Kansas City: Freight Power House on the Prairie
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
TRANSPORTATION
Kansas City: Freight Power
House on the Prairie
Our region’s status as a freight hub drives jobs and fuels our economy
STORY BY JULIUS KARASH | PHOTOS BY GARY ROHMAN
Kansas City surged ahead of its neighbors when the first span across the Missouri River, the Hannibal Bridge, opened here in 1869.
The 40,000 people who turned out to celebrate the bridge opening knew something big was going on. Indeed, the transportation link
established by the Hannibal Bridge enabled Kansas City to grow into a cattle trade mecca and a major city, while nearby burgs were
issued one-way tickets to small-town status. Today, a powerful web of transportation infrastructure continues to drive Kansas City’s
engine. Depending on how you measure it, Kansas City is either the biggest or second biggest rail freight hub in the country, and the
interstate highways that crisscross the region make it a major trucking hub.
GROWING UP or not,” Kuehl says. “It includes any of the industries that depend
Grain and other commodities converge in Kansas City and move on transportation of parts. That’s the role that Kansas City has
out again. So do manufactured goods and parts for those goods. The always played.”
mix includes flowers, pharmaceuticals and virtually every other item “We’re in the catbird seat,” says George Blackwood, former
used in businesses and homes. Kansas City Council member and immediate past president of North
According to the 2009 KC Regional Freight Outlook report America’s SuperCorridor Coalition Inc. (NASCO), an organization
issued by KC SmartPort Inc. and the Mid-America Regional that advocates for transportation and trade. “We are precisely
Council, the 18-county Kansas City area handled an estimated positioned to have exponential economic growth by virtue of the
total of 291 million tons of freight in 2007, with an estimated transportation advantages we have.”
total value of $826 billion. An additional 650 million tons of Kansas City’s transportation infrastructure played a role in the
through-rail volume passed over the region’s rail network. Regional recent decision by UpWind Solutions Inc., an Oregon-based wind
rail and truck freight was projected to increase from 246 million asset management services firm, to open a $2.1 million distribution
tons in 2007 to 349 million tons in 2027, a 20-year compound center in Lenexa.
annual growth rate of 1.8 percent. “The decision by UpWind Solutions to locate its main distribution
Growth in any sector of our economy is much welcomed during center here is another excellent example of how KC provides the
these challenging times. And as we slowly emerge from this economic ability for an emerging industry such as wind energy to leverage one
downturn, freight activity is creating and sustaining thousands of jobs of our region’s legacy operational strengths, in this case transportation
at transportation companies, intermodal freight terminals, warehouse and logistics,” says Tim Cowden, senior vice president of business
and distribution centers, manufacturers and other industries. development for the Kansas City Area Development Council.
“If you look at the industry growth that’s happening in Kansas Cowden notes that UpWind’s expansion in the Kansas City
City, distribution/transportation is a significant pillar of growth in area “comes closely on the heels of another similar company, AH
this community,” says KC SmartPort President Chris Gutierrez. Industries, that determined earlier this year to not only locate its
“We are a transportation hub, and because of that we’re seeing parts staging operation, but also its North American headquarters
tremendous growth in that sector.” in the region.”
Chris Kuehl, managing director of Armada Corporate Intelligence Yet Kansas City’s prowess as a transportation hub can be a curse
in Kansas City, Kansas, says an estimated 20 to 25 percent of the as well as a blessing, says Kuehl, noting that transportation is
jobs in the Kansas City area are linked to transportation and supply frequently referred to as the “canary in the coal mine of the economy.
chain activities. The first industry to feel a decline is transportation,” he says.
“That includes warehouse work and supply chain coordination On the other hand, transportation is the first industry to recover
work, whether they’re actually working for a transportation company when the economy begins to rebound, Kuehl says.
