Project Site Tomorrow

Project Site Today

Mid-Willamette Valley Industrial Park & Intermodal Center Project

Linn Economic Development Group is proposing the development of the Mid-Willamette Valley Intermodal Center (MWVIC) in Millersburg, Oregon. The site is centrally located in the Willamette Valley. The site's logistical location where the Union Pacific Railroad (UPRR) mainline, Portland Western Railroad (BNSF), and Interstate 5 come together makes it ideal to serve as a centralized reload center for the valley's natural resource-based economy. With the passage of Keep Oregon Moving (HB 2017-A), the Oregon State Legislature appropriated $25 million for the development of the MWVIC.

The proposed MWVIC would primarily serve the agricultural community in the Willamette Valley and Southern Oregon by providing infrastructure for transferring intermodal containers from trucks to rail and vice-versa. The intermodal center has the potential to provide public benefits by reducing the number of trucks using the highways in the Portland area, which potentially would lower highway maintenance costs, reduce congestion, improve air quality, and decrease carbon emissions. The project would produce positive economic impacts through increased local spending and the creation of employment opportunities. 

MWVIC Project Plan Proposal (dragged).jp

Click the image above to view how the MWVIC will help move products from the field to international destinations.

Intermodal Center Project Rendering

Commodities and Products Likely to be Served

 

The Mid-Willamette Valley is considered the “grass seed capital of the world,” producing almost two-thirds of all U.S. cool-season grasses. Benefitting from fertile soil in the valley, mild winters, and dry summers, these seeds for turf and foraging grasses are shipped around the world. Additionally, straw is primarily a byproduct of the grass seed industry, harvested and baled after the seeds have been harvested. Most of it is sold to international markets for livestock feed. Hay is also produced directly for animal feed and represents a range of varieties. Straw and hay are relatively low-value and low-margin products that are considered to be “backhaul” by international ocean carriers: it is marginally more profitable for the ocean carrier to ship these products overseas than it is to ship the containers back empty.

Aside from grass seed, straw, and hay, a broader set of agricultural, wood, pulp, and waste products are regularly shipped out of the region.

Transported Commodities in the Region

Typical Market Destinations

 

Approximately 81% of the exported agricultural products from the Mid-Valley are loaded onto ships in Seattle and Tacoma, with the remainder exported from ports in Long Beach (8 percent) and Oakland (3 percent), California. Traffic congestion near Portland, Seattle, and Tacoma have increased the transit times and costs associated with trucking products to these areas. Millersburg, Oregon, sits in a geographic location that allows agricultural producers in the region to consolidate their products efficiently and avoid highway congestion on the I-5 corridor.

Market Share That Would Use the Facility

Market Share in the Area That Would Use the Intermodal Center

 

Market analyses of existing commodity flow, phytosanitary certificates, and agricultural production data combined with stakeholder interviews indicate the expected level of rail service needed. Although the majority of products shipped out of the region are still likely to travel by truck, analysis indicates that there is sufficient demand to support 302-364 loaded containers leaving the intermodal center per week. Approximately 75% of these are expected to be 40’ intermodal containers destined for export, with the remaining comprising 53’ containers for domestic shipments. The respective volume is expected to be relatively constant throughout the year.

This estimate is consistent with the results of our stakeholder interviews with an opportunistic, self-selected sample of exporters. Of the 17 participating interviewees, about half suggested they would likely use the intermodal center to ship a combined 245 export containers per week throughout the year. There is limited availability of empty containers in the Mid-Valley, and this equivalent volume of empty containers would need to arrive by train.

Anticipated Transportation Cost Savings

Private transportation cost savings may accrue to users of the facility who face lower transportation costs than current alternatives. These benefits only accrue if user fees are lower than alternative shipping modes that provide the same level of service. Since the current mix of shipping alternatives will continue to exist, growers and shippers will be able to choose the alternative that provides the best level of service, reliability, and timeliness necessary. Calculation of the scale of anticipated private benefits, however, can be performed using expected demand, expected trucking costs, and a basic set of assumptions on markets served. Under full utilization, private transportation cost savings are expected to total $2.1 million per year. When evaluated over a twenty-year timeframe—from 2020 to 2040—at a 3 percent and 7 percent discount rate, these savings amount to between $21 and $31 million. These transportation cost savings are likely to be captured in the private market by either growers, shippers, the facility operator, or the rail operator.

Size and Scale Necessary to Support Operation

The proposed intermodal center in Millersburg will have a main office, parking lot, space for approximately 100 trucks to park overnight, amenities for truck drivers, an intermodal center capable of handling both domestic and international containers with sufficient track space to handle both inbound and outbound unit trains, and a 60,000 square foot storage warehouse and docks to support reloading and transloading onto rail, with capacity for longer-term storage of product.

Return on Investment Analysis

Estimated demand is being used to develop a financial operating model, which includes fixed and variable operating costs associated with all operations at the intermodal center. Based on available market data and operating inputs from a similar (albeit smaller) intermodal center in Boardman, Oregon, it is expected that the intermodal center will generate $1.2 million in revenue in each year of operation once build-out is complete. This is sufficient to support continuous operation of the intermodal center. At full build-out, this intermodal center will require six full-time-equivalent staff to operate.

Financial Feasibility of Demand Estimate

Anticipated indirect job and economic impacts are calculated using a standard input-output model and include direct, indirect, and induced impacts from construction and operational expenses. The construction of the facility and rail line will support $18.8 million in direct output, $7.9 million in direct labor income, and 140 direct construction jobs. Spending circulates through the local economy resulting in indirect and induced effects. Combined with the direct effects, construction generates a total of $29.3 million in output, 11.4 million in labor income, and 220 jobs. The operations of the facility will support $2.4 million in output, $414 thousand in labor income, and six jobs every year. Summing the direct, indirect, and induced effects results in $3.1 million in total output, $614 thousand in total labor income, and 12 total jobs supported by operation of the MWVIC.

Public benefits to the residents of Oregon accrue when the quality or quantity of non-market goods is improved. Although the values can often be inferred from private market transactions, public goods are not regularly bought and sold. This analysis draws information from published economic literature and relevant federal guidance to calculate a range of benefits accruing to Oregon residents from the construction of the proposed intermodal center. It is expected that the intermodal center will generate between $2.9 and $4.7 million per year in public benefits during full operation from removing trucks from roadways in Oregon. The potential present value of public benefits over the next twenty years is between $28 million to $68 million, reflecting a nearly 3-to-1 return on investment for the State at the high end.

Figure 12 Public Benefits

Bottom Line

Growing highway congestion and a strong reliance on international markets provide a sufficient case for expanding transportation options. The proposed Mid-Willamette Valley Intermodal Center can best provide these options for the region. Once fully operational, economic conditions indicate that the intermodal center will be able to operate in a financially feasible manner and generate a significant return on investment for the State of Oregon.

 

The Millersburg location captures a sizeable share of the market, removes a large number of trucks from roadways in the state, generates generous private transportation cost savings, and maximizes public benefits.

Linn Economic Development Group

Greg Smith, Project Manager

541-337-0000

ledgprojectmanager@gmail.com

Created by Gregory Smith & Company, LLC

(c) Linn Economic Development Group (LEDG) | 2018