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SURFACE & DOMESTIC TRANSPORTATION TRUCKING | RAIL | INTERMODAL | AIR & EXPEDITED | DISTRIBUTION 46 THE JOURNAL OF COMMERCE www.joc.com AUGUST 24.2015 CANADIAN NATIONAL RAILWAY is looking to do for Mobile, Alabama, what it did for Prince Rupert, British Columbia: turn a relatively small port with limited container business into an intermodal gateway, while capitaliz- ing on a potentially lucrative market. The port, little of whose cargo flow isn't connected to the energy industry, is in the midst of expanding its container terminal and building an adjacent $36 million intermodal transfer facility to bolster its position in the U.S. Gulf against much larger container ports such as Houston and New Orleans. The two projects, scheduled for comple- tion in 2016, are expected to increase the port's capacity by 90 percent and allow the traditional breabulk and bulk-heavy port to compete for intermodal traffic now going to East and West Coast ports. It has a long way to go, having handled just north of 70,000 20-foot-equivalent container units last year, with its share of containerized imports through the Gulf shrinking to 6 percent last year, from 6.8 percent a year earlier, according to PIERS, a sister company of The Journal of Commerce within IHS. But CN will help lead the charge, having signed a memorandum of understanding this summer for the intermodal gateway project with the Alabama State Port Authority and APM Terminals, which operates the Mobile container terminal. The agreement will give CN, which has owned a rail line connecting Mobile to Memphis and the U.S. Midwest since 1998, increased access to all three North American coasts. "Canadian National is an ideal partner," said Jimmy Lyons, CEO and director of the Alabama State Port Authority. "The Cana- dian National tracks run straight up in the middle of what we see as our desired market." "For the longest time, we've had a rail- road that goes all the way to Mobile; we've had physical access to Mobile," J.J. Ruest, CN's executive vice president and chief mar- keting officer, told The Journal of Commerce. "But activities at Mobile have been centered around the import and export of coal." Within a year, the railroad promises, Mobile will be a gateway for intermodal imports and exports. CN plans to capitalize on Mobile's deep-water harbor, its access to the U.S. heartland, the Gulf's history of stable labor relations and the port's proximity to a soon-to-be-opened expanded Panama Canal. By next year, CN will be moving intermo- dal traffic off ships and onto trains in 2 1/2 days or less and carrying them north from Alabama into the U.S. Midwest, Ruest said. That's not dissimilar to the railroad's strategy at Prince Rupert, one of the fast- est-growing North American container gateways. Indeed, CN's top executives say they hope Mobile will mirror the success the railroad has had more than 2,500 miles away in British Columbia. "We've gone through this before," Ruest said. Before the Prince Rupert Port Author- ity opened its Fairview Container Terminal in September 2007, the tiny town 500 miles north of Canada's largest port in Vancouver was perhaps the least likely candidate to become a gateway for North America's trade with Asia. But CN, the sole rail provider at the Brit- ish Columbia port, took a chance and began offering direct service from Prince Rupert to Chicago, Memphis and New Orleans. When Chinese ocean carrier Cosco launched a ser- vice from Asia to Prince Rupert, CN priced its intermodal service to the U.S. aggres- sively, reportedly $300 to $400 per 40-foot container lower than what BNSF Railway and Union Pacific Railroad were charging to haul boxes to Chicago from Pacific North- west ports. Prince Rupert's growth in the trans- Pacific container trade was meteoric, with the port registering year-over-year gains of 20 percent or more practically each month until 2013. Much of the growth was based on U.S. cargo, although Prince Rupert in recent years has increased its share of the Canada- Asia trade. The port also has attracted more export cargo than originally anticipated. The port stumbled in 2013 as container volume declined about 5 percent. CN's initial intermodal contract with Cosco reportedly had expired, and rates to the U.S. market increased. But as talks between U.S. West Coast unions and port operators grew increasingly heated, Prince Rupert's container traffic rebounded as U.S.-bound services diverted north to Canada. Prince Rupert ultimately increased its throughput 12 percent by year's end, and the port is retain- ing many of those diverted shipments. The attraction is obvious: In a span of about two days, sometimes less, containers are moved from the ship to the on-dock inter- modal rail terminal, or vice versa, Ruest said. By Reynolds Hutchins CN GOES MOBILE Railway seeks to replicate Prince Rupert model in Alabama, solidifies its presence in Gulf