A new bulletin from my old haunts in Upstate New York got me thinking about how the overlapping dysfunctions in several relatively obscure subfields of public policy and planning combine to produce overall outcomes that are far from optimal.
Earlier this month, Union Pacific announced that it was shutting down its Cold Connect service, which moved refrigerated produce from California and Washington to a massive, and recently constructed, warehouse in Rotterdam, NY, next to Schenectady on CSX’ former New York Central Water Level Route. UP’s statement on the closure claimed that
Since acquiring the Railex assets in 2017, employees diligently worked to grow volumes and create a platform for the future; however, with COVID-19 impacting volume and truck prices, it is no longer sustainable to continue operations.
It’s worth unpacking this statement a little. First, it links the closure to COVID-19, but also blames trucking prices, the artificially low nature of which are a long-term annoyance to railroaders, planners, and sustainability advocates. The idea that COVID-19 would affect volume is perhaps a little strange; unless a significant chunk of the Cold Connect volume was moving to restaurants (plausible, I suppose, but seems unlikely to me) demand is likely higher now than it was in the Before Times, and if anything the supply chain is showing stresses from too much demand, not too little. Finally, the statement says that the operation is “no longer sustainable,” not specifically that it was actually losing money. This hair-splitting is, as frequent freight rail interlocutor @A320Lga theorized on Twitter, characteristic of the current Class 1 freight railroad fad of “Precision Scheduled Railroading,” an operating and business philosophy popularized by the late Illinois Central/Canadian National/Canadian Pacific/CSX CEO Hunter Harrison, which sometimes seeks to drive away not just unprofitable volume but sometimes even less profitable volume so as to add to shareholder value.
So what does the elimination of one conceptually significant, but relatively small freight rail operation have to do with broader trends in American freight and logistics planning? First, as I’ve already noted, UP’s stated reasons for the elimination of Cold Connect refer back to issues of public policy, such as the hidden subsidies to trucking and the incompetent response to COVID-19. Second, the loss of 160+ jobs in Rotterdam is nothing to blink at; though it’s part of the broader pandemic depression, it’s also another blow to a depressed town in a depressed ex-industrial region that in my opinion qualifies as one of the easternmost outposts of the Rust Belt (Connecticut’s Naugatuck Valley and Bridgeport are also Rust Belt, but nothing further east. Fight me.). Third, it’s environmentally damaging–it’s a much-studied article of faith among those in the know that rail is usually the cleanest way to move goods a long distance overland. Finally, one only needs look a little down the road to see how poor public policy and planning frameworks are reinforcing the very pathologies that led to the elimination of Cold Connect.
A little to the west of Rotterdam along the Mohawk River (and I-90, and the Water Level Route, and the Erie Canal…gotta squeeze a lot of transportation infrastructure into a relatively narrow passage), a new warehousing and logistics cluster is growing in the ex-industrial areas of Montgomery and Fulton Counties. Or rather, a couple of different clusters are growing in different places. While this new growth surely represents economic hope in an area that’s been bereft of it for so long that the lack of hope has been featured in the novels of Richard Russo (himself born in Johnstown and raised in Gloversville), it is…not exactly following the practices a progressive planner would recommend for long-term sustainability.
Let’s start with the cluster just southwest of Johnstown, along the Cayadutta Creek. From the air, it looks impressive, home to a giant Walmart distribution center, along with the yogurt producer FAGE, delivery company DHL, and paint manufacturer Benjamin Moore. No longer home to a glovemaking industry or a gelatin plant, perhaps Johnstown is at least benefiting from the relatively low-wage jobs provided by the logistics cluster.
Let’s take a closer look with a different mapping interface, OpenRailwayMap.
Hmmm…it turns out that the cluster is placed just north of the Montgomery-Fulton county line, conveniently giving all of the tax revenue to one county. The cluster is also entirely road-dependent, despite being located only a few miles from a busy freight rail line; indeed, the Walmart warehouse taunts us through its placement directly on top of the abandoned right-of-way of the Fonda, Johnstown, and Gloversville Railroad (the dashed brown line in the above image). Indeed, these two things are related. This cluster leverages a location relatively close to I-90, but just far enough away from the Mohawk that it can’t be easily served by rail (although restoring the FJ&G wouldn’t be too difficult), while conveniently sticking Montgomery County or NYSDOT with the tab for maintaining the roads between the freeway and the warehouses, and minimizing Fulton’s own tab. Finally, as with any major commercial development in Upstate New York, the Walmart warehouse alone sucked up $1.9 million in subsidies. Rivalries between governmental entities and the hidden subsidies to the trucking industry combine to produce a really dysfunctional outcome.
Across the Mohawk, a few miles south and a little east of Johnstown in Montgomery County, we come to the rural town of Florida, New York (not to be confused with the Village of Florida, New York, in Orange County; Google Maps can’t tell the difference), next to but significantly not part of the post-industrial city of Amsterdam.
Here, a huge Target distribution center is joined by a number of smaller businesses as well as a massive Dollar General warehouse (the building shown under construction in the satellite imagery) and potentially soon Amazon.
