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Rail News Home Norfolk Southern Railway

September 2014

Rail News: Norfolk Southern Railway

Parts for BMW's South Carolina plant drive up auto business for Norfolk Southern


By Jeff Stagl, Managing Editor

To significantly grow intermodal business, diverting freight from truck to rail is goal No. 1 for Norfolk Southern Corp. Some automotive traffic recently generated in South Carolina is helping the Class I meet that objective.

A rendering of the South Carolina Inland Port, which opened in October 2013 in Greer. The port serves a number of international manufacturers in upstate South Carolina, including BMW and Michelin.
Source: Norfolk Southern Corp.

Late last year, NS tailored containerized service for BMW Manufacturing Co. L.L.C.’s assembly plant in Greer, S.C., which prompted the automaker to convert nearly 20,000 truckloads to rail. NS now uses double-stack trains to move all the parts and components for sports activity vehicles (SAVs) assembled at the BMW plant.

Via an overnight service, the railroad transports import and export containers 235 miles between the South Carolina Inland Port in Greer — which is located three miles from the auto plant — and the Port of Charleston. Parts for BMW’s X-series SAVs are imported from Europe to the port and components for final assembly are exported from Charleston to such markets as Russia and India.

NS already had been transporting finished BMW vehicles from Greer to the port since the plant opened in 1994 as the automaker’s first major factory outside Germany. The Greer plant assembles about 300,000 X-series SAVs annually.

The truck-conversion effort for SAV parts began in fall 2011, when NS executives traveled to Germany to discuss BMW’s vehicle business, says Christopher Luebbers, NS’ group manager of international marketing. One discussion point identified something readily available.

“We already had the rail service between Charleston and Atlanta that went through Greer every day,” says Luebbers.

But two other issues needed to be resolved: finding a site to position containers, since there was no intermodal terminal in Greer at the time, and determining a place to store containers, since BMW no longer wanted to house the boxes on plant property.

Enter the South Carolina Inland Port, which the South Carolina Ports Authority (SPA) opened in October 2013. NS is the exclusive rail provider at the $50 million facility, which enables the railroad to position and store all of BMW’s containers. NS subsidiary Thoroughbred Direct Intermodal Services now manages the inland supply chain for the containers, including just-in-time parts delivery to the BMW plant.

NS assumed responsibility for all track constructed at the inland port. Knowing there was a built-in customer that could provide traffic density at the new facility was a major catalyst for the port’s development and NS’ infrastructure investment, says Luebbers.

“We probably would not have invested in the facility without BMW,” he says. “The port authority would have had to do it from their own financial standpoint.”

BMW officials were intrigued about the truck-to-rail conversion because of the close proximity to the inland port and lower rail transportation cost NS could offer since it could load trains without switching, says Luebbers.

The rail move’s environmental benefits and the potential for reduced truck congestion on Interstate 26 were enticing, too. The automaker estimates 20,000 to 25,000 trucks will be removed from the highway each year by using rail, while an NS analysis shows that transporting 20,000 containers by rail between Greer and Charleston produces two-thirds less carbon dioxide emissions than trucks traveling on the same route.

So far, NS has converted 95 percent of the targeted 20,000 loads, says Luebbers.

“The other 5 percent are loads that can’t take an extra day in transit time,” he says.

In early 2014, BMW opened a facility adjacent to the inland port that enabled the automaker to relocate a vehicle export operation from Duncan, S.C., to Greer. Now, BMW plans to expand the Greer plant, “which will probably push up our volumes with them,” says Luebbers. The $1 billion expansion is expected to increase the plant’s annual production from 350,000 to 450,000 vehicles by 2016's end.

NS already has garnered additional volume from other shippers in the area due to the inland port, such as container moves for a chemical company, tire manufacturer and athletic apparel company. And other importers and exporters are expressing interest, says Luebbers.

“The inland port has the capacity to take on more volumes,” he says.

But as traffic increases, NS will need to analyze its line to ensure it can handle the additional traffic and not delay any trains, says Luebbers. In addition, capacity at NS’ Charleston terminal will need to be studied.

An intermodal container transfer facility (ICTF) Palmetto Railways is developing at the Port of Charleston also could help spur more traffic for the Class I. The near-dock facility is being developed in cooperation with the SPA's construction of a container terminal at a former Navy base. The ICTF would serve all SPA container terminals with connections to both NS and CSX Transportation.

For now, NS officials are placing the BMW traffic in the win column for short-haul intermodal business. They’re trying to attract more cargo moving less than 500 miles that typically is trucked.

Higher fuel and insurance expenses, a tight driver market, constrained capacity, and new government regulations on hours of service and safety performance are driving up trucking costs, making short-haul rail more attractive, NS officials say.

The Class I already has landed short-haul business for containers moving between Charleston and Savannah, Ga., and Atlanta; Charleston and Savannah and Charlotte, N.C.; Norfolk, Va., and Greensboro, N.C.; and the Port of New York and New Jersey and Pittsburgh. Building volume density helps offset the costs and other factors involved in shorter-mile intermodal movements that typically tend to favor long-haul shipments, NS officials say.

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