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California Inland Port Feasibility Analysis Briefing – State Of California Inland Port Feasibility Analysis Briefing - SJVAPCD Overview of Project Results of Feasibility Analysis Reaction From Industry Meeting Environmental Considerations Agenda Interface with Railroads Intermodal or Multifaceted Platform Conclusions and Next Steps Feedback and Discussion • Lagging economic performance/trade competitiveness • Extraordinarily large intra-State cargo Overview of market/freight movement system Project • Emissions and air quality ________________ • Road congestion Problem • Almost all California-market containerized cargo moving through ports transits via Overview truck By itself California is a huge cargo logistics market New California paradigm needs to be created by developing far more efficient cargo shipping alternatives for shippers Overview of New intermodal rail spine, connecting seaports to Project key consumption and production markets ______________________ - Reduces costs to shippers - Reduces GHG and criteria pollutants Business - Reduces traffic congestion and road Proposition maintenance costs - Increases economic competitiveness in areas of the State that have performed below urban coastal regions Could provide a platform for integrated rail-clean truck system over an inland port district Overview of Project Corporate Participants Examples Food Producers Association Almond Producers Fresh Fruit Association CMTA California Trucking Association Port Market Trucking Companies APM Terminals Maersk XPO Logistics Process and Status Agree on Review Define Produce Review Concept & Elements Inland Create Determine Industry Market Data Review With Detailed Optimal Assemble Preliminary Port/Truck Working Public Policy Interviews Analytics State Business Delivery Delivery Operational Technology Group Role Model Structure Structure Model – Rail Objectives Go/Stop 1st Phase – Underlying Feasibility 2nd Phase Detailed Business Model/RR • Bakersfield–to-Sacramento along CA 99 highway spine California • Includes Bay Area region • UP & BNSF rail tracks parallel road Inland Port corridor • Central Valley distribution serves Market Bay Area market • 74% of all containerized cargo moves through Ports in Los Angeles • Restoration Hardware • Costco • JC Penney • Amazon (4) • Kohls • John Deere • Crate & Barrel • CVS • Frito Lay • Kellogg's • Grainger • Nestle • Safeway • Del Monte • Home Depot • Medline • TESLA Central Valley- Bay Area Distribution Hub Inland Port District Rail Infrastructure System • UP and BNSF – Parallel in Central Valley North • UP Coastal Line • Shared Track and Proprietary Track • Intermodal Facilities – Manteca, Lathrop Central and Barstow • Classification/Switching Facilities - South Mohave and Barstow • Various Shortline Operations Domestic Intermodal/Classification Facility Inland Port Market Annual TEU Volume, Inland Port District By Sub-Market Inbound Outbound Total TEU Volume Bay Area 316,902 171,322 488,224 North Region 104,340 138,551 242,891 South Region Central Region 80,338 150,499 230,837 Bay Area South Region 47,830 84,250 132,080 Central Region Total Market Shed 549,410 544,622 1,094,032 North Region Equivalent: 17,700 Truck Trips Per Week Scenario Analysis Modelling • Assumptions • Unit train of 250 containers running North-South from the Ports complex in Los Angeles • Closed system • Running on existing rail tracks • No assumption about which railroad tracks, or combination • Calculated truck versus rail costs - three intermodal station scenarios • 3-Stop Scenario North – Central – South • 2-Stop Scenario North – Central • 1-Stop Scenario North Results of Analytics • North Region performs well +$400 to $500 per TEU • Central Region performs modestly well-to-near breakeven +$100 to about breakeven • South Region struggles to perform -$200 or worse • Due to district shape being long, it is challenging to optimize stop locations to maximize access to market concentrations • Will only work with high market acquisition in North Region market • 2-Stop scenario seems to optimize market acquisition – balance between cost and efficiency Potential Train Frequency Volumes and train frequencies are a function of market acquisition – customer shifting from truck to rail Market Acquisition Scenarios 10%: 3 Trains/Week Approx 92,000 Annual Truck Trips 20%: 6 Trains/Week Approx 184,000 Annual Truck Trips 30%: 10 Trains/Week Approx 276,000 Annual Truck Trips Transit Time – Truck Versus Rail • Transit time will not be the driving factor • Even with increasing congestion and delays, truck will offer shorter transit times for shippers • Trains will stop at intermodal stations • Travel more slowly • May require dwell time at classification/switching yards • Truck travel times: 4.5 to 9.5 hours • Rail travel times: 28 to 35 Hours Industry Input Truckers - Would welcome not having to run to the Port (road congestion and wait times); Would substitute shorter, more profitable routes; easier to retain drivers Agricultural Processors - Desire streamlined field-to-port logistics, lower costs are Very important Food Producers - Very concerned with cost and service DC Operators - Most DC retail facilities are not currently Located on rail, would favorably consider rail if transloading operational challenges are offset by cost and improved operational dynamics Ocean Carriers - Equipment location and control is paramount; remaining closer to Port is advantageous; imbalance of chassis at Port terminals is an ongoing issue; more rail could provide relief Terminal Operators - Generally terminals would welcome more rail vs truck volume Environmental Benefits • Based upon this analysis, NOx emissions would be reduced by up to 84% while greenhouse gas emissions would be reduced by up to 93% • Based on the total annual reduction of emissions as shown below, the proposed central valley intermodal rail service would provide a significant reduction in annual emission Railroad Issues • Critical to understand key issues to the railroad industry • Railroad sector is undergoing substantial change • Intermodal rail would not be considered 5 years ago • Business strategy evolution: precision railroad management strategy • Key Business Points: • Utilization of existing rail capacity • Pricing strategy • Anticipated rate of customer acquisition in concentrated Areas • ROI hurdle rate Key Conclusions • The preliminary business model suggests a California inland port rail system is viable; but a more detailed analysis is needed for the project to move forward • It’s important to more substantially engage the railroad companies to jointly assess and review options, but not rely solely on the railroads to advance • The project is beyond the scope of any existing organization – the State of California will need to play a leadership role Next Steps • Determine Valley interest in proceeding to next phase State and Regional (i.e. SJV Regional Policy Council) • Determine State interest in proceeding to next phase Interest • Identify lead State organization and other participants • Detailed Business Model • Develop Environmental Plan Business Model • Railroad engagement and partnership • Investment requirements and Delivery Plan • Engage and develop market Market • Gain soft/hard shipper commitments Development • Focus on inbound & outbound • SCs: agribusiness, consumer distribution, auto/industrial.
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