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American ShipperIntermodal

A port grows in North Dakota

A port grows in North Dakota

Rail terminal benefits agriculture exporters and state's oil boom.



By Chris Dupin



   Agricultural exporters' difficulties in obtaining shipping containers for their products during 2009 and 2010 were widely publicized, and helped spark a Federal Maritime Commission fact-finding investigation into the availability of equipment and space on ships for U.S. importers and exporters.

   Now some agricultural exporters are beginning to benefit from a new inland rail terminal in Minot, in northern North Dakota. It is attracting service from shipping companies either repositioning empty containers for exporters or moving products into this sparsely populated area, which is also seeing a boom in oil and gas production.

   Gregory Johnson, owner and chief executive of North Dakota Port Services, said planning for the terminal goes back about a decade when a local group began to look into how to develop intermodal rail service in the region.

   Johnson opened the facility three years ago, handling a variety of railcars. In August he achieved the objective of attracting intermodal service to the region, as the first containers from OOCL arrived and were loaded with agriculture products, then carried by the Burlington Northern Santa Fe to the port of Seattle for shipment to Asia.

   Since then other steamship lines have begun moving product from Minot, including Maersk and CMA CGM, said Lynda Norris, director    of strategic accounts for BNSF Logistics. 'I'm talking daily to others.'

   Johnson said there are four additional companies that have expressed interest in serving the terminal, and one of his objectives is to get rail service to ports elsewhere in the country since pulses ' peas, beans and lentils ' and other crops in North Dakota are shipped to Latin America, Europe and Africa, as well as Asia.

   'We are building it slowly. The shipping community has a lot of commitments when something like this starts and some of those commitments are contractual,' he said. 'As contracts get renewed, you hope some of the freight will move.'

   In November the facility was loading about 40 to 50 containers a week. With room for 120 cars, Johnson said he hoped to double the trackage on his terminal before winter next year. In addition to containers, the terminal handles all sorts of railcars, including gondolas loaded with pipe for drilling.

      'We created a facility that can be expanded on, which is what we are doing,' he said. 'We created it not only for intermodal, we created it to develop a distribution center.'

   He thinks distribution centers like North Dakota Port Services are a necessity because with increased demand for rail transport, it will be increasingly difficult for small shippers moving less than 100 to150 units to 'attract rail delivery on a timely basis or as often as we are going to need it.

   'The demand on railroads increases every year, and as you see the population migrate to either the inner U.S. areas, which is basically the Chicago and Detroit areas, or to the coastal regions, the only way to get cargo in or back out with the volumes needed is the railroads,' he said.

   'I don't think we will see more railroads east and west. Because of the mountains, the passes are limited. Railroads are working on higher velocity with increased speed, longer trains, more trains,' Johnson added.

   'An intermodal network is built off of density, so all railroads, not just BSNF, have intermodal hubs where there is a lot of inbound and outbound freight,' Norris said. 'You would think Minot would be a logical choice. There is a lot of agricultural export in Minot, and on the flip side, with the Bakken Shale deposit ' imports are increasing.'

   Johnson also owns Premier Pulses International, which processes dried peas, chickpeas and lentils. 'Freight and transportation has always been a big interest of mine,' he said.

   In addition to pulses, he said container service will be attractive for products such as canola meal, corn, dried distillers grains, alfalfa, organic flax and wheat and flour.

   Prior to intermodal service this fall, he said agricultural products moving out of Minot by rail had to be loaded in hopper cars to Seattle and Tacoma, then transloaded into containers for export. That's less than ideal, Johnson said, since there are sometimes issues with scheduling and loss of product, bag counts, and contamination.

   'You are always at the mercy of someone else loading and unloading your product,' he said.

   Intermodal hubs tend to be spaced about 500 miles apart, attracting shippers from about a 250-mile radius, he said. Located about 500 miles northwest of Minneapolis, Minot also has the advantage of being located on BNSF's Highline route, which runs intermodal trains from the ports of Seattle and Tacoma to Logistics Park Chicago in Elwood, Ill. Johnson said he would have far less success if Minot was located 120 miles to the south, where there is another BNSF line, but dominated by coal traffic.

   'There are a lot of other inquiries coming in for a similar service to Minot,' Norris said. 'While all opportunities will be given serious consideration, the unique characteristics that make Minot viable may not exist for other locations.'

   Norris said North Dakota Port Services has the advantage of being located just a stone's throw from BNSF's Gavin yard, where trains are refueled, inspected, and crews are changed. That makes it easy for the railroad to pull or pick up cars while the trains are refueling.

   Initially steamship lines repositioned empties from Chicago to Minot, and Johnson believes this might be needed to handle future growth.

   But for the moment, Norris said, that has been unnecessary because so much cargo is coming into Minot to support the oil and gas industry. Exploration of Bakken Shale, an oil deposit two miles beneath North Dakota, Montana, Saskatchewan and Manitoba, has led to an explosion in drilling activity in the past several years.

   Baker Hughes said the number of rotary rigs drilling in North Dakota was 143 in early December compared to an average of 50 in 2009.

   Large amounts of 'frac sand' or proppant used in the drilling process is being shipped through Minot. After wells are drilled, fluids containing proppant are pumped into rock formations to fracture the rock ' the proppant props the fractures open to allow oil and gas to flow more freely so that production rates and the amount of oil or gas can be increased.

   While some of the 'frac sand' is mined, a great deal of ceramic proppant, a man-made material is also used, and much of this is manufactured in China and Russia and arrives in Minot by container. Ceramic proppant manufacturers say the uniform size, spherical shape and strength of their material results in better hydrocarbon production.

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