Far-reaching changes in global commerce and cyberspace sales are
driving new opportunities in the logistics industry, with Michiana
positioned to reap substantial benefits.
With manufacturing increasingly performed offshore, the stretched
delivery chain for products is in search of factory-to-shelf
efficiencies that can save tens of millions of dollars a year by
trimming one day from the schedule.
With more shopping done online, with Cyber Monday as a symbol, demand
for small-package shipment has soared. (So has demand for vans and
other delivery vehicles, one reason for recent manufacturing boosts in
The full impact of the shifts has been delayed by the recession,
observers say, including development of an intermodal facility at
Kingsbury Industrial Park in LaPorte.
But cargo activity is already increasing at South Bend Regional
Airport, where FedEx and UPS handle packages, including one-day
service, and overnight letters.
Airport Executive Director John Schalliol says cargo through September
totaled 17,813,765 pounds, including 2,184,829 pounds in September
alone — a 0.2 percent increase over the same period in 2010.
“It is trending upward,” he says. “We are a major player in that kind
of activity. People say, ‘I never use the airport. I don’t want my
taxes to go there.’ They use it every day if they order anything
online or shipped in.
“It will come in by air to South Bend. It will be delivered by truck.
They don’t drop it on their house.”
Many of the goods also come by rail, says Andy Laurent, manager of
growth initiatives for the Chicago South Shore & South Bend Railroad
that leases the tracks of the Northern Indiana Commuter Transportation
District, and price increases in truck transportation have made the
train more attractive.
“Most people’s experience with it is sitting at a grade crossing
looking at the flashing lights and wondering how long it will take,”
he says. “A lot of things we use in daily lives are on those trains,”
from Xboxes to bulk sand for building.
The Chicago-to-South-Bend line mostly moves coal to steel mills and
power plants and steel from the mills to start its trip to customers.
The rail system, unlike any other U.S. transportation from highways to
seaports to airports, is a set of competing private enterprises
requiring the handoff of goods at different junctures, Laurent
explains. South Shore has access to all seven Class 1 companies
because of its proximity to Chicago.
“I’m one railroad away from any place in the country,” he says. “South
Bend is in a good place — same thing with trucking, air freight,
anything like that.”
In addition to the cost-competitiveness brought on partly by increased
regulation on trucks, rail offers a less labor-intensive, more
environmentally friendly way to haul goods.
Trains with two diesel locomotives and two crew members can carry the
equivalent of 250 semi-trucks, and a gallon of fuel carries a ton of
freight 450 miles.
“I think our trend line is up because our competing mode of
transportation’s cost is going up, as well as fuel savings. A lot of
industries are taking a look at their carbon footprint, being greener.
Wal-Mart is starting to measure carbon footprint. We’re a much more
South Shore could become a key player at the Kingsbury intermodal
facility, providing first-mile/last-mile transportation to other
“We could serve all the other railroads because we’re a neutral
carrier,” Laurent says. “You have all these similar facilities on the
west side of Chicago. What no one has really taken the gamble on is
Activity has recently begun to stir at Kingsbury, where Chris Davey of
Grubb & Ellis/Cressy & Everett proposed the intermodal center just
before the depths of the recession.
“The pressure for logistics had been growing exponentially every
year,” Davey says. “The phenomenon is relatively new. Now most
everything is made overseas and shipped back to the United States.
These ports are becoming very busy now and they’re running out of
space as the product comes in on the East Coast or the West Coast.
“All the product that had to come to the middle of the country had to
come by rail or truck from the coasts. That’s why there was so much
pressure on the logistics industry. Our infrastructure wasn’t adequate
to support the change in business strategy.”
Michiana is well known for its highway access, including the
oft-repeated assertion that South Bend is second only to Harrisburg,
Pa., in the number of people accessible within a day’s drive.
The intermodal facility aims to capitalize on the rail traffic that
passes through. Railway companies are divided east and west — Norfolk
Southern and CSX in the east, for example, Union Pacific on the west,
all converging on Chicago.
A facility in Joliet serves the west side of Chicago, Davey says, and
the 800-acre LaPorte project would serve the east side.
Train transportation, while cheaper, is less dependable than truck
traffic, he says, and upgrades to the system are under way in some
places, such as Virginia, to support innovations such as stacking
truck trailers on rail cars.
Just a few decades ago, most goods were manufactured in the United
States, often in regional plants, with short delivery routes to
customers. Now, those goods can come from the other side of the world.
“It takes a long time for that product to leave China and get on the
shelf at the local Target or Walmart or whatever store it might be,”
Davey says. “If you can compress that time frame, you can save a lot
“It’s a relatively new phenomenon. We believe when things get back to
normal, demand will be increased. Things are starting to pick up
Earlier this year, LaPorte County Commissioners agreed to participate
in $12 million in rail extension and infrastructure improvements at
the park, with money from the county, state and CSX, to support
development of a cold storage facility for produce brought by train
from the South and held for distribution by truck.
“That will be the first phase of that development,” Davey says. “I
seriously believe once that first building is up there and the economy
improves, you’ll see a lot more development similar to what’s going on
with this development.
“You look for niche markets. Logistics is one that will grow in the
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