[Photo: CSX]

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.

Todd Powell is southern director of Plum Creek Timber. Now the largest landowner in the state, Plum Creek is helping to develop an inland port east of Lake City.? [Photo: Jeffrey Camp]

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, FloridaTrend.com]. 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.

St. Joe CEO Britt Greene says his company is "looking at several opportunities to build inland ports."? [Photo: Florida Times-Union/Rick Wilson]

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."

Moving Cargo Around Florida

Major Rail Carriers in Florida

• CSX: 2,800 miles of track; three intermodal terminals; additional truck-rail transfer facilities
• Florida East Coast Railroad: 350 miles of track; four intermodal terminals; additional truck-rail transfer facilities
• Norfolk Southern: Less than 100 miles of track; shares intermodal facility in Jacksonville with FEC and CSX; in 2009, opened Titusville intermodal facility.

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Logistics Centers:
The Contenders

• In northeast Florida, Plum Creek Timber, Florida’s largest private landowner with 600,000 acres, is working on a 2,500-acre "intermodal mega-site" east of Lake City on U.S. 90 meant to handle increased freight loads to and from the Jacksonville Port, with access to all of Florida’s major interstates and rail service on CSX lines.
• In the Panhandle, Florida’s second-largest landowner, St. Joe Co., donated 4,000 acres for America’s newest airport, Northwest Florida Beaches International, which will open in May. The company is working to develop 1,000 acres adjacent to the airport with transportation/logistics and aerospace/aviation companies — which the company hopes will lead to further development of its 71,000-acre West Bay property, including an ILC somewhere on its landholdings. CEO Britt Greene says a crucial piece of the company’s plans is a deal with the St. Joe Port that will allow it to resume operations for the first time since it was shuttered in 1997 with the town’s paper mill. St. Joe also inked a deal with Genesee & Wyoming Railroad that will connect the port with the national rail system in Chattahoochee.

Alfonso (left) and Pepe Fanjul, owners of Florida Crystals, will team up with the Port of Palm Beach on a 1,000-acre distribution center.

• In southeast Florida, Florida Crystals, the sugar giant owned by the Fanjul family of Palm Beach, recently won approval from the Port of Palm Beach to be its partner in a 1,000-acre intermodal warehousing and distribution center that would ease congestion in south Florida’s three seaports.
• In south-central Florida, two agricultural powerhouses — Lykes Bros. and A. Duda & Sons — are pushing plans for a major ILC and advanced manufacturing hub in Glades County. The project was originally proposed for the Port of Palm Beach partnership, but company executives withdrew it from the process in October and are pursing a national developer. They say the Moore Haven site creates an ideal southern link to the Plum Creek site in north Florida and CSX’s new integrated logistics center in Winter Haven.

Commuter Rail Projects
Projects either under way or envisioned for Florida

• High-speed rail, Tampa to Orlando: President Obama announced $1.25 billion in economic stimulus funding for the project in January. The Department of Transportation plans to start work on the 84-mile segment between Tampa and Orlando in mid-2011. Completion is expected in 2014. Officials expect 16 round-trips per day at speeds up to 168 mph. It should take less than an hour to travel between the two cities.
• High-speed rail, Orlando to Miami: The second phase of Florida’s high-speed rail plan isn’t funded, but state and federal officials envision a 230-mile line with trains operating up to 186 mph, making travel between Miami and Orlando about two hours.
• Tri-Rail: Currently the state’s only commuter rail line, Tri-Rail has grown into a heavily subsidized system with about 13,000 daily riders. It extends 71 miles from Miami to Fort Lauderdale to West Palm Beach, with 18 stations, including links to the three international airports. The Legislature in its December special session on rail agreed to keep Tri-Rail operating with an annual subsidy of about $15 million.
• SunRail: Florida lawmakers in December signed off on this four-county project that will turn 61 miles of CSX freight rail tracks into a commuter rail system running from Poinciana south of Kissimmee north to DeLand. The state will spend $432 million to the buy the track from CSX; the federal government and four counties will pay another $462 million for additional improvements. Service is expected to begin in 2012, just as the Department of Transportation starts a major I-4 reconstruction project through the area.
• Tampa Bay Area Regional Transportation Authority: The Legislature created TBARTA in 2007 to implement a master plan for Citrus, Hernando, Hillsborough, Manatee, Pasco, Pinellas and Sarasota counties. The authority has developed a master plan that includes a 135-mile short-distance rail system; a 115-mile commuter rail system and various forms of bus transit, including express and exclusive-lane. Hillsborough County residents are expected to vote this November on a 1-cent tax — which TBARTA would support — to fund transportation improvements including light rail. or envisioned for Florida.