovereign wealth funds, investment banks and other finan-
rived efficiency gains compared to the transaction costs of cial institutions are increasingly involved in the funding of
the process (Gomez-Ibanez, 2008). Efficiency gains in- transportation infrastructure. A lack of transparency can
volve a higher output level with the same or fewer input be perceived negatively by the general public and can
units, implying a more productive use of the infrastruc- transform a simple transaction into a complex political
ture. Transaction costs are the costs related to the ex- process. Since many concessions are set over long time pe-
change (from public to private ownership) and could riods (50-75 years), they bring the issue of changing mar-
involve various buyouts, such as compensations for exist- ket conditions that may force a renegotiation of the
ing public workers. For public infrastructure, they tend to contract. It is next to impossible to foresee long term mar-
be very high and involve delays due to the regulatory ket changes and traffic levels, so a provision for renegotia-
changes of the transaction. tion should be provided. Again, this renegotiation can be
subject to controversy and public debate, particularly if
Privatization and Financing Models performed in an un-transparent manner.
Once privatization is considered, an important issue con- Due to their nature and function, several other forms of
cerns which form it will take. There are several options privatization can be established for intermodal freight ter-
ranging from a complete sale of the infrastructure to a minals (Table 7). Considering that intermodal terminals
management contract where the public sector retains own- have an intensive use of equipment, leasing agreements are
ership and a share of the revenues. Three forms of privati- an important dimension of privatization and of the strate-
zation are particularly dominant: gies of existing private infrastructure operators.
• Sale or concession agreement (lease) of existing facili- Table 7 Forms of Intermodal Terminal Privatization
ties. Divestiture is part of a political agenda which Type Nature
Sale Terminal is transferred on a freehold basis but with the requirement that
began with deregulation. As discussed before, budget
it will be used only to provide terminal services.
relief is sought because of mismanagement; the public Concession Long-term lease of terminal land and facilities and the requirement that the
sector is essentially forced to sell or lease some of its Agreement concessionaire undertakes specified capital investments to build, expand, or
infrastructures. For a sale, the infrastructure is trans- maintain the cargo-handling facilities, equipment, and infrastructure.
ferred on a freehold basis with the requirement that it Capital lease Similar to a concession except that the private sector is not explicitly
required to invest in the facilities and equipment other than for normal
will be used for its initial purpose (unless another maintenance and replacement over the life of the agreement.
agreement was negotiated). For a concession agree- Management Private sector assumes responsibility for the allocation of terminal labor and
ment, it commonly takes the form of a long term lease contract equipment and provides services to the terminal users in the name of the
with the requirement that the concessionaire main- public owner. The public sector retains control over all the assets.
Service contract The private sector performs specific terminal activities. The arrangement
tains, upgrades and builds infrastructure and equip- differs from a management contract in that the private sector provides the
ment. management, labor, and equipment required to accomplish these activities.
• Concessions for new projects. Tap new sources of capi- Equipment lease Can be in various forms involving leaseback arrangements or supplier
tal outside conventional public funding. It can take credits. These agreements are used to amortize the costs to the terminal
for new equipment and to ensure a reliable supply of spare parts and,
place in the context of fiscal restraints or as a way to
often, a guaranteed level of service/reliability from this equipment.
experiment with a more limited form of privatization

Limitations of Private Capital Challenges to Existing Funding Practices in Freight