36 KC BUSINESS | KCBCENTRAL.COM
Chris Gutierrez, president of KC SmartPort Inc. I N S I G H T, I N N O V A T I O N & I N S P I R A T I O N 37
RAILROAD TOWN STRONG TRANSPORTATION In an age when trends and technologies come and go quickly, railroads continue NETWORK SUPPORTS to make a major impact on Kansas City. GROWTH AT KC The Kansas City Southern Railway, which was founded here in 1887 by visionary MANUFACTURING FIRM entrepreneur Arthur Stilwell, employs about 600 people in the Kansas City area. The Kansas City area’s vibrant transportation Those employees work at the railroad’s downtown corporate headquarters, at a network frequently gets credit for supporting major rail yard near downtown and at an intermodal facility at the site of the the region’s strong manufacturing sector, former Richards-Gebaur Air Force Base in south Kansas City. which includes two major auto plants and Kansas City Southern’s north-south route system gives Kansas City manufacturers many smaller operations that dot the city’s direct access to key markets throughout the central and southeastern United States, industrial landscape. Mexico and the Pacific Rim. The freight it moves in and out of Kansas City primarily The link between transportation and consists of coal, grain and intermodal freight, or freight that is transferred from one manufacturing was cited once again in July, mode of transportation to another. when Milbank Manufacturing announced “A number of developments are underway pertaining to the maintenance that it was making a capital investment of and expansion of existing yard track infrastructure capacity,” says Kansas City $2.7 million to expand its Kansas City operations Southern spokeswoman C. Doniele Carlson. “All of these initiatives are designed and add 57 new jobs. to enable [Kansas City Southern] to more efficiently handle growing business Milbank, which started in 1927 as a maker volumes. [The company] will also continue to hire new employees to keep pace of high voltage switches, is now a leading with the growing business.” manufacturer of electrical meter sockets. In BNSF Railway employs more than 2,400 people in the Kansas City area, 2009, it entered the renewable energy market including approximately 800 at its “hump” classification yard in the Argentine with its PowerGen products for use in the neighborhood of Kansas City, Kansas. Trains come in from points such as Seattle, wind turbine industry. Los Angeles and the Gulf Coast. Once they arrive, train cars are separated and The company, which ships and receives regrouped to form new trains that will head out to their final destinations. goods by truck, is located in an industrial area Seven miles long and crossed by 90 tracks, the BNSF yard processes more than of northeast Kansas City near major highways. 1,800 rail cars a day, not including trains that merely pass through. The hump, a “Having a good highway transportation small hill with tracks running over it, uses gravity to position train cars in their system and having a good rail system in and designated positions. out of Kansas City is absolutely essential to “A lot of rail traffic comes from the west coast and goes through Kansas the economic growth and development of City on its way to Chicago,” says Greg Lawler, general manager of the BNSF our city,” says Lavon Winkler, president and Kansas Division. The cars are packed with coal, grain and all kinds of general CEO of Milbank. “Infrastructure is incredibly merchandise, everything from medicine cups to teddy bears, he says. important to us.” Some of the workers at the Argentine yard drive the locomotives that push the Missouri Gov. Jay Nixon visited Milbank to rail cars around. Others pull cars together to form outbound trains. Employees announce the expansion. from the mechanical division perform safety inspections on the cars while others “Being here in the center part of the country fuel the locomotives, monitor traffic flow and supervise. and being able to transport both parts as well Lawler says Kansas City’s rail hub availability promotes manufacturing in as product relatively cheaply, with fluctuating the metropolitan area, which in turn creates more work for railroads and their fuel prices, gives us a significant advantage employees. A significant number of BNSF employees are at or near retirement over many others that want to manufacture age, a demographic dynamic that is helping to fuel demand for new employees. and sell products,” Nixon says. “We have rail, “BNSF is aggressively hiring conductors, engineers and mechanical workers this air, [freight] and highways here and the rivers.” year,” Lawler says. “This is for projected growth and to fill attrition.” The 57 new jobs will boost the Milbank operation’s payroll to approximately 325. INTERMODAL CHUGS AHEAD “It’s a very good thing that we’re able to add On a sunny summer morning, Tom Riederer looks out at a sprawling field jobs,” says Ben Geveshausen, unit president of scraped-over dirt in Edgerton, a hot growth pocket of southwest Johnson of United Steelworkers Local #13-07 at Milbank. County. This is the site of the 550-acre KC Logistics Park, which is currently “It helps not only our members here, but being developed next to a 450-acre BNSF intermodal facility that’s in the also the Kansas City area.” early development stage. 38 KC BUSINESS | KCBCENTRAL.COM
Chris Kuehl, managing director of Armada Corporate Intelligence in Kansas City, Kansas
I N S I G H T, I N N O V A T I O N & I N S P I R A T I O N 39George Blackwood, former Kansas City Council member , past president of North America’s
SuperCorridor Coalition Inc.
