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65 Commodities and Shipping Patterns All freight at VIP is international, with an approximately equal split of imports and exports. Exports are typically agricultural and natural resource products, while retail products are a majority of imports. The key commodities shipped through VIP include: poultry, logs and lumber, paper products, auto- parts, rubber, plastics, and retail items. Poultry, logs, and lumber are a major part of VIPâs export business. Poultry is a significant export business line, with VIP moving 2,500 poultry containers annually. With the weakening of the dollar in the 2000s, exports of both lumber and poultry from West Virginia through VIP have increased significantly. Figure 8-1: Map of VIP, Connecting Highways, and Nearby Ports Source: Google Maps Currently, the per box flat rate charge to VIT is $278 per box loaded and $193 unloaded plus a 24 percent fuel surcharge. Additional fees include containerizing logs at $192 per container, with an additional change of $1 for each log over 60, for shipment8 Freight Facility Development Conditions . However, moving containerized freight remains the largest portion of revenue generated by VIP. Local support for the development of VIP was positive, as the area was previously undeveloped rural farm land. Operations at VIP took a while to become economically viable due to competition from the Port of Baltimore and the lack of supporting industries in the area. Port officials speculate that local and state economic development agencies improved and accelerated development of private distribution centers through organizing and supporting growth around VIP. Potential for economic development paired with competitive transportation costs, low-cost available land, and easy access to both domestic and international markets were the primary elements that made the initial development of VIP economically viable. Development strategies evolved with time. Initially, the developers of VIP had intended to compete with freight activities at the Port of Baltimore, however now VIP is primarily supporting the Norfolk International Terminal. The Richmond Area MPO support currently subsidizes weekly container on barge service from Port of Richmond to NIT. Containers can then be loaded and sent to VIP via rail. All incentives within the Front Royal area have been provided to supporting private industry and distributors in the area. These incentives came from the state or county economic development organization (EDOs), and are not unique to transportation or VIP (incentives are available statewide). Virginia has a number of incentive programs available through the state and county EDOs, which provide low interest loans, tax exemptions, or grants. Some programs currently available from the state include: Bond Financing, Virginia Jobs Investment Program (VJP), Virginia Investment Partnership Act, Sales and Use Tax exemptions, and Foreign Trade Zones. For any new inland port developments, PPPs will be essential between the port authority, railroad, and EDOs to foster local support and split operational and development costs. 8 âSCAG Inland Port Case Studiesâ Tioga Group, 2006
66 Summary of Location Factors In summary, the primary location factors (as described/defined in Chapter 5) that were most important to the siting and development of the VIP were as follows: ï§ Ability to Access Key Markets or Customers: ï§ As evidenced by VPAâs requirement to be located within 200 miles of the seaport. The fact that numerous distribution centers have been developed in the area immediately surrounding VIP shows the success of the development and choice of site location of the facility. Public Sector Assistance and Incentives: Economic Development and Transportation Impacts The public assistance provided by the State of Virginia, which included a cost sharing of the expanded rail spur, was a key factor in the development and siting of VIP along with the active participation of Norfolk Southern in this public-private initiative. Economic Activity of the Freight Facility VIPâs development has leveraged numerous private distribution centers to locate in Front Royal. Development in the last 21 years surrounding VIP has been significant, as 39 major companies have located near VIP investing over $747 million and developing over 8.5 million square feet of space. This activity has created over 8,000 jobs. In comparison, VIP directly employs only 17 people. Therefore, VIP has been an enormous economic catalyst for Front Royal, attracting numerous freight-related businesses. Businesses take advantage of the location and direct access to the port through VIP for import distribution, resulting in reduced truck hauls and congestion. Since becoming operational in 1989, VIPâs focus has shifted to reducing congestion at nearby coastal ports in Virginia and