Although a level of privatization is commonly perceived Terminals
as a desirable outcome for the efficient use and operation Freight transportation, particularly in North America,
of transportation infrastructures, privatization comes with is already dominantly private. Still, private capital invest-
limitations. In some instances privatization can be unsuc- ments are increasingly difficult to secure for transport
cessful. The main reasons are linked with the private con- terminals, mainly for the following reasons:
tractor unable to honor the commitments (which is rare) • Risks. Private equity firms are increasingly concerned
or the new cost structure is perceived to be unfair by users by the level of risk related to funding intermodal infra-
since the privatized infrastructure now offers market pric- structures and equipment. They are aware that past
ing (more common). If customers are used to low and sub- growth does not guarantee future results, particularly
sidized costs they will not well respond to market prices, in the current economic context where substantial
particularly if they are not introduced in an incremental trade imbalances have emerged and where debt de-
manner. Although private initiatives commonly result in rived consumption has reached a limit. Traffic projec-
efficiency gains, private capital involves many limitations tions are likely to be on the over-estimation side. The
concerning capital costs and the issue of domestic versus main factor becomes reconciling traffic expectations,
foreign capital: resulting in terminal capacity investments and equip-
• Capital costs. Nominal costs for private capital are ment purchase, with real traffic once the terminal is
often higher than for public debt, since the later is operating. Any significant differences will be linked
guaranteed by the full faith in the credit of the state. with substantial financial losses. The true extent of
This can create a moral hazard as the capital costs and risk factors can only be known afterwards, but can
their risks are transferred to the public in terms of have profound impacts in assessing future investment
guarantees to cover operating costs (cross-subsidy) or allocations.
bail-outs in case of default. This process is very com- • Design phase. The construction and upgrade of inter-
mon in a variety of public enterprises which in spite of modal terminals are commonly delayed for several rea-
acute losses operate on the assumption that their fi- sons, particularly through compliance to a variety of
nancial shortfalls will be covered by the state. Thus, municipal, state and federal regulations. For a project
depending on the size and capitalization of a transport involving a level of Federal funding, on average four
operator, capital costs can be higher than for a public years of delays may be inputted simply because of a va-
counterpart. riety of regulatory procedures. More recently, environ-
• Domestic vs. foreign finance. Local private capital mar- mental and local impacts considerations have become
kets can be very limited, particularly in developing an increasing burden which can account for up to 20 or
countries. Transportation assets are also so substantial 30% of terminal development costs. An increase in mar-
that they are only accessible to the largest equity firms. ginal costs has also been noted, as the more extended
Modern transportation infrastructure projects are eas- the design phase, the higher the final costs tend to be.
ily beyond the range of local and regional govern- Since transport terminals are among the infrastructures
ments. Finance can thus be tapped from foreign that are the most time consuming to design and build,
markets. Even in the United States, terminal assets are private firms consider new terminals as high risk proj-
mainly accessible only to a few large equity firms, ects and will only commit when they have confidence
many of which are foreign owned. This can be contro- about expected traffic levels. Delays in the design and
versial as the case of Dubai Ports World purchasing the construction phase also involve delays in the purchase
port terminal assets of P&O in 2006 demonstrated. Be- of intermodal equipment servicing the terminal.
cause of political pressures DPW was forced to sell the • Low returns. Delays in the design phase and higher op-
American port assets of the transaction to the AIG erational costs than expected can lead to low, if not
holding company. Fluctuations in exchange rates can negative returns. Due to the growing involvement of
also be a significant risk factor, but if a currency is un- private equity firms and the limited number of termi-
dervalued (debased), investments can pour in to take nals, there has been an “over bidding” to acquire ter-
advantage of the discount to capture valuable and rev- minal assets with the expectation of significant future
enue generating assets. This appears to be the strategy traffic growth. The price / earnings (PE) ratio of recent
of several Sovereign Wealth Funds concerning the terminal acquisitions has increased to around 20, while
United States. the range of 10 to 15 has historically been the average
value. Still, PE ratios must be interpreted cautiously as
earnings are past earnings and may change in the fu-

ture because of changes in the traffic, competition Conventional Emerging

from existing or new terminals as well as higher oper- Design
Build Build
Design Private Build
ating costs. Consequently, lower returns can be ex- Design Operate Finance Own
Bid Contract
pected if terminals are seen from a more conservative Build Transfer Operate Operate
Build Fee Service (BOO)
financial evaluation perspective. (BOT) (DBFO)
Private / Public Partnerships

