One of the leading railroads in the U.S, CSX Corporation (CSX) announced its plans to invest approximately $59 million in intermodal freight terminal expansion in Columbus, Ohio.
The expansion is a part of the company’s ambitious multi-year National Gateway project, which aims at improving the efficiency of freight network between the Mid-Atlantic ports and the Midwest markets.
National Gateway project is estimated to involve a total investment of $850 million, of which CSX Corp. expects to contribute approximately $575 million. A portion of the public fund needed to complete the National Gateway has been secured and CSX Corp. is working with its state partners to apply for the additional funding required to complete the project.
Upon completion, National Gateway is expected to reduce truck traffic and increase intermodal capacity on key corridors without increasing the number of trains. We believe that this will improve the efficiency and profitability of the company.
CSX Corp. has already commenced a key part of this project, the Northwest Ohio Intermodal Terminal in early 2011 with an investment of approximately $175 million. This high capacity terminal improves market access to and from ports in the east coast. Additionally, this terminal is equipped with eco-friendly technology.
Intermodal freight transportation is rapidly gaining grounds with the customers given its potential advantages over truck in terms of cost and capacity. Consequently, railroads are increasingly focusing on building infrastructure through heavy capital investments in order to support growing intermodal demand.
Other railroads like Norfolk Southern (NSC) are also seeking expansion in intermodal networks with major Intermodal corridor initiatives such as the Heartland, Crescent, Meridian, Titusville, Tennessee, Alabama and Pennsylvania. Norfolk continues to make strategic long-term investments and expects to invest $2.2 billion in 2011 with half of it dedicated toward Intermodal development.
Currently, we maintain our long-term Neutral recommendations on CSX Corp. and Norfolk with short-term (1-3 months) Zacks #2 Rank (Buy) for both.
