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Trouble in the Windy City

11.01.14

By Larry Gross 
Original article published October 21 at JOC.com

As we turn the corner on autumn and begin to head for winter, one thing has remained constant: Rail service, including intermodal, is struggling. Despite CEO claims of gradual improvement, the data show no real progress. One long-term strategic planning rail executive who is now retired recently described the situation as the worst he’s seen among railroads as a whole in his career. There’s trouble everywhere, and performance is in the dumper.

The epicenter of the problem lies in Chicago. Under current railroad operating patterns, 25 percent of rail traffic touches the Windy City. Recent operations into Chicago have bogged down severely, with trains stacking up on the approaches to town like trucks waiting at a toll booth.  The situation east of Chicago has become so bad that Amtrak at one point elected to turn around the New York-Chicago Lake Shore Limited in Toledo, Ohio, busing the passengers the rest of the way, because Amtrak couldn’t get its supposedly high-priority passenger train through the mess.

Canadian Pacific CEO E. Hunter Harrison offered one answer this month, however fleeting. CP’s merger overture to CSX this month may have had several motivations, but one key driver has been Harrison’s determination to fix the broken Chicago gateway. CP owns 49 percent of key cross-town carrier Indiana Harbor Belt, with the remaining 51 percent split between CSX and Norfolk Southern.

Acquiring CSX -- CP ended talks a week after they were announced when CSX seemed less than enthused about the idea -- would have provided CP with a controlling 71.5 percent interest in Indiana Harbor Belt, and thereby a single-owned link across Chicago between its eastern and western lines. This would have put CP on par with Canadian National, which acquired the Elgin, Joliet & Eastern belt line around Chicago during Harrison’s tenure as CEO with the same purpose.

What’s the problem with Chicago? The railroads point to the city's antiquated physical plant, with complex track patterns including many crossings at grade in which one train must wait on others; fragmented yards and heavy commuter traffic. One response has been the CREATE program, a $3.8 billion public-private partnership to which most Chicago rails belong. CREATE’s aim is to identify and fix bottlenecks, including those troublesome crossings.

But the process has been bureaucratic and slow, and transit times across Chicago appear not to have improved much, if at all, despite $1.1 billion raised to date.

The addition of unit trains, primarily crude oil trains between North Dakota and the East Coast, has exacerbated the problem. There is no schedule for these trains, which appear frequently but at random times and intervals, so they’re difficult to plan for. When one of these trains arrives in Chicago and the connecting road doesn’t have a fresh crew available, the train sits -- all 100 cars and a mile long, taking up critical track space.

What’s the solution? There are no silver bullets, but better coordination between the railroads would help. If necessary, trains without connecting crews should be held before they get into the congested Chicago terminal area and then metered through as the receiving road is prepared to accept them.

Another possible area of improvement would be the creation of a shared access railroad for Chicagoland, patterned after the highly regarded Conrail shared access entity serving NS and CSX in New Jersey and Michigan. The Chicago Shared Access entity would take over the Chicago connecting railroads, streamline operations and centralize decision-making.

Of course, one obvious question is whether 25 percent of the nation’s rail traffic needs to go through Chicago. Use of alternative gateways and creation of new bypass routes would take some of the pressure off. But doing so would require the railroads to alter longstanding operating practices and patterns, and perhaps be willing to individually accept higher costs or lower revenue in some situations as a necessary price for improving the overall situation. These are just a few suggestions; there are many other potential paths of improvement.

What’s not clear is whether the rail industry feels the necessary sense of urgency required to shake up conventional thinking and look at big solutions to a big problem. To their credit, the railroads are trying to throw enough resources, in the form of locomotives and crews, to begin to pull out of the nosedive.

These have long lead times, so it remains to be seen if the railroads will be able to get ahead of the curve in this manner. Perhaps they will be able to dig out sometime over the course of 2015, if traffic growth eases and the coming winter is kind.

But if things get better, the danger is that the root causes of the Chicago problem will remain. We hear a lot of talk about the unprecedented winter of 2014 as if snow in Chicago was a novel event. But the Chicago meltdown isn’t a weather problem. It’s a structural and operating problem.

Besides, can we really afford a system where the single node that processes one-quarter of our nation’s rail traffic can be brought to its knees by a few significant snowstorms? The time for baby steps is past. It’s time to take bold actions to fix the Chicago problem.

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Lawrence Gross is president of Gross Transportation Consulting in Mahwah, New Jersey, and a partner at FTR Transportation Intelligence. A veteran with 34 years in the transportation business, he covers freight transportation, concentrating on the intermodal and trucking sectors from a transportation and equipment perspective. He is a frequent speaker at industry events. Contact him at [email protected] and follow him on Twitter: @intermodalist