The Florida East Coast Railway will begin hauling cargo from the Port of Miami next month after completing the first phase of an on-dock facility for ship-to-rail transfer of intermodal boxes, setting the stage for potential new cargo business into Florida, the Southeast, and the Midwest.
The short-line railroad, which operates between Miami and Jacksonville, expects to move 60 to 80 containers per day at the outset and two to three times that amount by August when the project is completed, James R. Hertwig, FEC Railway's president and chief executive officer, said in a phone interview.
"One of our target markets at the start is central Florida. There are about 100,000 units annually that are being trucked to and from the (port) and we are looking at having that freight go on-dock rail," he said. Previously, FEC had difficulty capturing that business because the cost of paying for a truck to shuttle containers to the railroad's nearby yard in Hialeah wiped out any intermodal savings and shippers felt that once a truck hooked up to a chassis it might as well make the 230-mile run all the way to Orlando.
FEC will now load a block of containers at the port, transport them directly to its new intermodal terminal in Cocoa Beach and use its short-haul trucking arm to deliver the boxes to customers in Orlando.
"It's a better economic value for the shipper compared to today that traffic moves to Savannah by rail and is then trucked down or is trucked from Miami," Hertwig said.
UPS is now taking advantage of FEC's access to central Florida from the north. The world's largest package delivery company and the largest user of intermodal rail service in the United States, recently opted to tender 6,000 loads per year to FEC from Jacksonville to the Cocoa facility, Hertwig said last week during a panel discussion at FTR Associates' annual freight conference in Indianapolis.
The train leaves Jacksonville at 7 p.m. and drops off the containers by 12:30 p.m.
The intermodal facility is part of Port Miami's infrastructure plan that includes deepening the harbor channel to 50 feet to accommodate behemoth container vessels currently entering service and building a truck-friendly tunnel connecting the man-made island on which the port sits with the interstate highway system, to increase delivery efficiency in time for the expansion of the Panama Canal in 2015. Port authority and FEC officials say they expect shippers and ocean carriers to gravitate to the new intermodal options because containers on all-water services from Asia can be offloaded in Miami, put on a train and be in consumer markets further north faster than they can by riding on vessels hop-scotching to various ports along the East Coast.
FEC, which interchanges with the Norfolk Southern and CSX railroads in Jacksonville, touts two-day service to places like Atlanta, Nashville, Tenn., and Charlotte, N.C.
The $45 million Miami project included restoring a neglected main line to the rail bridge connecting the mainland with the Port of Miami, rehabilitating a damaged rail bridge, and modifying the Hialeah yard to handle the increase in intermodal traffic. The project was supported by a $23 million TIGER grant from the federal Department of Transportation, about $9 million from the Florida Department of Transportation and $5 million from Miami-Dade County.
Today, a test FEC railcar will cross the restored rail bridge, which was damaged by Hurricane Wilma in 2005, from the Hialeah railyard, Port Miami spokeswoman Andria Muniz said.
Some of the new intermodal facility's land is currently being used by contractors for the massive tunnel project as a storage area for material and heavy machinery. The tunnel is expected to be completed in May, after which FEC will lay down two more 3,000-foot tracks and be at full capacity, Hertwig told American Shipper
Delays caused the start of on-dock rail service in Miami to be pushed back from the first quarter.
FEC is also busy building an intermodal container transfer facility for domestic and international traffic at Port Everglades in Fort Lauderdale. The facility is expected to be completed in July, Hertwig said.
Meanwhile, South Florida Logistics Services, a subsidiary of Florida East Coast Industries and sister company to FEC, is developing the South Florida Logistics Center on a 400-acre tract adjacent to Miami International Airport and the FEC's Hialeah yard. The rail-served logistics park eventually will have 1.5 million square feet of warehouse space. The first 175,000-square-foot warehouse is scheduled to open in October with several tenants.
Under the plan, FEC will shuttle 40-foot ocean containers from the ports of Miami and Fort Lauderdale to the facility where they can be transloaded into 53-foot domestic containers for transport to the Southeast and other regions, as well as stored or reconfigured for final delivery. The multimodal facility will also process air cargo and benefit from designation as a Foreign Trade Zone where duties can be deferred on goods that are re-exported or postponed until entry into the U.S. market.
Some FEC loads will move directly up the coast from Port Miami, while others will go to the transload center for further processing.
Walt Disney Co. will probably begin to move some shipments on a trial basis through Port Miami on the FEC in the first half of 2014, after the on-dock rail service is running smoothly, Hertwig said in the interview.
reported last year that Disney would divert some merchandise ordered in Asia from the Port of Savannah to Miami once intermodal service was established
At the FTR Associates event, Hertwig said FEC is able to defy conventional wisdom and profitably operate a short-haul intermodal service because it has invested in multiple sidings, trains and terminals. Many analysts also think Florida is too far away from major population centers to become a significant gateway for discretionary international cargo.
Unlike Class I railroads that only offer intermodal service once every 24 to 48 hours on certain lanes, FEC runs six trains a day in both directions, which makes it easier for shippers to make a connection, Hertwig said.
The railroad recently opened another intermodal facility in West Palm Beach, he added. It also opened a facility within the past couple of years in Fort Pierce, primarily at the request of Walmart.
Almost 80 percent of FEC's business comes from intermodal and 45 percent of the traffic moves less than 350 miles within Florida.
FEC and Florida East Coast Industries are owned by funds managed by Fortress Investment Group.