supporting local freight movements. As VIPâs services grew in the early 1990s, large importers began developing facilities in the Front Royal area near VIP. Current large customers include: Worldwide Auto, Rubbermaid Commercial, Pilgrimâs Pride Poultry, Family Dollar, DuPont, Red Bull, Coors, and Home Depot. Future opportunities for VIP are contingent upon other strategic transportation infrastructure improvements. One of these improvements is developing a corridor connection with Washington-Dulles Airport in an effort to capture a larger share of international and domestic air cargo from the airport. This potential connection would facilitate more efficient transportation movements and utilize VIP as the main distribution center for Washington-Dulles Airport. Costs of Facility The initial land purchase and development of VIP was $13.3 million in 1987. The land purchase was $7.3 million and site development costs were approximately $5.7 million. Rocky terrain and issues with soil conditions increased the site development costs beyond original cost estimates9. The land acquisition and development costs of the facility were covered through the Virginia Transportation Trust Fund. The Transportation Trust Fund provided adequate funding, avoiding the state of Virginia going into debt for the development of VIP10 9 Bray, Robert âVirginia Inland Port: The Case for Moving a Marine Terminal to an Inland Location.â . The facility, operated by VIT, has generated a net profit since 1994 covering the costs of operating and maintaining all facilities at VIP through collecting fees on a per-container basis. The specific costs of operating VIP were unavailable. 10 âSCAG Inland Port Case Studiesâ Tioga Group, 2006.
67 Transportation Impacts VIPâs total throughput in 2009 was approximately 24,500 international containers, a fairly significant reduction from the prior year when VIP handled 33,600 containers. This drop in trade activity was consistent with the global economic recession and is expected to rebound as world trade increases. Rail haul distances from VIP to NIT are 220 miles, as seen in Table 2. All freight from NIT that travels to VIP via rail is then distributed inland by truck, and conversely any inland freight travels to VIP via truck and is transloaded to rail. All freight traveling via rail originate and terminate at VIP and NIT only. Average truck haul length from VIP is 100 miles typically heading towards Fredericksburg MD, Central Pennsylvania, or Pittsburgh, PA; while freight traveling to NIT via VIP is trucked to VIP from West Virginia, Pennsylvania, and Ohio. It is only cost-effective for freight traveling from the Ports of Portsmouth or Norfolk to use VIP if freight is traveling more than 200 miles inland from these ports. For 2009, container traffic from the ports to VIP reduced truck vehicle miles of travel (VMT)11 Table 8-4: Railroad and Truck Freight Transportation in Virginia by approximately 5.4 million, which in turn reduced highway maintenance and repair costs and provided environmental benefits to Virginia through reduced truck emissions. Reducing truck traffic could reduce CO2 emissions as much as 3,100 tons annually, which in monetary terms equates to approximately $105,000. Additionally, VIPâs rail connection significantly reduces physical stress on the highway system, as heavier loads can now be placed on rail to and from marine ports. These heavy loads can then be repacked at VIP to reduce the volume of heavier/overweight truckloads on the highway network. Containers per Year Average Length of Haul Railroad 24,500 220 Truck 24,500 100 + miles An Environmental Impact Statement (EIS) was conducted prior to the development of VIP. As the EIS was completed over 20 years ago, it is not available in electronic format. The EIS is a federally mandated assessment of the potential negative and positive impacts for decision making of an action or development; in this case the EIS would provide information on the environmental impacts of the facility development. Currently, there are no major environmental concerns regarding VIP aside from the typical truck idling concerns that will occur with all intermodal facilities. 11 Annual truck trips were calculated for each facility based on tonnage at that facility and Federal Highway Administration (FHWA) guidelines on tons shipped per truck. Assumptions were made related to the average haul length for trucks and/or rail operating at that facility, based on the 2007 Commodity Flow Survey or firsthand knowledge obtained from the facility representative. This information was then combined to calculate VMT. Monetary savings associated with reduced vehicle emissions, reduced pavement wear and tear, and decreased accidents were estimated using US Department of Transportation 2009 Transportation Investment Generating Economic Recovery (TIGER) guidelines, and the VMT calculations.
