Author Topic: St. Joe, other land owners plan to capitalize with CSX on high-speed rail deal  (Read 2047 times)


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When state lawmakers met in Tallahassee in December for a special session on rail, the headlines were all about passenger trains: The law that emerged from the session cinched the SunRail commuter system for central Florida, upped funding for south Florida’s Tri-Rail system, and set the stage for a long-coveted high-speed passenger train between Tampa and Orlando. A month later, when President Barack Obama came to Florida to award the initial $1.25 billion for the Tampa-Orlando link, the news again was about moving people.

But passenger trains are just part of the transportation story in Florida. Changes in the way freight moves around the peninsula could be even more significant for Florida’s future.

Changing global trade patterns, driven in part by the supersized cargo ships that soon will begin traveling through the widened Panama Canal, may create a boom in freight-related and light manufacturing industries in the state.

And five of the top 10 private landowners in the state are angling to cash in by developing integrated logistics centers (ILCs), facilities where containers of freight are moved from railcars to trucks and vice versa. Along with freight-handling facilities, the logistics centers — sometimes called "inland" logistics centers or "inland ports" — typically include warehouses, distribution centers and often manufacturing operations near a major rail line.

Among the biggest private landowners, Plum Creek Timber, St. Joe Co. and the Fanjul family of Palm Beach each wants to build its own ILC project. Lykes Bros. and A. Duda & Sons are collaborating on a center.

Meanwhile, CSX is building a big ILC in Winter Haven, and Hillwood Development is studying whether to include one at the Cecil Commerce Center, a shuttered Naval Air Station that the city of Jacksonville has turned into a 17,000-acre industrial and manufacturing center.

The private landowners share a goal of diversifying their companies. All want to rev up the development potential of their properties. Company executives also tout the projects as business catalysts that will help Florida out of this recession and arm it better to withstand the next one.

"When you look at the numbers, you see that Florida has an incredible opportunity," says Todd Powell, southern director for Plum Creek Timber, the state’s largest private landowner, who sees the possibility of serving growing consumer markets not only in Florida but north up the eastern seaboard and south into the Caribbean and Latin America.

Behind the ILC frenzy is a shift in the way freight is moving globally. Giant container ships with goods from China and other international suppliers typically have entered the U.S. in California. Goods bound for eastern U.S. markets then were loaded onto trains or 18-wheelers and transported across the country.

In the past decade, more container traffic has begun flowing through Atlantic ports, especially in New York, but also in Norfolk, Va.; Charleston, S.C.; and Savannah, Ga. Florida has gotten only a slice of the surge — in part because it has 14 competing ports rather than one powerhouse ["Florida Ports Racing to Handle Giant Cargo Ships," July 2008,]. The most recent statistics from the Florida Ports Council show that half of all consumer goods imported to Florida from Asia still come through western seaports — while another 20% come through the Port of Savannah, which serves Florida markets down to Orlando.

Now, however, as both the Port of Miami and Port of Jacksonville dig channels deep enough to handle the giant "post-Panamax" ships sailing through the expanded canal, Florida has a shot at landing a bigger share of import business from Asia and elsewhere.

The logistics centers are seen as essential to luring ocean carriers and major importers to the ports. The centers proposed by Plum Creek, St. Joe and Lykes/Duda also are designed to attract advanced manufacturing companies that could export goods like solar panels from the sites. "This strategy is about economic development and paying jobs," says Britt Greene, CEO of St. Joe Co.

Freight-rail improvements are another key. The reliance on trucks to move freight into Florida has put the state at a disadvantage as interstates have grown more congested, fuel costs have risen and pressures have mounted to reduce the carbon footprint of goods. Nationally, the focus on fuel efficiency and greening the supply chain has brought about what transportation analysts call a "rail renaissance," with carriers like CSX successfully marketing their fuel efficiency compared to trucks. Billionaire investor Warren Buffett is a big enough believer in rail’s future that he paid $34 billion last year for U.S. railroad giant Burlington Northern Santa Fe Corp.

One catalyst for the private landowners’ plans is the 3-year-old deal between CSX and the state that had been stuck in limbo until the Legislature ratified it in December. The deal — equal parts freight rail and commuter package — creates a 61-mile commuter line and lets CSX move its Orlando intermodal and automotive operations to a big new logistics center the carrier is building in Winter Haven.

As that first domino falls, the landowners are pushing ahead with their own centers. The CSX deal "is the brilliant beginning of a process that could make Florida the freight distribution and advanced manufacturing hub of the Americas," says Mark B. Morton, vice president at Lykes Bros. and ILC project manager.

Lykes and Duda executives view the logistics center they envision for Glades County as the southern terminus of a string of centers down Florida’s backbone that will relieve truck congestion on the coasts and bring industry and jobs to poorer counties. The Moore Haven site, on the west side of Lake Okeechobee, straddles a railroad called the South-Central Florida Express. Owned by U.S. Sugar, the South Central meets up with CSX lines just to the north at Sebring. "A Lake City-Winter Haven-Moore Haven chain of intermodals gives an unprecedented opportunity to build supply chain infrastructure and the economy in the interior of Florida," says Morton.

Meanwhile, the Port of Palm Beach has voted to partner with Florida Crystals to create a logistics center at the company’s facility in Okeelanta. The company says its center will serve the "Fort Market" stretching from Fort Myers to Fort Lauderdale to Fort Pierce.

Daniel F. Martell, vice president of real estate for Florida Crystals, says "it’s time to take action and start building these facilities. Otherwise the Panamax ships go right past our shores to Savannah and Charleston instead of stopping here."

Collectively, the plans leave some big unanswered questions, not least of which is the environmental wisdom of putting manufacturing in the largely rural areas. "If you make all of this land industrial, you don’t have any environment left in Florida," says Drew Martin, chairman of the Sierra Club’s Everglades Committee.

Meanwhile, will major retailers, logistics companies and manufacturers be as eager to expand in the state as Morton, Powell, Greene and others believe? And could Florida end up with too many logistics centers? The state’s history is full of examples of regional competition that worked against its collective interest. Are the various centers "symbiotic," as Martell believes, or will they end up competing against each other, for example?

Another big question is who pays for all the improvements related to the centers. State Sen. Paula Dockery of Lakeland, who fought the state’s commuter rail package because she opposed public subsidies for the CSX freight rail improvements, says taxpayers have already paid for more than $1 billion on a "boondoggle."

To help answer the questions, the Florida Chamber of Commerce Foundation and the state Department of Transportation are working on a freight/logistics study due out later this year. For the first time, Florida will have a comprehensive reckoning of the goods moving in and out of the state via ships, planes, trains and trucks. Consultants are interviewing players from the international developers of ILCs to the Ikeas and Targets that populate them. They’ll ask questions like: Why do you bring cargo into Savannah and truck it all the way to Orlando?

"There is a huge opportunity for Florida if we do this right — there are new businesses and jobs at each and every link in the logistical supply chain," says Tony Carvajal, executive vice president of the Chamber Foundation.

"But we need the data because this is a very fluid market," he says. "Just because we decide we should be at the center of the global-trade universe doesn’t mean everyone else will agree with us."

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Captain Zissou

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Look at everything that converges in Jax.  We should be a shoe in.  We need to dominate this market and get out ahead of this trend. 


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Tufsu already posted this.
Lenny Smash