Public Responsibility Private Responsibility
Public / private partnerships (PPP) are contractual agree-
ments between a public agency (federal, state or munici- Figure 9 - Public / Private Partnership Options1
pal) and a private sector entity that allow for the design, • Private Contract Fee Services. A common contract
building, operation or financing of transport infrastructure structure where the public sector transfers the respon-
(FHWA, 2007). They thus confer a wide range of options sibility of specific services, such as operation and
in terms of capital allocation and respective levels of par- maintenance of public infrastructures, to the private
ticipation. They can simply cover the standard design / sector. There exists a variety of private firms that have
build contracting process common in many road projects specialized in providing services to transport infra-
or involve innovative approaches where a private operator structure, particularly in terms of maintenance, repairs
takes charge of the construction and management of a and upgrades.
transport infrastructure over a long term concession. PPP • Design-Build. Similar to the design-bid-build partner-
take place in situations where stakeholders alone cannot ship with the exception that they are combined into a
clearly evaluate the respective advantages of the invest- single contract. As usual, the public sector owns the
ment. The public sector thus helps leveraging the position infrastructure as well as bearing the responsibility for
of the private sector, which commonly results in a better its financing, operating and maintenance.
allocation of resources than if they would have done so in- • Build-Operate-Transfer. While the public sector is re-
dependently. While the public perception tends to relate sponsible for the financing of the infrastructure, a pri-
PPP to toll roads, the reality places these initiatives in vate entity provides for construction and operation. It
every segment of the transportation industry from modes is also known as a “turnkey” PPP since after a specified
to terminals. amount of time, the public sector takes over the infra-
PPP take a particular dimension in the freight sector as structure. It can be decided to extend the operation
freight transportation is much the realm of the private sec- contract to the same operator or have it up for bid.
tor with public interests mainly covering the regulatory • Design-Build-Finance-Operate. The responsibilities for
framework. The most significant infrastructure assets are designing, building, financing, and operating the infra-
related to freight transport terminals, particularly ports structure fall in the hands of the private sector, but
and rail, a reason why they are dominantly owned or oper- ownership remains public. There is however some
ated by private interests, which makes public involvement flexibility in the PPP as the respective shares of the fi-
problematic. There is thus a conventional approach to PPP nancing could come from a pool of public and private
which is gradually been supplemented by an emerging interests. The flexibility also takes form in terms of the
framework where private entities are taking a higher level nature of the financing, which can be capital or in
of responsibility (Figure 9). kind. The expectation is that the contracted debt used
The main forms of PPP include: to finance transport infrastructure will be recovered by
• Design-Bid-Build. In the first stage, a contract is future revenues, which implies that user fees will be
awarded to an engineering design firm to set a clear applied and that debt (such as bonds) is leveraged by
guideline in terms of the potential costs, materials and future revenues.
equipment required to complete a public works proj- • Build-Own-Operate. The design, development, financ-
ect. Then private contractors are invited to bid on the ing, building, operation and maintenance of an infra-
proposed specifications, which are reviewed by the structure fall completely under the responsibility of the
public entity. The bid winning contractor then under- private sector and this for the duration of the conces-
takes the construction phase and once completed, sion, which is dominantly long term. Public sector in-
management and maintenance will be performed by volvement is limited to the general regulatory
the public sector. All steps are financed by the public framework and assuring compliance to the terms of
sector. the contract.
1Source: adapted from US Department of Transportation, Federal Highway Administration (2007) Financing Freight Improvements, Publication #FHWA-HOP-06-108,
http://ops.fhwa.dot.gov/freight/publications/freightfinancing/index.htm.

sponding equipment demand are thus likely to shift

Conclusion: more to inland load centers.
Options and Recommendations • Freight distribution clusters. The ongoing agglomera-
The current context in intermodal transportation in tion of distribution centers into major clusters will
North America is prone with risks and opportunities. offer ongoing opportunities to lease equipment. Due to
While an expected slowdown in traffic would be indicative the flexible and fluctuating nature of freight distribu-
that the equipment leasing market for this sector could be tion, distribution centers are prone to lease equipment.
stabilizing, or even shrinking, structural changes in the in- Since these activities tend to be clustered, the leasing
termodal industry are offering several opportunities. One market can develop regional niches servicing these
of the most influencing factors concerns higher energy markets once they reach a certain size. As each distri-
prices that will incite a restructuring of North American bution center tends to be part of a different supply
freight distribution systems. Terminals and distribution chain linked with different sectors of activity (e.g. ap-
centers will play a key role in this shift as shippers, opera- parel, auto parts, furniture, food, etc.) they require a
tors and the public sector renew interests in intermodal wide range of equipment. A growing number of initia-
transportation to cope with inefficiencies in freight distri- tives involve the development of logistics parks, often
bution. Already the rise in all-water services connecting in conjunction with the setting or expansion of an in-
East Coast ports through the Panama and Suez canals (intermodal rail terminal. Again, this represents opportu-
stead of using the West Coast and the rail landbridge) is an nities for leasing equipment both to intermodal and
indication that maritime shippers are reconfiguring their freight distribution activities within a region.
services to face growing inland intermodal transportation • Greater involvement of global private operators. At the
costs. Time and performance requirements in modern global level, large private terminal operators and logis-
freight distribution are also likely to make intermodal tics service providers have emerged. While some are
transportation a focus in the accumulation of scarce capital independent private entities, others are subsidiaries of
investments. It is thus expected that investments in inter- sovereign wealth funds. The ongoing process is to in-
modal transport terminals and equipment will endure. The sure a higher level of control on global supply chains
leasing of intermodal equipment will be an approach fa- since it is linked with better levels of service and the
vored by many terminal and freight distribution center op- capture of added value along the transport chain.
erators. For new terminal and distribution center facilities Many are now moving in inland transport operations
it will minimize risk while the market potential is being and become increasingly involved in leasing inter-
developed. For established facilities, leasing equipment modal equipment.
will represent a strategy to acquire more performing, but • Environmental compliance. The imposition of environ-
capital intensive equipment. In light of the changing eco- mental regulations and standards on the transportation
nomic and financial context in which intermodal trans- sector will endure. This will likely benefit intermodal
portation evolves in North America, the following rail which is comparatively more environmentally
recommendations can be underlined: friendly than road. Yet, the growth of intermodal rail
• Advanced intermodal equipment. There is a trend in traffic will bring closer attention from an environmen-
existing and particularly in new terminals towards the tal standpoint and possibly additional regulations.
implementation of advanced intermodal equipment, These regulations will impose more stringent condi-
namely cranes, that is more reliable and energy effi- tions for the related intermodal equipment, which will
cient. While this equipment tends to be more capital extend to the leasing industry.
intensive, productivity gains more than compensate. • Security and safety equipment. Security and safety con-
Terminal operators are thus more likely to lease this cerns are likely to endure with terminals the key facili-
equipment as a risk mitigation strategy. ties where security related activities will be performed.
These activities involve the security of the intermodal
• Domestic rail traffic. The domestic intermodal rail mar- facilities and the security of the containerized freight.
ket is expected to rise. While the main driver of inter- The growth of intermodal transportation will thus be
modal transportation in North America was international linked with the use of additional security equipment,
trade and long distance inland movements, the restruc- particularly when international supply chains are con-
turing of supply chains due to energy prices will favor cerned.
more North American sourcing and shortening lengths
of haul. Intermodal terminal development and the corre-


