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Freight Gridlock: The complications of a solution are as real as the consequences of inaction

THE HUDSON ESSAY Michael Hudson was vice president of public affairs at Illinois Tool Works Inc. and chairman of the Illinois Issues Advisory Board at the time of his death in 1992. In his memory, fellow board members established an annual essay to examine a significant economic trend in Illinois that has been affected by public policy or the lack of it. This essay about freight gridlock was funded by a donor who asked to remain anonymous.

Chicago is boastful of its role as home to the world's largest marathon road race, drawing the fastest runners from around the globe and 45,000 total competitors. But the Windy City could learn an important maxim from the speed machines who descend on its streets every fall: The fastest always wins the race.

Many Chicago Marathon runners literally outpace the city's freight rail shipping industry, one of the city's largest and most important. On average, freight trains move through Chicago's bottlenecks and choked junctions at a turtle-pace of 9 mph. The marathon's faster runners leave the diesel-chugging engines in their dust as they sprint at more than 12 mph. Even the slowest runners, sweating and sputtering at 4 mph, are running at half the pace of freight trains moving through the city.

In an economic, but very real sense, Chicago — the nation's rail hub and its most congested point — is losing the race. "The congestion in the Chicago area is a friction on the fluidity of the whole rail system," laments Paul Nowicki, government relations vice president for Burlington Northern Santa Fe Railway, which handled 2.5 million intermodal shipments in Chicago last year.

That runners in the famed marathon traverse the streets faster than high-powered freight trains is no laughing matter. More than $22 billion in yearly economic activity and 37,000 jobs with a $1.7 billion payroll are tied to the strangled industry. Many experts fear freight will eventually start routing around Chicago to save precious time and money. The largest railroad in Canada is already making moves to that end, opening a large distribution and switching center in Memphis, Tenn.

The solution to the problem, which became more apparent in recent years as international trade boomed, might be a $1.5 billion series of 70 rail improvement projects called CREATE, or the Chicago Region Environmental and Transportation Efficiency Program. Unfortunately for the industry, and perhaps for other citizens, no one seems to want to cover the tab as infighting continues over who should pay and whether the problem is as big as doomsday-sayers indicate.

In 2003, the state, all six of Chicago's major rail shippers, Amtrak and Metra, which oversees suburban commuter rails, agreed on CREATE's mission and project particulars. It marks the largest and most sweeping public-private partnership in rail history. The most visible improvements will include the construction of six rail "flyovers," or overpasses for certain rail lines at backed-up junctions, in addition to 25 new overpasses or underpasses for major roads that cross heavily trafficked lines. Perhaps the most important upgrades, though, will create more direct paths for trains maneuvering Chicago's labyrinth of tracks. To do this, the six major freight operators, Metra and Amtrak have agreed to share the use of five designated rail corridors and invest heavily in signal improvements.

When complete, the average speed of freight trains through Chicago will rise to a more tolerable 15 mph.

To be sure, many experts agree that the complications in implementing the plan are as real as the consequences of inaction. 

"We will have massive gridlock unless something is done," says Mike Franke, Amtrak's senior director of corridor planning. "And Chicago will continue to suffer in terms of its importance as a national rail center."

Currently, the Chicago region handles 1,200 trains a day, including 700 passenger trains, on a rail system that is more than a century old in key places. Tens of thousands of freight cars can take as long as two days to get through the mess of bottlenecks and junctions when it can take the same time to get those goods halfway across the country. This significant strain threatens thousands of jobs and billions of dollars in economic stimulus. It also adds cost to products such as cars, paper, coal, corn and imported goods. 

"It drives costs up, and  it inevitably impacts customers as well," explains Nowicki. "Right now, freight is often delayed, and the delivery time for shipments is more uncertain."

Not just freight haulers feel the pinch, however. Chicago's expansive passenger service is hemmed in by the booming freight industry and vice versa. During each weekday rush hour, freight traffic grinds to a halt to give hundreds of Metra passenger trains the right-of-way. On the flip side, Metra has limited expansion possibilities because freight trains use many of the same tracks and critical junctions.

The problems will only get worse. According to a 2004 report by the civic planning group Chicago Metropolis 2020, freight rail traffic will jump by a stunning 67 percent in the next 22 years. Metra and Amtrak also are facing rising pressure to add routes and trains, particularly for reverse commuters and those traveling from small towns, as gas prices skyrocket and highways grind to a halt.

"We have had massive growth in freight traffic, about 3.5 percent a year, and it is continuing to grow," says Doug Hagestad, a former freight rail executive and associate director of Northwestern University's Transportation Center. "Plus, we want more passenger service. Where are you going to put these trains?"

Despite the glaring problems, action has been relatively slow as political will appears to be faltering. Since 2003, $330 million of the needed $1.5 billion has been secured, while the prospects of landing more money appear at least years away. Illinois lawmakers were able to rope in just $100 million in the last federal transportation package. Negotiations on the next one won't start until 2009. At the same time, Gov. 

Rod Blagojevich has been reluctant to put forward a public works package. Proponents want it to include $500 million over five years to get CREATE over the funding hump.

Part of the problem appears to be convincing lawmakers and average citizens that CREATE is worth the price tag.

Meanwhile, the six major rail companies — BNSF, Canadian National, Canadian Pacific, CSX, Norfolk Southern and Union Pacific — have agreed to put forward just $212 million of the total cost, with $100 million already in the kitty. The rail companies say their cut equals the amount of economic benefit they expect to derive from CREATE. This formula leaves at least $1.3 billion for the public to shoulder.