40 KC BUSINESS | KCBCENTRAL.COMThe intermodal facility and logistics park are
expected to create 13,230 direct and spinoff KANSAS CITY FREIGHT BY THE NUMBERS
jobs (most of them non-railroad jobs at or near The Kansas City region is one of the nation’s leading rail hubs and handles a
the logistics park) by 2026, along with a $1.4 broad variety of rail freight. In 2007, the total estimated volume was 72.2 million
billion financial impact on Johnson County. short tons of rail freight with an estimated value of $100 billion. Using the Surface
“The potential for this being a real logistics Transportation Board Waybill Sample Database from 2006, the total estimated
hub is great,” says Riederer, president of through-rail volume was 653 million short tons, with coal accounting for 53 percent
the Southwest Johnson County Economic of through shipments.
Development Corp. “Over the next 20 years, U Rail freight is dominated by domestic inbound and outbound flows that have
it will change the face of this whole area.” the highest value per ton of the different rail flows. The domestic inbound and
The budding intermodal operation and domestic outbound flows (each with 47 percent of the tonnage) together account
the logistics park are part of a growing for 98 percent of value.
trend in freight transportation and distribution. U Canada cross-border rail freight accounts for 5 percent of tonnage and
Driven largely by growth in international Mexico cross-border holds a 1 percent share of tonnage.
trade, intermodal freight transportation U The value profile is dominated by transportation equipment and miscellaneous
involves the movement of freight on multiple mixed shipments. Together they account for 83 percent of total value.
modes, such as rail and truck. This allows U Intermodal freight accounts for only 28 percent of total tonnage, but it
a truck trailer to be loaded directly onto accounts for 63 percent of total value.
a train car or from a train car to the back U The largest carload commodity group is Transportation Equipment, which is
of a truck. largely comprised of motor vehicles and motor vehicle parts/accessories.
“The growth we’re seeing is in the warehouse Air freight involves the shipment of small volumes of higher value products. In
and distribution facilities that are attracted here 2007, the study regions total air freight amounting to 126,000 short tons with total
because of the intermodal developments,” estimated value of $1.85 billion. Outbound air freight has a total value of $1.24 billion,
says SmartPort President Gutierrez. which reflects the shipment of higher value products, notable miscellaneous
At KC Logistics Park, which is being manufactured products (jewelry, precious metal, etc.) at 58 percent of outbound
developed by The Allen Group, some of value. Demand for international air cargo services is projected to grow in line with
those warehouse and distribution jobs future expansion of regional economic activity.
will be created by DeLong Co. Inc., which The river system of the study region handled 4.9 million short tons of water freight
recently acquired eight acres there for a in 2007 with an estimated total value of $.06 billion. Inbound freight amounted to
grain exporting facility. 0.5 million short tons with an estimated total value of $0.17 billion, with the following
“We were looking for a secondary loading major commodity groups—nonmetallic minerals and waste or scrap materials.
point in the Midwest,” says Bo DeLong, vice Outbound freight amounted to 2.6 million short tons with an estimated total value
president of grain operations for the Wisconsin- of $0.21 billion. Major outbound commodity groups were nonmetallic minerals,
based company. “We’ve been wanting to get waste or scrap materials, and farm product.
into the Kansas City market for at least the Source: KC Regional Freight Outlook, September 2009 Mid-America Regional
last five years. We waited until BNSF decided Council and KC SmartPort.