About the Researchers

Jean-Paul Rodrigue
Dr. Jean-Paul Rodrigue, Associate Professor, Dept. of Global Studies & Geography, Hofstra
University, Hempstead, NY, USA. Email: Jean-paul.Rodrigue@hofstra.edu Jean-Paul Rodrigue
is an internationally known academic focusing on transportation, freight distribution and
trade issues, particularly in North America and Pacific Asia. He has published extensively
on the topics of logistics, global production networks, transport gateways and corridors,
economic integration, international trade and regional development. He is also on the inter-
national editorial board of the Journal of Transport Geography, the Journal of Transport
and Land Use and acts as the Van Horne Researcher in Transportation and Logistics.
Anthony Hatch
Anthony Hatch, abh Consulting, 155 West 68th Street, Apt, 1117, New York, New York
10023. Email: ABH18@mindspring.com Anthony Hatch has been a senior transportation
analyst on Wall Street for over twenty years, starting at Salomon Brothers; proceeding to
Argus, PaineWebber, and most recently at NatWest Markets (USA) prior to becoming an
independent analyst/consultant at the latter's closing of operations. After initially covering
the airline sector, Mr. Hatch's coverage has been focused on the freight transportation seg-
ment, particularly surface transportation. The core of this coverage has been the large cap
railroads, with sub sector coverage of trucking, air freight and express, maritime, transporta-
tion suppliers, leasing companies, logistics companies and freight forwarders. Mr. Hatch is
known for his knowledge of the intermodal area, where the various modes of freight trans-
port converge, on which he has held a dozen specialized conferences.

References
Barrett, T. VADM (2007), Deputy Secretary of Transportation, keynote address, Port and Terminal
Infrastructure Investment Roundtable, New York, November 9.
Cambridge Systematics (2007) National Rail Freight Infrastructure Capacity and Investment Study,
prepared for the Association of American Railroads, www.camsys.com.
Federal Highway Administration (2007) Financing Freight Improvements, Publication #FHWA-