Amtrak, Metra and supportive business groups, such as the Chicagoland Chamber of Commerce, see this split as equitable, while others think the rail companies could bring more to the table. "There is a tremendous benefit here for the citizens and to the motorists who use Chicago freeways," says Robert Gallamore, former director of Northwestern University's Transportation Center and a retired railroad executive. As the argument goes, a more efficient freight system will allow the expansion of passenger service, reduce the number of trucks on the highways, remove wait times at railroad crossings and cut down on air pollution.

Yet, questions remain about how much impact a better freight rail system will have on the most visible related issue: interstate truck traffic. The Chicago Metropolis 2020 report concludes that any reduction in trucks will be "nominal." Gallamore says that assessment might be accurate overall, but he argues there would be quick cuts in trucks between intermodal yards as over-the-road transfers are reduced. Specifically, he says, the truck-clogged route on Cicero Avenue near O'Hare International Airport would get much-needed relief.

Few, however, are arguing over the touted positive ramifications for passenger service and the overall economic benefit to the nation's third-largest city. "[For CREATE to fail] it would mean less business for the Chicago intermodal yards. It would be less trucking and shipping business and restaurants and lodging and all the things that come with the shipping industry," says Brian Steele, Chicago Department of Transportation spokesman. Chicago has so far pledged $30 million to CREATE.

Amtrak has been particularly excited about CREATE's potential to fix its woeful on-time performance and, therefore, fill more seats. Two flyover projects, one at a junction in Brighton Park and another on the southern Rock Island Line, would speed dozens of daily Amtrak trains heading south, west and east. At those two points, Amtrak trains are now forced to come to a complete stop and wait for freight trains to pass. Improving punctuality in Chicago helps keep the national Amtrak system on time as well.

"Freight train interference is the largest single source of Amtrak delays in the Midwest," says Amtrak's Franke. "Our growing ridership is vying for capacity over their growing freight volumes."

The question still remains for some on the sidelines whether the public is actually going to get $1.3 billion in benefit and the freight companies just $212 million. Jim LaBelle, deputy director of Chicago Metropolis 2020, says he thinks the rail companies could pay double what they have agreed to. 

"If the state did come through, I would encourage the railroads to match that," LaBelle says of the $500 million being sought from the state budget this year.

Freight haulers beg to differ. "That is simply not going to happen," says Nowicki. "We simply can't justify investing more private capital for public benefit."

Indeed, the rail companies may have other options to plunking down big bucks on Chicago's century-old infrastructure. "Logistic companies and shippers and purchasers are always looking for the quickest, most reliable routes," LaBelle says. "If it turns out for them that Chicago is a point of delay, enterprising logistics folks will get around that bottleneck."

Canadian National Railway, the northern nation's largest freight shipper, underscores LaBelle's point. After business began to boom in the late 1990s, CN started to feel the financial bleeding from Chicago's notorious delays, sending executives searching for a solution. In 2005, CN opened a delay-free, 2,500-square-acre intermodal shipment center in Memphis, Tenn. "A new transportation network is emerging and connecting the world in a different way," proclaims CN's promotional video on the new facility.

Today, CN can bypass Chicago with profitable loads from Asia and Europe destined for the southern and central United States. For example, CN now transfers large lumber shipments in Memphis instead of Chicago, potentially cutting delivery times from a sky-high 40 days to a manageable 28. In a business sense, CN appears to be on the right track, leaving Chicago on the wrong one.

Regardless of CN's move, others disagree that enough freight can bypass Chicago to put a relevant dent in the region's shipping economy. "It is like a scare tactic," says Gallamore, a former Union Pacific executive. "It is going to grow, but it is not going to suck away all the traffic. You are not going to see this sudden shift because the infrastructure simply isn't there."

Even Nowicki agrees that any possible major shifting of traffic around Chicago is years if not decades away. "Over the long term, cities like Memphis could take some of this business from Chicago," he says. "But in this business, it is not going to happen tomorrow."

Still, most agree that continued congestion will have an overall negative impact from the freeways to the stores. "Goods will cost more. It is that simple," says Hagestad, a former marketing vice president with the Illinois Central Railroad. "If it has to go on the highway system, that is what will happen unless we are going to force trucks to operate at a deficit."

Hagestad also argues that other Illinois towns are at risk, including Galesburg with its large intermodal facility in the western region of the state. If substantial traffic reroutes around Chicago, heading south to St. Louis or Memphis, the facility could lose significant business. 

"Here is the rub," he says. "Suppose we don't do anything."

With so many interests at stake — freight and passenger rail, business, jobs, the cost of goods — why is action on CREATE moving like a lumbering train through Chicago? "The challenge to get the program done is for groups of businesses and business leaders to say collectively, 'This is so important to the region's economy, and it may not help me this year, but in a few years it will help,'" LaBelle says.

Basically, the problem is the price tag and convincing people to pay it. While some key lawmakers see acute urgency in the issue, including Chicago Democratic U.S. Rep. Daniel Lipinski, others have chosen to put other projects first, like former Republican U.S. House Speaker Dennis Hastert's pet Prairie Parkway in the far west suburbs.

Certainly the cost the public is being asked to foot without seeing a direct or immediate benefit creates a mountain of ambivalence for proponents to scale. "It is the immediate economic benefits that get people to invest hard dollars," notes Gallamore. At the same time, even LaBelle, who thinks the rail companies could pony up more, acknowledges a substantial chunk will have to come from the public. "It is a shared benefit between the public and private," he says. "Without the public investment, CREATE is not going to get done."

Meanwhile, the massive and experimental project jerks forward. 

With $330 million nailed down, the planning for most of the 70 projects is under way, and construction on nearly a dozen smaller improvements is set to start this summer. "It is moving and that is the important thing," notes Tom White, spokesman for the Association of American Railroads. Even so, the pace — like the trains through Chicago — will be tested against the patience of the business world.


Joseph Ryan is the transportation reporter for the Daily Herald in Arlington Heights.

Illinois Issues, June 2007

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