Background Research Material for Freight Facility Location Selection: A Guide for Public Officials (NCFRP Report 13) (2011)

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61 incentives and marketing, transportation connectivity benefits, etc. Economic development and business attraction effects include:  Redevelopment  – Economic and financial gains from redevelopment of existing underutilized land, including additional job creation and increases in property value. New Businesses  – The economic and financial gain of locating new businesses on previously undeveloped land; and Residential Properties 8.3 Costs – This includes the addition of new houses and the benefits of increased population. When evaluating the full impact of a freight facility, the costs must also be considered in order to fully assess whether the location is ideal. As described earlier, the costs of freight facilities are often borne primarily by the private sector owner of freight logistics facilities though it is increasingly common for public-private partnerships to help fund facilities and connecting infrastructure. The three main categories of cost are: capital for the facility, connecting infrastructure, and operating/maintenance costs.  Capital  – Capital costs are those costs that occur when building the facility itself, including design and construction. These costs are typically incurred up-front before the facility is opened. Infrastructure  – Infrastructure costs are those costs that are necessary to improve the road or rail network surrounding the facility in order to fully accommodate the increased volume of shipments. Operating and Maintenance While all of these measures may not be applicable to every freight facility, Table 8-1 indicates these components that should be considered in undertaking an assessment of the economic and transportation impacts of freight facilities. The table below summarizes measures that should be examined. – These costs are incurred on an annual basis in order to keep the facility up and running. They include utilities, wages, repairs, and other similar costs. Table 8-1: Components to be Considered in an Assessment Impacts Costs Transportation Economic Traffic volumes by mode Direct travel costs Supply chain logistics Environment, emissions and energy Safety and security Construction Direct economic activity at the facility Multiplier effects Economic Development / business attraction Capital Infrastructure Operating and Maintenance Part 2: Introduction to the Case Studies For each freight facility class that was identified in Chapter 3, a case study was identified to provide a “real world” example of this facility type and its related site selection factors as well as its estimated economic and transportation impacts. Case studies were selected based on the following general criteria:  In general, an attempt was made to make sure that there was a balance in the geographic representation of the case studies across the U.S.

62  We selected facilities and projects that showed a range of project development, from projects that have been in operation for many years to facilities that are in the final stages of development.  The Team selected facilities that included multi-modal transportation issues.  The Team selected facilities where there was sufficient publicly available information available and project participants who were willing to share information as part of a publicly available research project.  All of the case studies that were chosen are generally considered to be successful freight facilities. By selecting successful projects, the information described pertaining to site selection criteria and transportation/economic impacts provides greater value than if projects were selected that were not developed or had not been successful with their implementation. Table 8-2: Seven Case Studies Facility Type Case Study Inland Port Virginia Inland Port (Front Royal, VA) Intermodal Terminal Rickenbacker Intermodal Terminal (Columbus, OH) Bulk or Transload Terminal Savage Safe Handling (Auburn, ME) Distribution Center Family Dollar (Numerous Facilities) Warehouse Murphy Warehouses (Numerous Facilities) Integrated Logistics Center AllianceTexas (Fort Worth, TX) Hub Terminal Old Dominion (Morristown, TN) The following sections present the results of seven case studies that were completed for each of the major freight facility class identified in Chapter 4. 8.4 Virginia Inland Port Case Study Introduction Facility Type: Inland Port The operations of Virginia Inland Port (VIP) are handled by a private company, Virginia International Terminals Incorporated (VIT). VIT was created by the Virginia General Assembly in 1983 to operate all of Virginia Port Authority’s marine terminals. VIT currently operates VIP, along with Virginia’s marine terminals, covering all costs from terminal earnings. The VIP began operations in 1989 and over time freight activity has expanded significantly as distribution centers have located nearby facilities to access the transportation and logistics services at the VIP. VIP is located in Front Royal, VA approximately 70 miles west of Washington DC, and is generally recognized as America’s first successful inland port. As described in other chapters, inland ports redistribute cargo handling functions and activities from congested ports to inland locations where land is more available and cheaper, and the transportation network is less constrained7 7 “Commission Briefing Paper 4L-01: Evaluation of Core Capacity Deficiencies’ Impact on Crowding out Economic Growth and on Shifting Economic Growth into Outlying Areas” Transportation for Tomorrow, Wilbur Smith Associates. . Services at VIP include: stuffing/stripping of containers, dispatch and arrange trucking, warehouse facilities, mechanical repairs, U.S. Department of

