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October 2011



Intermodal Article
Florida East Coast Railway partners with two south Florida ports to tap more import container traffic



Intermodal

— by Julie Sneider, assistant editor

Major expansions under way at two south Florida ports are critical components in Florida East Coast Railway's (FEC) strategy to grow its intermodal business in the coming years.

The projects include a $50 million plan to restore freight-rail service to the Port of Miami — where intermodal service between the port and FEC's Hialeah Yard has been suspended since Hurricane Wilma damaged a connecting rail bridge in 2005 — and a $72.8 million objective to build an intermodal transfer facility (ITCF) at Port Everglades in Fort Lauderdale.

Combined with the Panama Canal widening that's under way, the projects have FEC President and Chief Executive Officer James Hertwig feeling bullish about the potential impact that intermodal traffic growth will have on the 351-mile regional, which is the exclusive rail provider to the two ports.

"As the Panama Canal expands in 2014, we believe that one of the first ports of call will be those south Florida ports," says Hertwig, who assumed FEC's top post in July 2010.

Other than New York City, the largest population on the East Coast is located in south Florida, which bodes well for businesses eager to bring their products to market, he says.

Timing Is Everything

Florida long has been a gateway for trade between the United States and Latin American and Caribbean countries. But because of converging developments in international trade, such as the canal expansion and growth in Latin American and Caribbean markets, Florida faces a "once-in-a-generation opportunity" to expand its economy by becoming a global hub for the trade, as well as logistics and export manufacturing businesses, according to a December 2010 report issued by the Florida Chamber of Commerce.

This summer, both ports posted progress with their projects. In August, the Broward County Board signed a memorandum of understanding with FEC to build and operate an ITCF on a 42.5-acre site at Port Everglades. The MOU calls for a 30-year agreement, with two 10-year renewal options. The board and FEC are negotiating a definitive agreement, which Hertwig says he expects will conclude by year's end.

Both projects are public-private partnerships in the truest sense. Costs for the Port Everglades ICTF will be covered by an $18 million intermodal system grant from the Florida Department of Transportation (FDOT); $5 million equity contribution from FEC; $30 million loan that FEC has applied for through a state infrastructure bank; and $19.8 million in land value that the port is contributing through a "nominal" lease rate. The FEC/Port of Miami project will be funded with a $22.8 million Transportation Investment Generating Economic Recovery (TIGER) grant from the U.S. Department of Transportation; $10.9 million from FDOT; $10.9 million from FEC; and $4.8 million from the port.

In July, officials broke ground on the Port Everglades' Eller Drive overpass, which will elevate a portion of Interstate 595 to enable trains to access the port on ground-level track. FDOT is the lead agency on the $42 million overpass project, which is expected to be completed by late 2013, according to port officials.

The container facility is necessary for the port to "play a more active role in intermodal and the transport of cargo throughout the peninsula and beyond," says Port Everglades Director Phillip Allen.

Room To Grow

The 15-acre ITCF currently used by the port is "woefully undersized and over capacity," and located two-and-a-half miles from the port, which means cargo coming off a ship has to be transported via truck before it can be loaded onto FEC trains, he says. The new 40-acre ITCF will be located near docks, allowing trains to transport cargo out of and into the port more directly, says Allen.

"We will have the capability to build a 9,000-foot train right on the port," he adds.

The ITCF is one of three Port Everglades expansion projects in the works. The port also plans to lengthen an existing deep-water turnaround area for cargo ships and add five new cargo berths; and deepen and widen a channel to 50 feet to accommodate "super-sized" vessels that will be traveling through the Panama Canal after 2014. The channel dredging will depend on funding availability, Allen says, adding that, at a minimum, the port will need to add berths to make room for the larger ships.

The projects would boost annual port capacity from just under 1 million 20-foot equivalent units (TEUs) to more than 2.5 million TEUs over the next 20 years, he says.In addition, the ITCF would divert an estimated 180,000 trucks from area roads by 2027.

Truck diversions are a primary goal for the FEC-Port of Miami rail line project, as well. When the line is completed in mid-2012, about 60,000 containers will be diverted annually, according to the regional. And, the port expects to capture additional container traffic from Latin America and South America, as well as Asia, Hertwig says.

In July, FEC broke ground on the project, which involves four phases: reconstruction of a 4.4-mile port lead, which was the original mainline to the port; rehabilitation of a bascule bridge that connects the port and rail yard; construction of an on-port rail facility; and modifications to the FEC Hialeah Yard to accommodate intermodal traffic growth.

Excitement Is Building

Cargo will flow directly from the ship to the railroad at the port; in addition, some freight will be transported via rail between the port and Hialeah Yard.

"We've been really excited about reactivating that rail," says Kevin Lynskey, the Port of Miami's assistant director for business initiatives.

Besides the rail line reconnection, the port will benefit from the Hialeah Yard's proximity to Miami International Airport, he adds.

"I think three or four years ago, when we first got together with the FEC, we both understood our asset base would increase in worth by making this investment," says Lynskey.

The Port of Miami's overall infrastructure expansion received a major boost earlier this year when Florida Gov. Rick Scott gave FDOT approval to provide $77 million for dredging work, which is designed to enable larger cargo ships to enter the port.

Port officials estimate the expansion would make the Port of Miami the nation's third eastern seaport capable of handling large container-carrying vessels.

Currently, about 10 percent of the ports' cargo traffic is transported via FEC (slightly more than 10 percent through Miami and slightly less than 10 percent through Port Everglades). FEC's Hertwig wants that percentage to climb to the mid-20s or 30 percent after the ports and Panama Canal finish their expansions.

The projects will help FEC provide overnight service throughout Florida, and second- or third-day service throughout the southeastern United States, says Hertwig.

"Hopefully, this will be a tremendous opportunity for this railroad," he says.



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