The Mohawk Valley and Freight Sprawl

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).

The old Beech-Nut plant is the giant white thing dominating this view of Canajoharie, in case you couldn’t tell.

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?

1. (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.
2. 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.
3. 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.
4. 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.
5. 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.
6. 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.

 

 

 

 

 

 

 

Freight Railroad Intransigence and Empire Corridor Options

The Albany Times-Union reported on Sunday that CSX, freight railroad owner of the old New York Central Water Level Route, had officially filed with the state Department of Transportation its opposition to the state’s proposed improvements to the Empire Corridor West passenger service.  This isn’t particularly surprising; CSX has long opposed the project and has for quite a while developed a corporate reputation for not being a fan of passenger rail sharing any of its infrastructure. That being said, the claims that CSX seems to have made in its letter of comment on the Empire Corridor EIS say a good bit about its corporate strategy, and potentially about the future of passenger rail in New York.

The Times-Union acquired a copy of CSX’ letter, but did not provide direct quotes in its article. Instead, it summarized the railroad’s objections thusly (caveat: not a full list):

CSX said additional passenger trains would only add to the congestion, causing delays and hindering access to freight customers on sidings along the main rail line.

Without adequate separation between the freight tracks and a newly constructed passenger track, high-speed trains also would pose increased danger to CSX track crews, it said.

CSX criticizes the methods used to compile the draft statement, pointing out that projected costs don’t include payments for use of CSX property, which it says is worth “billions.”

CSX also said the statement doesn’t consider other, more cost-effective, ways to improve passenger mobility from upstate cities such as Syracuse, Rochester and Buffalo that are along the route, including improved bus service and air service.

And it says the study should have considered the Albany-New York City and Albany-Niagara Falls segments as two different corridors, allowing policy makers to proceed with improvements on the first and choosing the “no-build” alternative for the second.

These objections are, not to use too fine a word, bullshit. And I think CSX knows that, and the state DOT knows that, and anyone following the situation carefully should know it too. I’ll provide a brief fisking here:

–The recently (ok, a few months ago) released DEIS explicitly only covers the portion of the line west of Albany; that’s the whole point of calling it the Empire Corridor West study.

–The entire project is predicated on the separation of passenger trains from freight on an entirely new track, thus getting them out of each others’ hair.

–Railfan forums (yes, they can be a good source of information; career railroaders know a lot), in particular this one, have long studied CSX’ claim that only three tracks will fit where four used to be and two exist today. CSX’ logic is that the distance between track centers now needs to be 30 feet, where 15 sufficed historically. The consensus is that CSX’ insistence on 30′ track centers is completely unnecessary.

–The DEIS makes very clear (page 1-6, for those who are interested) that the cost numbers it calculates do not include buying the right-of-way from CSX and otherwise compensating the railroad for inconvenience; that will occur at Tier 2 of the EIS process.

–The EIS itself makes very clear, and to its credit the Times Union includes in its article, that NYC-Upstate, much less intra-Upstate bus and especially air services are in no way competitive with better train service. Buses don’t get people out of cars, and air service is unprofitable in those corridors and prohibitively expensive for most travelers in any case.

–CSX’ claim about the fragility of capacity of the Mohawk Subdivision, its designation for the line across Upstate New York, is very, very suspect. A 2012 CSX network planning document makes clear that the Mohawk Sub is currently under-capacity (in contrast to, among other routes, the freight-only, single-track West Shore Line):

Meanwhile, the 2009 NYS rail plan also shows the Mohawk Sub below capacity, and envisions it only beginning to approach capacity in 2035, despite predicted increases in traffic. CSX claims that increased traffic from the Panama Canal widening is likely to move across the Mohawk; most observers think that container traffic to the Midwest will continue to move via West Coast ports, with increased traffic to East Coast ports being confined to the coastal area. Certainly, Amtrak trains are disruptive to CSX’ 50-60 freights a day on the Mohawk; but they are clearly not having any significant impact on the line’s reliability. Indeed, despite federal rules mandating that Amtrak trains be given priority, the 47% (!!!!) on-time performance of Empire Corridor trains west of Albany indicates that they’re not exactly the top priority of Mohawk Sub dispatchers.

So if CSX’ objections to New York’s plan are mostly bull, and can be dealt with easily if they’re not, what’s going on? Why bother to object to a project that is potentially lucrative (if the state pays the billions that CSX claims half the ROW is worth) and would significantly improve the railroad’s image at a time when well-publicized gas train explosions are proving to be a massive PR problem for the industry?

