Rail Yard Aerial View

The Chicago Challenge – Part 1, by Bert Ruden


In any discussion of automobile distribution facilities, it’s worth taking a look at the facilities in the three largest U. S. metropolitan areas.

The New York metropolitan area is still the nation’s largest, with a 2017 population estimate of 20.7 million people. The region has three rail-served, inbound auto facilities: Doremus I, Doremus II, and Ridgefield Heights, with a total capacity of 11,200 vehicles. Both of the big eastern railroads, CSX Transportation and Norfolk Southern, have full access to both of these auto facilities. This is an unusual arrangement. Most inbound destination automotive terminals are owned and served by just a single railroad.

In addition to these facilities, there are ocean terminals at Port Newark, NJ and North Bergen, NJ, which handle vehicles from Europe, Asia, and Mexico. These imported vehicles go to the New York market, as well as moving to destinations further inland by both truck and rail.

The New York metropolitan region is also supported by other auto facilities. There are two facilities in the Albany, NY area, 140 miles north of New York City. Twin Oaks, PA is about 100 miles south. East Brookfield, MA is about 170 miles northeast. There are import vehicle ocean terminals at Davisville, RI; Wilmington, DE; and Baltimore, MD; the first two of which can also handle domestically-built vehicles moving for delivery to regional markets.

The Los Angeles metropolitan area is the nation’s second largest metropolitan area, with a 2017 population estimate of 13.4 million people. The region has two rail-served, inbound auto facilities: Mira Loma on the Union Pacific, and San Bernardino on the Burlington Northern Santa Fe. Mira Loma is a huge facility, with a capacity of more than 15,000 vehicles. San Bernardino has a capacity of more than 5,500 vehicles.

The Los Angeles metropolitan area also has several automotive ocean terminals that handle inbound vehicles from Europe, Asia, and Mexico. Among these are the Port of Long Beach, the Port of Los Angeles, and Port Hueneme. Like their eastern counterparts, these ports supply vehicles to the local market in addition to supplying destinations further inland by both truck and rail.

The Los Angeles metropolitan region is also supported by the National City, CA auto facility on the Burlington Northern Santa Fe, and the Port of San Diego ocean automotive facility, which are both located about 125 miles south of Los Angeles.

The Chicago metropolitan area is the nation’s third largest metropolitan area, with a 2017 population estimate of 9.5 million people. From a transportation perspective, and a finished vehicle transportation perspective, Chicago has some unique features that the two larger metropolitan areas do not share.

First, Chicago remains the nation’s “railroad capital.” The four largest U. S. railroads (Burlington Northern Santa Fe, CSX Transportation, Norfolk Southern, and Union Pacific) and the two large Canadian based railroads (Canadian National and Canadian Pacific) all serve Chicago and interchange freight there. This is the only location in the U. S. where these six biggest players in the North American railroad industry come together.

Second, not all of the railroads serving the Chicago area have automotive facilities. Union Pacific has two: Chicago Heights in the southern suburbs and West Chicago in the western suburbs, with a combined capacity slightly more than 6,400 vehicles. Burlington Northern Santa Fe has an automotive facility in its enormous Logistics Park Chicago facility in the far southern exurbs, with a capacity of 8,500 vehicles. Canadian National has a small automotive facility shoehorned into its intermodal facility in south suburban Markham. Canadian Pacific and CSX Transportation do not have automotive facilities. Norfolk Southern’s position is a bit complicated, as we will see.

Third, unlike the two bigger metropolitan areas, the Chicago metropolitan area has automotive assembly plants. There are two: FCA’s Belvidere Assembly Plant in Belvidere, IL, and Ford’s Chicago Assembly Plant in Hegewisch, IL. Belvidere, which is rail served by the Union Pacific, is a closed facility. FCA can bring its own vehicles in if it chooses, but the facility is not open for vehicle shipments for other manufacturers.