HOP-06-108, http://ops.fhwa.dot.gov/freight/publications/freightfinancing/index.htm.
Gómez-Ibáñez, J.A. (2008) The Future of Private Infrastructure, Speech given to the University
Transportation Research Center, Region 2, Baruch College, April 25.
Ircha, M.C. (2006) Characteristics of Tomorrow’s Successful Port, The AIMS Atlantica Papers #4,
Atlantic Institute of Market Studies, http://www.aims.ca/library/Ircha.pdf.
Nelson, J. (2007) Deputy Maritime Administrator, keynote address, Port and Terminal Infrastruc-
ture Investment Roundtable, New York, November 9.
Notteboom, T. and J-P Rodrigue (2008) "Containerization, Box Logistics and Global Supply Chains:
The Integration of Ports and Liner Shipping Networks", Maritime Economics & Logistics, Vol. 10,
No. 1-2, pp. 152-174.
Randolph, D. (2008) “Preparing for the Future Mexican Land Bridge to the United States”, North
American Transport Competitiveness Research Council, Paper No 8.
Rudin Center for Transportation Policy and Management (2008) “Public Private Partnerships: Na-
tional and International Experience, Local Possibilities”, New York Transportation Journal, Vol. 11,
No. 2, pp. 15-16.
Slack, B. (2008) “Rail deregulation in the United States”, The Geography of Transport Systems,
http://people.hofstra.edu/geotrans/eng/ch9en/appl9en/ch9a1en.html.
Theofanis, S. and M. Boile (2008) “Empty Marine Container Logistics: Facts, Issues and Manage-
ment Strategies”, Geojournal.
Valenga, D.B. (2000) “The Ocean Shipping Reform Act of 1998”, Transportation Journal.
Zumerchik, J. J-P Rodrigue and J. Lanigan (2008) “Automated Transfer Management Systems to Im-
prove the Intermodal Efficiency of Rail Freight Distribution”, submitted for publication, Transporta-
tion Research Board.

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North American Intermodal Transportation:

Infrastructure, Capital and Financing Issues

The Foundation is the only research organization dedicated solely

The Foundation accomplishes its mission through development

research is independent, predictive and peer-reviewed by industry experts.

Equipment Leasing & Finance Foundation

EQUIPMENT LEASING & FINANCE

EXECUTIVE SUMMARY ..........................................................................................................................................3

INTERMODAL TRANSPORTATION IN NORTH AMERICA

TRANSPORT TERMINALS AND EQUIPMENT

INTERMODAL INFRASTRUCTURE DEVELOPMENT NEEDS

CONCLUSION: OPTIONS AND RECOMMENDATIONS ......................................................................................21

ABOUT THE RESEARCHERS..................................................................................................................................23

EQUIPMENT LEASING & FINANCE FOUNDATION

EQUIPMENT LEASING & FINANCE FOUNDATION

EQUIPMENT LEASING & FINANCE FOUNDATION 3

4 EQUIPMENT LEASING & FINANCE FOUNDATION

Intermodal Transportation in North America

EQUIPMENT LEASING & FINANCE FOUNDATION 5

North America and the Global Economy The “China Effect”

6 EQUIPMENT LEASING & FINANCE FOUNDATION

EQUIPMENT LEASING & FINANCE FOUNDATION 7

(or the storage areas) to a railcar using the terminal's

tend to have more space available however and can

form of inland port. For the satellite terminal, it is

mainly a facility located at a peripheral and less con-

8 EQUIPMENT LEASING & FINANCE FOUNDATION

well as a variety of transloading activities in the vicinity of 50

Ports Portland (OR) Montreal

52.6 million twenty-foot equivalent Units (TEUs) (Figure Los Angeles

2006.Transatlantic trade shows a similar, albeit less exten- TEU (2006)

to what extent past growth trends will endure in the future

EQUIPMENT LEASING & FINANCE FOUNDATION 9

Since 2006, a downward trend is emerging for container-

10 EQUIPMENT LEASING & FINANCE FOUNDATION

BNSF Figure 7 American Intermodal Rail Terminals (number per state)

EQUIPMENT LEASING & FINANCE FOUNDATION 11

10 The nature and extent of these investments is very diffi-

12 EQUIPMENT LEASING & FINANCE FOUNDATION

EQUIPMENT LEASING & FINANCE FOUNDATION 13

14 EQUIPMENT LEASING & FINANCE FOUNDATION

EQUIPMENT LEASING & FINANCE FOUNDATION 15

16 EQUIPMENT LEASING & FINANCE FOUNDATION

EQUIPMENT LEASING & FINANCE FOUNDATION 17

18 EQUIPMENT LEASING & FINANCE FOUNDATION

Limitations of Private Capital Challenges to Existing Funding Practices in Freight

EQUIPMENT LEASING & FINANCE FOUNDATION 19

ture because of changes in the traffic, competition Conventional Emerging

Private / Public Partnerships

20 EQUIPMENT LEASING & FINANCE FOUNDATION

sponding equipment demand are thus likely to shift

EQUIPMENT LEASING & FINANCE FOUNDATION 21

22 EQUIPMENT LEASING & FINANCE FOUNDATION

About the Researchers

EQUIPMENT LEASING & FINANCE FOUNDATION 23

Federal Highway Administration (2007) Financing Freight Improvements, Publication #FHWA-

24 EQUIPMENT LEASING & FINANCE FOUNDATION

Future Focused Research for the