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.

 

 

 

 

 

 

 

Upstate Must Earn “Parity”

New York State governor Andrew Cuomo and New York City mayor Bill de Blasio have finally come to agreement on the scope (though not every detail of funding for) the 2015-2019 MTA capital program. So, naturally, Upstate politicians are again beating the drum of “parity,” demanding an equal amount of capital spending on transportation infrastructure (mainly, of course, roads) Upstate. There’s only one problem.

Upstate doesn’t deserve the funding. Yet.

“Parity” is a problematic concept when it comes to New York State infrastructure spending in any case, implying as it does that the needs of the New York City region and Upstate are somehow equivalent. They’re not. The MTA estimates that its service area contains 15.2 million people; even if we subtract 1.8 million people to account for the inclusion of Fairfield and New Haven counties in Connecticut, that’s still approximately 69% of the entire state’s population. New York City alone accounts for between 8 and 9 million of those people. Logically given that population density, NYC’s rapid growth, and the region’s economic success, Downstate taxes heavily underpin state activities Upstate. A world of real parity would reduce that spending, something that few Upstate politicians (or voters) seem to understand. As such, as Cap’n Transit pointed out a few years ago, requests for “parity” are really a demand for various politicians to be able to steer state funds to pet areas, modes, projects, and (this being New York, after all) people.

But the reality of the financial landscape of New York State isn’t the only reason leadership should resist Upstate demands for help with infrastructure funding. Upstate’s been hit hard by economic restructuring in the last couple of decades, and I’m certainly OK with some level of subsidy being extracted from Downstate to pay for ongoing revitalization efforts here. But as an Upstate resident (albeit a recent arrival), I’ve come to appreciate another reason Upstate doesn’t deserve transportation infrastructure spending parity: its inability to control sprawl and create an efficient framework for provision of public services, even as the region’s population shrinks.

It’s not news that by and large Upstate continues to shrink even as NYC and its region grows. That shrinkage is, of course, in and of itself a reason that Upstate shouldn’t receive large amounts of capital funding; it should be focusing on maintaining existing infrastructure, not building new things. What people from Downstate and elsewhere don’t appreciate as much sometimes, I think, is the extent to which Upstate continues to sprawl even as its population declines.

That’s the subject of one of Aaron Renn’s most striking posts (from 2011, well before I knew I was moving Upstate), as well as a 2003 Brookings report titled “Sprawl Without Growth: the Upstate Paradox.”  Though a few Upstate areas, including the Capital District, are growing (even if typically at anemic rates), even in those regions sprawl has outpaced the rate of growth. The Capital District’s pattern is typical. As the local MPO, CDTC, laid out in their new regional transportation plan draft, despite slow growth the region has basically merged into one “urbanized” (really, suburbanized) area stretching from Albany’s southern suburbs all the way to Glens Falls and Lake George.

CDTC New Visions 2040

No one has done better work showing the costs of this kind of development than Charles Marohn and the team at Strong Towns. Their series on the “Growth Ponzi Scheme”  lays out the ways in which sprawl–especially in declining or economically weak areas–becomes a millstone around the necks of local government, demanding ever-greater maintenance spending, as well as facilitating a mindset that thinks the solution is yet more capital spending regardless of economic realities. That describes the broken cycle in Upstate pretty damn well.

“But Sandy,” you say! “We can’t just leave Upstate to suffer a slow economic death, strangled by the decline of American manufacturing and the forces of globalization.” And I agree! There’s absolutely a place for capital spending on infrastructure Upstate; I even wish the state were a little more aggressive about it. But the money must be spent in the right places and in the right ways. That means fundamentally changing the realities of planning and development Upstate to conserve sparse governmental resources and allow efficient ongoing spending into the future. It means curbing sprawl, which sucks dollars out to the perimeter and demands an ever-growing amount of spending, and reinvesting in cities , whose infrastructure already exists. It means an end to resource-agnostic demands for spending billions on objectively wasteful projects like the “Rooftop Highway” in the North Country or tunneling I-81 in Syracuse (a consideration that DOT officials had rejected as absurd, but added back into the alternatives process at the insistence of local stakeholders).

And more than anything, Upstate needs to earn infrastructure investment by articulating a positive vision for fiscally responsible growth (or decline, as it may be) that upends the currently dominant “way we’ve always done it” mentality and begins a movement toward adapting to the new shape of the American economy. That means dropping the territorialism and learning to work with major global concentrations of intellectual and financial capital like New York City and Toronto, to which Upstate just so happens to be adjacent. If (as) housing prices in those markets continue to skyrocket, Upstate stands a good chance of skimming off some overflow–but only if attitudes and development patterns change.

Of course, part of the problem Upstate faces is its geographic isolation. And that’s where I’ll live up to the obligation I’m placing on Upstate to articulate a positive vision for a new framework for transportation and development. What’s the “parity” I envision for Upstate, given the state’s investment in the MTA? How about building out true high-speed rail (HSR) along what’s now called the Empire Corridor, from Albany to Buffalo? Alon took a close look at NYC-Toronto HSR a while back, and has taken the Cuomo administration to task for its lack of interest in the project. For the record, I concur in the judgment that the current administration has probably chosen to sandbag proposals for real HSR in the corridor, and that the “alternatives” analyzed are somewhat absurd.

Current politics aside, the demand for parity and an HSR project actually fit together fairly well. The overall investment in the current MTA capital program is about $29 billion, all but $3.2 billion of which will come from the state and the MTA’s own funds (which are, as much as Cuomo’s people like to deny it, state funds). Even at the inflated prices sometimes quoted for the California HSR project, that’s either just about enough or almost enough to build a full-scale HSR line from Albany to Buffalo, plus upgrading the existing Hudson line for faster, electrified trains. (though it will never be a true HSR line because all those curves that make it so pretty) A few billion more–most of which would be paid by Ontario–would bring the line to Toronto.

Imagine Buffalo, and Syracuse, and Rochester being 2-3 hours from NYC by train. Right now, there are a few unreliable trains per day, plus buses. Air service is massively expensive and spotty. HSR would give people and firms in those cities quick access to the red-hot markets in NYC and Toronto, and likely even bring some transplants looking for a slower pace of life and more affordability back. That would be a positive vision, one worth spending “parity” money on. Let’s change how things work up here. Then we’ll deserve that parity.