The Norfolk Southern facility at Hegewisch is open for inbound shipments from manufacturers other than Ford. However, Hegewisch has a capacity greater than 5,500 vehicles. Hegewisch’s primary purpose is to support outbound rail shipment of vehicles from Ford’s Chicago Assembly Plant’s production, and Ford makes use of the facility for their own inbound vehicles coming to the Chicago area market from other Ford plants. So there’s not going to be much room for other manufacturers’ shipments of inbound vehicles.

The risk at locations where inbound vehicles shipments are competing for ground space with outbound vehicles shipping from a production facility comes from the needs of the production facility getting first preference. We end up in the frustrating situation of “starving in the midst of plenty,” where the railcars needed to load outbound vehicles are sitting at the facility loaded with inbound vehicles that can’t be unloaded because the facility is full of outbound vehicles. Having loaded railcars waiting at locations where they cannot be unloaded, sometimes for weeks at a time, while the number of vehicles waiting to load continues to increase at those same locations is not something that any of the involved parties wants to see. These situations do damage to the network as a whole. Resolving these situations often results in a lot of bad feelings all around because of the time and expense involved in the solutions. Here is an example of railcar shortages being a symptom of a network failure rather than a systemic problem. The railcars are at a location for a “zero empty mileage” reload. The railcars are loaded with vehicles, which is what every participant in the network wants them to be at every possible opportunity. The issue is a failure of means to keep all of the vehicles flowing to ensure the railcars keep moving loaded with vehicles.

One of the major eastern U. S. railroads has no automotive facility in Chicago, while the other has to be cautious with the amount of inbound traffic going into their facility. So automakers with production facilities or import locations in the eastern half of the U. S. can either truck vehicles to the Chicago market or pay for two line haul rail moves to access one of the western railroads’ facilities. While the U. S. automakers have closed plants in places like Norfolk, VA; Atlanta, GA; Baltimore, MD; and Newark, DE, the “transplants” have built plants in places like Marysville, OH; Spartanburg, SC; West Point, GA, and Chattanooga, TN. So this lack of rail options from the East remains an issue for the industry and the network.

The Chicago market doesn’t have the same sort of network support structure that the two larger markets have, either. Vehicles moving into the Chicago facilities by rail have a wide distribution area because there aren’t any supporting facilities close by. The closest automotive facility to Chicago is at the AM General assembly plant in Elkhart, IN, 110 miles away. This is a very small facility at the assembly plant that builds military vehicles, so it is not really capable of handling significant volumes of inbound traffic. The two closest open destination auto facilities to the east are CSX at Walbridge, OH, and NS at Fostoria, OH; 240 and 270 miles away from Chicago respectively.

To the north, the closest auto facilities are the three in the Minneapolis/Saint Paul area, 400 miles away.

This is about the same distance between Los Angeles and San Francisco. To the west, the closest auto facilities are a pair in Council Bluffs, IA/Omaha, NE, 460 miles away. To the south, there are a pair of auto facilities in the Saint Louis area, 300 miles away. Only one of these seven facilities is owned and operated by an eastern U. S. railroad; Norfolk Southern’s Wentzville, MO facility in the Saint Louis area.

Finished vehicles going to Chicago by rail are going to dealers throughout Chicagoland plus dealers in eastern and central Iowa; Southern and Central Wisconsin; Northern and Central Illinois; most of Indiana, and Western Michigan. As an added wrinkle, the bulk of the U. S. recreational vehicle industry can be found within a 200 mile radius of Chicago. In addition to the retail and fleet vehicle shipments that we can expect to see moving to a major metropolitan market, there are a lot of cab chassis and vans moving to Chicagoland destination facilities to be made into RVs and other specialized vehicles.

2018 saw embargoes on shipments into three of the five Chicago auto facilities: one short embargo on each of the two UP facilities and a longer embargo on the BNSF facility. Embargoes are the tool of last resort for the railroad industry when working through congestion issues. What else might be going on here? We’ll look at some of the other issues specific to the Chicago area next month.

Thanks for reading! Continue to Part 2 in the series to learn more

January 2019 | Bert Ruden