Perhaps most notably to locals, this area also hosts the baby food company Beech-Nut, a longtime Mohawk Valley fixture that in 2010 moved 20 miles to this site after 118 years in the small village of Canajoharie. This piece from Syracuse.com does a good job laying out all of the fraught emotions and complications involved in that move; while it allowed Beech-Nut to remain in Upstate, and the company has continued its relationship with local suppliers, it involved abandoning a plant that had once been served directly by rail and water, not to mention ripping the economic and civic heart out of the Village of Canajoharie (but them’s the breaks when you’re a single-industry town).
And the site Beech-Nut moved is entirely truck-dependent. As the crow flies, the Florida cluster is a little over a mile from the Water Level Route and even closer to the abandoned West Shore rail ROW on the south bank of the Mohawk, but it has zero rail (or, for that, matter, water–the Erie Canal can still carry freight!) access. The new Beech-Nut plant, built at a cost of $124 million, benefited from “$104.5 million in state and local incentives, grants and tax breaks.” Public entities have also invested millions in cleaning up the old Canajoharie site (asbestos problems…OK, maybe not the best building to be making baby food in) in hopes of making it usable for a new investor.
So what we observe here are the faint rumblings of a new economy for a disinvested area, but it’s an economy that’s heavily underpinned by public subsidies both obvious (the ones that come from economic development agencies) and hidden (the reliance of the logistics industry on trucking). In addition, the “organizing” principle is not planning of any kind, but a twisted form of Tiebout competition where governmental entities compete in an entirely predictable race to the bottom to offer the most subsidies. New York State competes against other states, but plays an unpredictable role at the local level; counties compete against each other; within the counties, rural towns try to ensure that post-industrial cities will not see jobs return by grabbing new economic activity for themselves. And of course, it is all underpinned by subsidies to the trucking industry that are mostly determined at the federal level. And government in these areas-at all levels–is so desperate to attract economic activity that they can’t or won’t even use the high level of subsidy to demand basic long-term planning principles locating freight and logistics sites near rail whenever possible.
So what are the principles that a more sustainable (in all respects) planning and economic development regime should use when approaching the freight and logistics industry?
- (and this should be no surprise) The trucking industry should be charged the full social cost of its activities, with a goal of creating mode shift. This single policy change would have huge downstream effects, catalyzing change throughout the industry.
- If government insists on giving away subsidy packages (which it shouldn’t, but probably will) subsidies should be integrated with transportation and land-use planning to prevent truck-dependent logistics sprawl. The Center for Neighborhood Technology’s Cargo-Oriented Development, or COD, is a useful framework.
- Brownfields redevelopment and economic development programs are popular, albeit underfunded; one explicit goal should be to modernize old factory buildings and prevent companies from moving to greenfield locations, if possible. I’m sure there are people out there who know more about this than I do, but the current preference for massive, flat, single-level greenfield sites seems less like a physical necessity and more like a lack of creativity and imagination.
- A truly radical idea by the standards of Upstate NY and probably most of the country: freight and logistics is a regional-scale industry, and tax revenue from regional-scale logistics facilities should flow directly to the state or regional level, rather than flooding municipal or county coffers. Eliminating the twisted form of Tiebout competition that now characterizes logistics planning would almost certainly help to restore the importance and economic sense of place in the industry.
- Stop giving away useful rail rights of way for trails. Both the West Shore Railroad, a one-time New York Central competitor that ran along the south side of the Mohawk, and the Fonda, Johnstown, and Gloversville both play significant roles in this post. Large parts of both are now trails, and likely inaccessible for freight usage. There are places where rail trails are good, but the right of way should always be under public ownership, and the bar to opposing return to rail service through legal action should be extremely high.
- Find some incentive for Class I railroads to care about efficient delivery and participate in the modern logistics economy. As the example of UP’s treatment of Cold Express shows, this may be the second-most-important element, after getting trucking pricing right. Precision Scheduled Railroading has introduced America’s largest railroads to the concept of scheduling trains and running them relatively fast, but it has also driven away still-profitable traffic and alienated the railroads from a customer base that already thinks them arrogant and selfish. The public sector needs to find a way to push the railroads to think about running faster, shorter trains, along the European model, to make it possible for them to participate in the just-in-time logistics economy. Road pricing reform can be part of that push, as can strong public policy locating freight-heavy industries near rail. But it’s likely that some rail-specific push will be needed as well.
Let’s end on a happier note. Just another few miles down the road, in Guilderland, the Northeastern Industrial Park occupies a former Army depot that is exceptionally well-served by rail but also flat and open, reflecting its construction in 1941 at a time when the country was still rail-dependent.
The park is switched by SMS Rail Services, which interchanges with CSX on its adjacent mainline and uses the former Delaware & Hudson passenger line to Albany to link the park to a second Class I connection, Norfolk Southern at Delanson (yes, the name of the hamlet is a contraction of the name of the railroad that founded it). This industrial park–which looks like neither the ancient, tall, asbestos-laden building formerly occupied by Beech-Nut in Canajoharie nor the modern logistics sprawl of the Johnstown and Florida clusters–may be a “back to the future” moment for freight and logistics planning.