exactly where they were going to build their
intermodal terminal. We were fortunate TOTAL ESTIMATED REGIONAL FREIGHT
Cross-Border
to partner up with The Allen Group. We IN 2007 (VALUE) – $826 BILLION
Truck & Rail
believe we’re in position to be the most $9.2 (1.1%)
efficient exporter of agricultural products
Domestic Truck
in the Kansas City area.” Domestic Rail
$815.1 (89.9%)
The DeLong firm plans to commence $96.5 (11.7%)
construction in the second half of 2012
and begin operations in the third quarter Air
of 2013. Once the facility is completed, $1.9 (.02%)
containers full of grain and feed products
from the region will be trucked to the DeLong Source: TranSystems derived from Water
operation. There, those products will be Global Insight Transearch Data $0.6 (0.1%)
I N S I G H T, I N N O V A T I O N & I N S P I R A T I O N 41loaded into containers, which in turn will be loaded onto train cars for shipment TRANSPORTATION NEEDS to the West Coast, where they will be taken off the trains and loaded onto ships TO CREATE DEMAND bound for Asia. FOR CUTTING-EDGE DeLong expects the Edgerton operation to create eight to 10 jobs initially. If SPECIALISTS robust growth targets are met, the facility could provide work for 40 to 50 people When businesses receive product or raw in 10 years, including contract workers. material shipments on time, business owners “Our business itself doesn’t employ a lot of people,” DeLong says. “But it’s the quite likely owe a big thank-you to logistics other businesses that go along with our business that employ people. We have to hire and supply chain professionals. contract truckers and people to do logistics for us. And we’re not going to be the only Experts in this field design, plan and execute ones down there. We expect there to be others that will do comparable things.” procedures that ensure efficient deliveries at Across the state line in Missouri, construction began in July on the first building the lowest possible cost, and demand for their at KCI Intermodal Business Centre, an 800-acre business park being developed on expertise is growing. the KCI Airport campus adjacent to the airfield. “Inventory is very expensive for companies,” The occupant of the approximately 350,000-square-foot building will be Blount says Roger Woody, executive lecturer and International, a global manufacturer and marketer of replacement parts, equipment director of external supply chain management at and accessories used in the forestry, lawn, garden, agriculture and construction markets. the University of Kansas School of Business in The new building, scheduled for completion in January 2012, will serve as Blount’s Lawrence. “Companies that have downsized national distribution center for North American operations. The company will relocate in some areas have placed more emphasis on from its current distribution center in Executive Park east of downtown, and the becoming more efficient in their supply chain. move will enable Blount to create 89 new jobs for a total of 319. It’s all about reducing costs.” Nordic Windpower USA, a maker of wind turbines, plans to eventually move to The result is growing job opportunities for KCI Intermodal Business Centre from other sections of the airport. people such as Brian Oyer, transportation KCI’s logistics park is being developed by a joint venture formed by Clarion manager at the North American headquarters Partners and Trammell Crow Co., which is a subsidiary of CB Richard Ellis. “The of Huhtamaki Inc. in De Soto. Oyer, 45, has overall business center will host 5.4 million square feet when fully developed over worked in the supply chain field for 18 years. the next 15 to 20 years and will generate thousands of new jobs for Kansas City,” In March, he landed a job at Huhtamaki, which says Jim Didion, who heads Trammell Crow operations in Kansas City. manufactures and distributes products such Meanwhile, the CenterPoint Intermodal Center-Kansas City logistics park is being as Chinet disposable tableware. The De Soto developed next to the Kansas City Southern intermodal facility that opened in 2008 operations are part of a global packaging at the former Richards-Gebaur site. The developer is CenterPoint Properties and company headquartered in Finland. the marketing agent is Zimmer Real Estate Services. “‘Supply chain’ has become the new “We’ve got highway infrastructure, including Three Trails Crossing, and rail buzzword,” Oyer says. “People have discov- infrastructure that Kansas City Southern has developed that connects the Kansas ered that [it] is a significant cost of doing business. City economy with Texas and Mexico, including the deep water port at Lazaro We can reduce their costs and get their prod- Cardenas on the Pacific coast, where cargo comes in from Asia,” says Mark Long, ucts to them when they want them. There is a a Zimmer senior vice president and principal. demand for people with my background.” The entire site, including the Kansas City Southern operation and CenterPoint, Oyer focuses on making Huhtamaki’s comprises 1,340 acres. Some businesses are currently operating there, but no new supply chain operate more efficiently, such buildings have gone up yet in the 350-acre first phase. as by combining multiple loads headed to Long says the recession has been a drag on CenterPoint’s development. But Long the same customer. and Tracey Mann, a vice president and director of industrial sales and leasing with Kansas City area residents can expect Zimmer, says the logistics park is positioned for success. growing demand for professionals with his Mann says Zimmer is talking to light manufacturers, warehouse/distribution expertise, Oyer says. “As the transportation companies and a variety of industrial users about locating in CenterPoint. hub here in Kansas City grows, it’s going to Such prospects are pleasing to City Councilman John Sharp, whose district includes lead more companies to build warehousing the CenterPoint site. “The intermodal center at the former Richards-Gebaur Air Force infrastructure here,” he says. “That should Base that has been developed by Kansas City Southern Railroad and CenterPoint will be lead to more transportation requirements the catalyst to attract jobs and businesses all along the [Missouri] 150 Highway and job growth in supply chain functions.” corridor,” Sharp says. “These projects will be a great economic boost.” 42 KC BUSINESS | KCBCENTRAL.COM
Tom Riederer, president of the Southwest Johnson County Economic Development Corp.
I N S I G H T, I N N O V A T I O N & I N S P I R A T I O N 43You can also read
