The Future of Freight
A ‘Smart’ move?

By Terry Scruton
senior correspondent

When you’re talking about the top ports in the United States, several names come to mind: Los Angeles, Seattle, Miami, Kansas City.

Well, maybe not Kansas City just yet, but a group of investors there is hoping to change that by turning the Kansas City metro area into one of the nation’s leading shipping ports. And, quite possibly, a port of entry into Mexico.

Yes, you read that right, Mexico.

Kansas City SmartPort Inc. is a non-profit group made up of both public and private sector members including the Greater Kansas City Chamber of Commerce and 45 investor companies such as Burlington Northern Santa Fe Railroad.

Chris Gutierrez, president of Kansas City SmartPort, said the group’s primary focus is to bring more business and commerce into the Kansas City area.

“The focus is economic development,” he said. “Attracting more of what we call freight-based projects so distribution centers and manufacturers will locate in our region versus Indianapolis, Dallas, Denver or wherever we’re competing with a specific project for the ability to bring more freight in and out.”

Mexican standoff
In spite of that goal, several areas of the SmartPort project have generated controversy in recent months. Perhaps the most controversial move is the project’s goal to build a Mexican customs office in Kansas City, MO.

That project has been negotiated between U.S. and Mexican officials and is currently awaiting final approval from the U.S. State Department.

Gutierrez said the customs facility has been approved by the Mexican government. Felipe Calderon, the winner of Mexico’s recent presidential election, is a member of the same party as outgoing president Vicente Fox. Gutierrez said he doesn’t think the transition in leadership will have any adverse affect on the customs project.

Assuming the deal goes forward, Gutierrez said the Mexican customs office would only clear truckload freight going south to Mexico and would not be used for freight coming into the U.S.

“It will operate with U.S. and Mexican customs for U.S. exports heading south by truck, so it exports to Mexico only,” he said. “To be cleared … that’s the documentation, the processing, the paying of duties – all of that process will be done in Kansas City – as opposed to at the border, where there’s 8,000 or 9,000 trucks crossing Laredo each day. There’s congestion, there’s some inefficiencies to that because of the volumes.”

Some critics have charged that a Mexican customs office in Kansas City, MO, would pose a security threat, and that SmartPort is hiding its ultimate plan, which is to turn Kansas City into a port that also handles truck traffic coming north from Mexico. Gutierrez says that just isn’t true and that SmartPort has federal funding in place to develop technology to track, trace and secure loads that pass through the port.

“We will use some of that technology to monitor that freight heading to Mexico,” he said. “And really it’s about monitoring that it stays on I-35 and that nobody opens the truck door and takes freight out and puts other freight in. In that sense, it’s more (about) value of shipments. You ship raw components to Mexico and someone takes out those raw components and they put electronics in and then they go to Mexico. To Mexico, that’s a concern because they didn’t pay the duties on electronics, they paid the duties on raw components.”

Hear that train a’comin’
Another controversy is brewing over SmartPort’s relationship with Kansas City Southern, a company composed of three railroad companies from the U.S., Mexico and Panama. Together, the group comprises a system of rail tracks that runs from the port of Lazaro Cardenas in Mexico across the U.S. border, through cities along the Gulf Coast, and, of course, into Kansas City.

One of the goals of the rail line and SmartPort is to import freight from Asian countries to the port in Mexico, then transport it by rail into KC. Kansas City Southern is targeting an old Air Force base 18 miles south of downtown Kansas City, MO, as the site of an intermodal facility that would serve as a shipping hub for the freight coming out of Mexico.

This move has many people concerned about security.

C. Doniele Kane, a spokeswoman for Kansas City Southern told “Land Line Now” on XM Satellite Radio that many of the containers coming out of Asia will be screened at point of entry through the Container Security Initiative, a U.S. run pre-screening program for inbound cargo She did not indicate how many containers would be screened or what would be done with the rest.

Kane also said that Kansas City Southern has its own “comprehensive, layered security program” in place. Though she didn’t give specific details, Kane said the program combines both human elements and technology to prevent tampering with the cargo. She said the most important step Kansas City Southern takes is to keep the trains in continuous movement as much as possible to lessen the chances of exposure to “illicit activities.”

