SOUTH BEND — Economic development officials hope a new rail service linking Indianapolis to West Coast ports in Canada will save central Indiana businesses time and money by bypassing a bottleneck in Chicago rail yards and help transform the capital into more of a distribution hub.
The Indiana Rail Road Co. will partner with Canadian National Railway to provide intermodal service for imports and exports between the British Columbia ports of Vancouver and Prince Rupert and Indianapolis starting July 1.
"This will help all businesses in central Indiana because we now have a direct rail option," said Chip Edgington, vice president of operations at OSP Group, which sells women's apparel, men's and home products dedicated to plus sizes.
Conexus Indiana, a not-for-profit organization that works to boost the state's manufacturing and logistics industries, has been working for six years to try to find a way for Indiana businesses to ship via rail while avoiding the congestion in Chicago, said David Holt, the organization's vice president of operations and business development.
"It's a big traffic jam for rail in Chicago," Holt said.
Companies frequently have to pay detention charges while goods sit in rail cars a day or two waiting to be unloaded, Holt said. Then they have to pay get the goods to Indianapolis, and that is frequently done by truck, which is more costly than train and more susceptible to weather delays, he said.
Holt said Conexus began thinking about trying to make Indianapolis an intermodal hub after seeing Columbus, Ohio, create one from the East Coast with Norfolk Southern about seven years ago. The challenge, though, was finding a railroad to work with.
Conexus found an answer when Indiana Rail Road Co., a regional 500-mile railroad that serves central and southwest Indiana and central Illinois, and Canadian National agreed to work together.
The plan is to provide rail service between the Canadian ports and Indianapolis three times a week. CN, which in 2009 bought the Elgin, Joliet & Eastern Railway Co. that encircles Chicago, will move the cargo from the Canadian coast to Newton, Ill., about 50 miles southwest of Terre Haute. That's where crews from Indiana Rail and CN will meet and swap loads, with CN bringing exports from Indiana to the Canadian ports.
The cost savings vary depending on what is being shipped and delays along the way. Those involved say the most important factor might be the time savings. Shipping time between Vancouver and Asia is a day or two faster than shipping from Long Beach, Calif., and the Canadian ports have less traffic, they said.
"Since they can move it quicker, they're not going to have to stock up as much as they do waiting for the next shipment to come on in again, so they're going to save big money in terms of safety stock," said Rick LaGore, executive vice president and chief operating officer of Integrated Distribution Services, a logistics company based in Plainfield.
He said having the rail service from the West Coast makes Indianapolis more competitive as an inland port.
Bob Zier, director of multimodal planning and programs for the Indiana Department of Transportation, said the new rail service could have some side benefits, such as easing highway congestion because it should mean fewer trucks traveling between Chicago and Indianapolis.
Indiana Rail Road has been expanding its Senate Avenue terminal in downtown Indianapolis to prepare for the increased traffic.
"The focus is on mainly central Indiana, but we are talking to companies in eastern Indiana, some north of Indianapolis that are interested in using our service," said Eric Powell, Indiana Rail Road manager for intermodal and economic development.
The number of trains could expand if the service is successful, Powell said.
"We have to gauge customer reaction. It's one thing for a lot of customers to say, 'Hey, we want this service.' It's another thing for them to follow up and actually use it," he said. "Ideally, we'd like to be running a train every day into Indianapolis."
Zier said he thinks other Indiana cities might try to emulate what Indianapolis is doing.
Keith Reardon, CN's vice president for intermodal, said the railway isn't actively looking for places where it can expand intermodal service but is willing to work with groups seeking service. CN opened an intermodal facility in Chippewa Falls, Wis., about 10 miles north of Eau Claire, in February 2012 and in June plans to open an intermodal ramp at its freight yard in Joliet, southwest of Chicago.
"It's definitely feasible for other places," Reardon said. "It's all about what property or what city we're trying to provide service to and then figuring out the best package to put in place to service them."