SALEM — Momentum is building behind a proposed intermodal facility in Millersburg, Ore., to receive grant funding from Oregon transportation officials.
A final review committee of transportation experts threw their support behind the Millersburg location over a competing site in Brooks, Ore., at a Jan. 11 meeting shortly after an independent evaluation also recommended the site.
However, both the committee and the third-party reviewer found shortcomings with both proposals relating to the financial viability of the intermodal facility, which is intended to ease exports of agricultural goods to Asia.
Proponents of both locations have “overly optimistic economic and volume projections” and “neither project is likely to be commercially viable” without some form of subsidy, according to a draft report from the Tioga Group transportation consulting firm.
Those concerns were echoed by several members of the review committee, which was assembled by the Oregon Department of Transportation. They said they were nervous about the project’s inability to be financially self-sufficient.
“Again, I have concerns the subsidy would have to come from somebody,” said Mark Gibson, president of Siskiyou Transportation, a trucking and helicopter company.
Currently, Oregon’s agricultural exporters must pay to truck straw, hay and other farm products to ports along Washington’s Puget Sound, where they’re loaded onto ships bound for Asia.
Their other option is to have the containers trucked to Northwest Container Services in Portland, where they’re loaded onto railcars bound for ports in Seattle and Tacoma.
In 2017, state lawmakers approved $25 million on an intermodal facility in the mid-Willamette Valley, thereby avoiding traffic in the Portland area.
Competing proposals for building the facility in Brooks and about 25 miles to the south in Millersburg were submitted to ODOT last September. The proposals underwent analysis by a third-party reviewer and the review committee before the state transportation commission makes a final decision in March.
Shipping via rail becomes cheaper than trucking for routes longer than 500 miles, but the Millersburg and Brooks locations are both less than 250 miles from Puget Sound ports, the Tioga report found.
“Neither can be competitive with trucks or other operations while recovering their full costs,” according to the Tioga Group.
Both sites are “technically and operationally feasible” if they can reach agreements with railroad companies, the report said, but it’s likely they’d need ocean carriers to subsidize their operations by absorbing the expense of relocating empty containers to either facility.
The prospect of relying on the generosity of ocean carriers was troubling to committee members, who noted that the shipping industry has undergone turmoil and consolidation in recent years.
“They don’t have a lot of deep pockets right now,” said Mark Nickerson, freight rail coordinator with the Washington State Department of Transportation. “They’re doing better than they were, but they’re still struggling.”
The availability of empty containers is a significant issue for either intermodal facility, as far more goods are exported from the Willamette Valley than are imported.
The Union Pacific Railroad already provides subsidies to the Northwest Container Services intermodal yard in Portland, but it’s re-evaluating its operations to improve profits and is expected layoff people and eliminate some business lines, the report said.
For the mid-Willamette intermodal facility to be successful, it must offer lower prices than trucking companies, according to Tioga Group.
“It is not usually sufficient for rail intermodal options to meet truck costs,” the report said. “Intermodal service is usually slower, less convenient, and less flexible than truck service, and is often less reliable, and must therefore be priced below the truck alternative to be fully competitive.”
While the review determined there’s “not a clear net advantage to either location,” the Tioga Group ultimately recommended the Millersburg site for grant funding because Northwest Container Services, which has experience in intermodal operations, would run the facility.
However, the report said ODOT should make funding contingent on the Millersburg project securing agreements with the railroads and ocean carriers to ensure the service is financially competitive.
If the Millersburg location reaches a “dead end,” the Brooks site then can serve as a “feasible alternative,” the report said.
Members of the final review committee praised the effort and “vision” that had been invested in the Brooks proposal. However, the committee ultimately determined the location was less attractive because it’s closer to Portland, where intermodal facilities owned by Northwest Container Services and the Port of Portland already exist.
“It’s definitely a positive having it further down in the Willamette Valley,” said James Ballet, the retired owner of a heavy machinery rental company.
Even so, the committee decided that funding for the Millersburg site should depend on the state government having a better understanding of the necessary subsidies and a commitment from ocean carriers to cooperate.
The recommendation for grant funding should be seen as a “yellow light” for the Millersburg project rather than a “green light,” said Deena Platman, director of client services for the International Trade Systems freight management company.
“I don’t know if I’d go further with the project if we don’t have a clear understanding,” she said.