63 Agriculture inspections, pool chassis, generator sets for refrigeration units, and power hook-ups. The VIP facility is a U.S. Customs designated port of entry and has full range of Customs functions available including Foreign Trade Zone (FTZ). Despite all of these services, VIP’s primary role is transferring both inbound and outbound freight from truck to rail and vice versa. The wide range of services, port connectivity and complimentary private sector facilities make VIP an attractive intermodal transfer hub for inland freight shipments to and from the Port of Norfolk’s International Terminal (NIT). International freight imports from NIT are shipped via rail to VIP, and then trucked from VIP to inland distribution centers. Conversely, freight exports are trucked to VIP and then shipped via rail to NIT and loaded onto cargo vessels for international shipments. The Need for the New Facility History and development of VIP came from the prior consolidation of Norfolk, Newport, and Portsmouth ports under the Virginia Port Authority (VPA). Of the three ports, the Norfolk terminal was the only port at the time with on-dock rail, which could have placed Norfolk at a competitive advantage against the other two ports in utilizing the proposed VIP facility. Newport News Marine Terminal (NNMT) now has direct rail access with break-bulk rail service provided by CSX. Additionally, VPA provides drayage from Portsmouth to Norfolk to shift freight to the on-dock rail facility. Initially, the plan for the inland port was to absorb some of the freight at the Port of Baltimore through capturing truck freight traveling to and from the Ohio Valley and Pennsylvania to the Port of Baltimore. Carriers could reduce truck trips and labor costs by transporting freight to VIP, and sending freight via rail to port of Norfolk instead of Baltimore. The effectiveness of this strategy is hard to quantify as freight volumes were on the rise at VPA ports during that period and it is difficult to isolate freight that was diverted. Site Selection Factors and Facility Characteristics Physical Characteristics of the Site VIP is on a 161-acre site and has over 17,000 feet of rail tracks. Among other facilities on site, VIP also has a three-door cross-dock warehouse. Recently, VIP added 7 acres of pavement to the existing 40 acres to increase terminal capacity to 47 acres for container storage and vehicles. In addition to VIP’s facilities, there are 24 distributors surrounding VIP, which provide over 8.5 million square feet of space. The terrain was previously rural land with a large number of acres available. Table 8-3 shows some of the physical characteristics of VIP. Table 8-3: VIP Facilities Size Detail VIP 161 Acres Rail – 3 door cross-dock, access to Class 1 Railroad Truck – 1 mile from I-66 and 5 miles from I-81 Source: Interview & Bray, Robert “Virginia Inland Port: The Case for Moving a Marine Terminal to an Inland Location” The initial site selection for VIP focused on a few key parameters. First, VPA wanted a facility in close proximity (within 200 miles) to the seaport to provide intermodal transfers and create the opportunity to move port transfer facilities outside of the seaport. The location of an inland port should also have adjacent or nearby parcels available for distribution centers and other 3rd party logistics firms. During the site selection process, VPA worked with the railroads, which initially wanted a longer rail haul from the Norfolk International Terminal (NIT), but settled on Front Royal due to transportation access and availability of inexpensive land. The 200 mile short haul from NIT to VIP was somewhat unique at the time, but was economically feasible due to the combination of available land, access to highway interchanges, existing rail

64 infrastructure, and competitive shipping rates. The partnership between Norfolk Southern (NS) and VPA made the development possible and operations economically feasible. The state of Virginia and VPA covered the capital costs of expanding rail spur and provided labor at both NIT and VIP, while NS provided rail service. If VIP were developed with the knowledge that the Virginia Port Authority has today, the layout and configurations would be different to strategically plan parcels. Land requirements would be expanded to 1,000 acres with greater emphasis on smart growth for supporting freight facilities. Strategic smart growth would entail planning to incorporate:  Zoning and land use for supporting facilities (3PL, distribution centers);  Emphasis on freight and mobility;  Shared utilities; and  Buffer residential development from freight activity. Since VIP’s actual development was sporadic with little zoning, contiguous development didn’t account for the growth and operations existing today. The golf course development across from VIP, which hinders further industrial development, is emblematic of the need for greater planning for future inland port developments. New developments would also need to be adjacent to existing rail lines. While the physical requirements detailed above are essential for the physical freight operations, Public Private Partnerships (PPP) between VPA, the railroads, local communities, and economic development agencies will ensure the inland port is economically feasible and successful. Transportation Access Norfolk Southern provides rail service five days a week between VIP and NIT only; the trip to NIT is 220 miles from VIP by rail. VIP is located close to two major highways. Interstate 66 is less than a mile from VIP and provides east-west service towards the Washington, DC metropolitan area, I-95 and the east coast. Interstate 81 is within 5 miles and provides north-south highway connections along a major trade corridor. To the west of I-81, the highway becomes mostly a two-lane facility heading into West Virginia and the Appalachian region. This route is planned for upgrade as Corridor H of the Appalachian Development Highway System, connecting to I-79 but completion of this highway upgrade will likely take a number of years. Additionally, Routes 340 and 522 provide local north-south access. The map below shows VIP’s connecting highways and nearby ports.