Transportation Services Respond To China Trade

Jan. 21, 2005
Railroads and ports investing in new capacity and services.

With the influx of goods from China soaring (the U.S. trade deficit with that country rose 30% January through November 2004), transportation companies and public ports are making substantial capital investments and refocusing services.

Railroad Norfolk Southern Corp. plans to spend $938 million this year on improvements, including increasing track capacity and access to coal receivers, intermodal terminals and facilities for bulk transfer and vehicle production and distribution. That breaks down into $671 million for roadway projects and $225 million for equipment, according to a report from the Intermodal Association of America.

Norfolk Southern Chairman and CEO David R. Goode has said the upgrades will "help the company improve service levels and handle business growth by increasing capacity, improving efficiency and ensuring safety of operations."

Other railroads that are refocusing services and increasing capacity include: CSX Corp., which sold its CSX World Terminals unit in Dec. for $1.15 billion so it could concentrate on its railroad business; and both Union Pacific Corp. and Burlington Northern Sante Fe, which are in the midst of a battle to be the first among the two to lay 2,000 miles of track with the latest switching capabilities between Chicago and Los Angeles, which has become the primary U.S. entry point for goods from China and is struggling with its own capacity constraints.

Meanwhile, East Coast ports eyeing the build-up of cargo along the West Coast want in on the action. Starting in February, the North Carolina State Ports Authority will offer a weekly container service from China to the Port of Wilmington. The new service is jointly operated by Israeli and Taiwanese companies.

"We expect [this service] . . . will attract retail distribution centers to establish operations in southeastern North Carolina in the very near future, as well as offer additional opportunities for North Carolina's furniture industry," said Carl J. Stewart Jr., chairman of the port authority's board of directors.

Additionally, the Port of New York and New Jersey has agreements for eight shipments a week from China as the amount of incoming freight from Asia continues to climb. In 2004, Asia surpassed Europe as the port's leading trading partner. In the month of June alone, imports from the Far East were up 32%, according to the port authority.

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