There are, in my opinion, at least two separate dynamics in the CSX-NYS impasse, both of them essentially political in nature. First is CSX’ strategy for dealing with its busy, but expensive and competitive (between freight and passenger traffic) legacy lines in the Northeast. For years, CSX has gotten cash from the Massachusetts state government for improvements to its ex-Boston & Albany line over the Berkshires, while at the same time intentionally not agreeing to capacity improvements that would have allowed the MBTA to run more commuter trains between Boston and Worcester; when business east of Worcester proved less profitable than trucking most goods into Boston from an intermodal terminal in Worcester,  CSX sold the Boston-Worcester segment of the line to the Commonwealth. Meanwhile in New York, CSX and the state long maintained a cost-sharing arrangement for the upper portion of the Hudson Line, the Empire Service’s southern leg; as soon as the (always limited) freight demand on that line dipped, and the state proved willing to pony up, CSX leased the line to Amtrak. The strategy is clear, and quite smart: CSX milk public funds made available to its infrastructure for all they are worth, while intentionally not making capacity improvements that would allow more robust passenger service; as soon as the states tire of the situation and prove willing to pay up, the railroad is suddenly willing to sell.

The second dynamic has to do with the Andrew Cuomo administration’s lukewarm relationship with transit. As Alon Levy has written, it’s pretty clear that the Cuomo administration sandbagged proposals for a “true” Empire Corridor high-speed rail system by arguing that government can’t build infrastructure projects during a recession and publicizing inflated cost numbers.  The numbers the DEIS includes for the Empire West improvements are likely inflated too ($6 billion for a few hundred miles of third track on an existing ROW?), and the administration’s indifferent attitude towards the project–and any other kind of transit, really–has come across pretty clearly.

Cuomo values his image as a business-friendly, tax-cutting centrist governor, clearly believing that it separates him from other Democrats in the national field (we can, of course, argue about whether this is true, or whether it’s working for him in his own state). As Alon wrote in the first post linked to above, “Although Andrew Cuomo likes flashy public works projects, of which HSR is one, he is consistently pro-road and anti-rail.” This isn’t, I think, a particularly ideological stand (though it might have something to do with Cuomo’s well-know affection for vintage cars); rather, it’s a product of Cuomo’s desire to appeal electorally to white, wealthy suburban voters (=drivers) in a state where Democrats have long, and for good reason, been identified with New York and other cities. Nowhere has that come across more clearly than in his administration’s transportation and infrastructure priorities. Though the transit-advocate furor over the administration’s raid of the MTA budget for Verrazano Narrows Bridge toll relief was probably overstated given the relatively small amount of money involved, the raid was a clear indicator of an administration that cares more about attracting swing Staten Island votes than rewarding its loyal soldiers in the other boroughs, who are going to vote for the Democrat anyhow (especially after the combustion of the potential Working Families Party challenge to Cuomo). Similarly, Cuomo’s hugely expensive, unnecessary, and controversial (seriously? Clean water money for a car bridge?) new Tappan Zee bridge is clearly a sop to suburban populations in Rockland and Westchester counties.

So…I’ve been rambling. What do CSX’ intelligent strategy for maximizing profit from its legacy Northeastern holdings and Andrew Cuomo’s antipathy to transit have to do with each other, and with Empire Corridor West? I believe that CSX corporate management is watching the Cuomo administration very carefully, and is very much aware of its reluctance to invest serious money in transit. So CSX is going to, quite logically, play a waiting game. Their interest is in getting a massive payoff from New York State for the right to reclaim half of the Water Level Route ROW for passenger rail. With the Cuomo administration unlikely to want to invest the kind of money such a deal would take, their will almost certainly be no political ramifications in the short term for CSX’ intransigence. CSX is gambling that, in the medium run, if the next gubernatorial administration finds the Empire Corridor West situation unacceptable (and I certainly don’t see passenger OTP improving under current conditions), it will be willing to pay the company a massive amount of money.

If there’s one good for passenger rail that could come out of CSX’ reluctance to cooperate with the Empire Corridor West project, it’s that it might allow–or even force–future administrations to revisit the idea of true HSR in the Empire Corridor. Improved regional service in the corridor is better than nothing, but Upstate New York desperately needs an economic game changer, and nothing can match HSR for that potential. If CSX is truly unwilling to deal–or if, as I suspect, the price of a deal is just going to be incredibly high–studying HSR (at realistic prices, not the Cuomo administration’s inflated ones) may again become an attractive option.

In the meantime, it’s not like New York State has no leverage in the situation. CSX has long essentially held a monopoly on rail freight traffic into New England, a status enabled in recent years by Massachusetts’ investment in allowing modern freight car clearances and weights on the Berkshire Line. In recent years, though, the other titan of Eastern railroading, Norfolk Southern, has begun to challenge CSX’ chokehold on the region. Using traffic rights over the Delaware & Hudson’s longtime bridge route from Binghamton to the Capital Region, and an alliance with New England regional Pan Am east of there, NS has gradually built up a modern infrastructure for its traffic in the market. NS/Pan Am Southern is not yet capable of challenging CSX; in particular, the eastern part of the allied route, east of Mechanicville, would require significant investment to bring up to modern double-stack clearance/315,000 lb freight car weight standards. Norfolk Southern is beginning to pour in some of the necessary on its own, but if the state threatened to ally with Massachusetts to fully prepare the NS/Pan Am route for competition with the Berkshire Line, one imagines that CSX might find it shares more interests with the state than it thought. Just don’t count on any of those things happening.