In addition, she said Kansas City Southern’s Mexican component is the only railroad in Mexico that is certified in the Customs Trade Partnership Against Terrorism, a voluntary supply chain security program led by U.S. Customs and Border Protection aimed at helping private companies improve their security with regard to potential terrorist threats.

Gutierrez said that SmartPort is planning to leave the security of the inbound Asian freight mostly up to U.S. Customs, but SmartPort will be doing a little work on its end as well.

“We’re going to also work with KCS to secure that freight coming through Mexico into the U.S. so we can monitor that shipment and monitor that freight,” he said.

Intermodally inclined
A third area associated with the SmartPort project has drawn controversy on a more local level. Burlington Northern Santa Fe Railroad is moving forward with plans to build an intermodal facility in Gardner, KS, a growing town located about 30 miles southwest of downtown Kansas City, MO, along Interstate 35.

The intermodal facility will be at the heart of a business park that will include warehouses and distribution centers and other businesses. Steve Forsberg, a spokesman for BNSF, said that, once the facility reaches its peak capacity – which wouldn’t happen until it was up and running for 20 years – it would bring in about 10,000 truck trips every 24 hours.

Local residents are not especially pleased with those numbers, but Forsberg said that, according to a traffic study conducted for the project, it’s actually slightly less than the amount of truck traffic that currently passes through another section of Interstate 35 in nearby Shawnee, KS.

What’s more, the study revealed that, as Gardner continues to grow, it will see more automobile traffic than truck traffic, even with the intermodal facility.

“The interesting thing that the traffic study revealed is that by the year 2025 when Gardner is expected to have grown to more than 50,000 people from the 17,000 that it currently has, that 80 percent of the vehicular traffic that will occur as a result of this development will be automobiles,” Forsberg said. “And only 20 percent of it would be trucks. The other 49,000 vehicle trips per day would be automobiles.”

Still, the residents of Gardner are not taking comfort in that information. The Johnson County Sun reported that a group opposed to the facility has started a ballot around town to prevent Gardner from annexing the land that would be used for the facility. The city will most likely put the issue to a vote in November.

The Sun reported that the opposition group believes that if Gardner votes against annexing the land, it will scuttle the deal for the intermodal facility because BNSF will not be able to get the tax breaks it needs in order to build.

Forsberg said, however, that isn’t true and that BNSF will go ahead with its plans whether Gardner annexes the land or not. The only difference the annex would make is how much control Gardner has over the design and development of the project.

All roads lead to Kansas City
Controversies aside, Gutierrez said the SmartPort project has big plans for Kansas City. A significant part of those plans involves bringing another interstate into the Kansas City area.

Gutierrez said SmartPort is working with the departments of transportation in Arkansas, Louisiana and Missouri – along with the federal government – to extend Interstate 49 from New Orleans all the way to Kansas City. The project would involve upgrading the current U.S. Route 71 in Missouri and turning it into an interstate.

Gutierrez said the project is still in the very early stages of development, but he is confident that it will happen. He said the first step will be to figure out just what needs to be done and how much it will cost.

“We hope to work with MoDOT to do what they call a scoping project to understand what needs to be done,” he said. “Where are the interchanges that need to be put in place? Where are the outer roads? Where’s right of way that needs to be bought? And put a price tag on this road that we can then go back to the highway reauthorization bill that will start to be debated in the next year or so to get funding to improve that infrastructure.”

Gutierrez said SmartPort’s ultimate vision for the Kansas City area is to turn it into an intermodal hub that can compete with bigger cities like Chicago and even Los Angeles.

In fact, he said Kansas City already has some advantages over both of those areas. He said Kansas City is already the third largest trucking center, the largest rail center by tons, and has the largest air cargo facility in a six-state region.

Add to that the fact that Wal-Mart, Kohl’s, J.C. Penney and Dillard’s already have distribution facilities in the Kansas City area and others are on the way, and Gutierrez said Kansas City is ready to explode.

“You’ve got a great base and you’re already seeing some success,” he said. “These intermodals are just going to take it to the next level.”