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May 12, 2014

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SURFACE & DOMESTIC TRANSPORTATION TRUCKING | RAIL | INTERMODAL | AIR & EXPEDITED | DISTRIBUTION 60 THE JOURNAL OF COMMERCE www.joc.com MAY 12.2014 CHICAGO IS LIVING up to its reputation as the nation's transportation bottleneck. Severe weather and a rise in freight demand last winter weighed heavily on the city of broad shoulders, creating a cargo backlog at the nation's largest freight hub and the biggest North American cargo bottleneck — one that's still being worked through. Although railroads gave priority to intermodal trains because of their more time-sensitive nature, an uptick in coal traf- fic and other carload freight added drag to the entire network. That left many retailers and manufacturers receiving containerized goods later than scheduled. It could happen again. Chicago might not get a w inter so severe and unrelenting for many years, if ever. But railroad executives and city officials warn that more freight will move through the city even as a major public- private effort to boost ra il capacit y crawls forward. The railroads have taken note, particularly after the delays forced some car- riers to turn away business in the first three months of the year. The rail industry "should have pulled the trigger faster on re-routing cargo," BNSF Railway Executive Chairman Matt Rose told the JOC in Chicago. The six larg- est Class I railroads that connect in the area also should hand off cargo to each other bet- ter, he added. But it's going to take more than faster decision-making in re-routing cargo and bet- ter interchanging, a tough request considering railroads gear their networks for productiv- ity from within and less on efficiency of the total line-haul. In other words, a railroad will focus on getting an intermodal shipment to another railroad's line, only to have the cargo wait a day or more before being picked up by the other carrier, intermodal analyst Tom Finkbiner said. Besides, the jumble of rail lines and roadways in the Chicago metropolitan area would hamper rail traffic even if the carri- ers worked hand-in-hand on interchanging cargo and shifted freight away from the hub. The fact that about 25 percent of freight rail traffic moves through the Chicago area and that railyards and terminals are scattered in and around the city illustrates the extent of the network entanglement and resulting congestion. "You can come from the West Coast to Chicago in 48 hours (via train) and lose 24 to 30 hours just getting across the metropolitan area of Chicago to go on to the destination," James Kvedaras, Cana - dian National Railway's director of U.S. public and government affairs, said at the NAFTANEXT conference in Chicago in April. "That's for stuff that doesn't even have to be physically in Chicago." The Chicago Region Environmental and Transportation Efficiency Program, known by its CREATE acronym, is key to coping with the freight growth and speeding up the movement of goods through the hub, Kvedaras said. Work on the $3.8 billion proj- ect, launched in 2000, has slowed, largely because fewer dollars are coming from the federal government and the state of Illinois. The various government bodies, along with the freight rail industry, have already kicked in about $1.2 billion toward construction work. In terms of projects that boost freight rail fluidity, about half of the work has been completed, said Jeffrey Sriver, CREATE's program manager at the Chicago Depart- ment of Transportation. To finish the majority of work that would increase freight rail capacity, CREATE needs about $1 billion to relieve road and rail con- gestion on the south side, where four freight railroads and two passenger lines cross major thoroughfares. The preliminary design and environmental review for the initiative, known as the 75th St. Corridor Improvement Project, is nearly complete, and the final design process will follow, Sriver said. Then it comes down to finding the money. Getting funding for CREATE was much easier before federal earmarks became a toxic word in Washington following the recession, said Benjamin Brockschmidt, executive director of the Infrastructure Council at the Illinois Chamber of Com - merce. Now, Congress is struggling to maintain surface transportation funding, and the majority of state money coming from Springfield goes toward maintaining existing highways, roads and bridges, not building new capacity. Brockschmidt hopes a push to increase the state fuel taxes and vehicle registration fees connects at the state capitol. State legislators also are under pressure to end diversions of surface infrastructure dollars toward non-transportation work. With less funding likely to come from the federal government, some states are working to follow Indiana and Vermont in raising their fuel taxes or to follow Virginia in replacing the fuel tax with a sales tax on the wholesale price of gasoline and diesel. Doug Whitley, president and CEO of the Illinois Chamber of Commerce, last year told Congress that all CREATE parties, including the freight railroads, need to kick in more toward the project. The Associa- tion of American Railroads, the freight rail industry's main lobbying force, didn't return By Mark Szakonyi TANGLED IN CHICAGO Railroads in the nation's largest freight hub look to create lasting solutions after last winter's gridlock The rail industry "should have pulled the trigger faster on re-routing cargo."

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