New railroad an opportunity for Yuma, state, inquiry says

It's one thing to say a proposed railroad through Yuma County to move goods into the U.S. from a new port in Mexico would generate millions of dollars in economic activity and create hundreds of jobs.

It's another to back that up with facts.

"I've been constantly asked to show how there would be some economic value," Gary Magrino, board chairman of the Greater Yuma Port Authority, said of Union Pacific's plans for a railroad to link with a planned port at Punta Colonet on the west coast of Mexico.

Magrino now has something substantive to point to with a study just completed by Arizona State University.

"If Yuma becomes the entry point for a port with the potential to reach the current size of Los Angeles/Long Beach, the possible result would be thousands of jobs and millions of square feet of warehouse space," concluded the study, titled "The Southwest Gateway: Logistics on the Arizona/Mexico Border."

The study was commissioned by the governor's CANAMEX Task Force and conducted by Arnold Maltz, associate professor of supply chain management in the W.P. Carey School of Business at ASU. He spent 12 years in transportation and distribution prior to earning his doctorate in logistics marketing.

For sources, Maltz said he drew on reports about other U.S. ports, such as Los Angeles and Long Beach, as well as projections for the expected volume of shipping activity of a port at Punta Colonet.

He said his study was done "totally independently" of an economic study conducted for Union Pacific.

The need for a new port is driven by an ever-increasing volume of goods imported from Asia, primarily China, that is straining the current ports, Maltz said. And with the work stoppage at the Long Beach port a few years ago at Christmas time, retailers are pushing for solutions to keep goods flowing to markets.

"It's been projected that to start, Punta Colonet would have 6 percent of what the L.A./Long Beach facilities are doing right now," said Maltz.

That would mean the new port would handle approximately 500,000, 40-foot containers the first year, he said. Of those, 50 percent would be inbound with imports from Asia for distribution in the U.S.; the other 50 percent would be empty containers outbound back to Asia.

That volume could quadruple within seven years, Maltz said.

Estimates are that three, 100-car double-stacked container trains a day would be required to transport those goods into the U.S., he said, and increase with the expected growth at Punta Colonet.

"If Punta Colonet gets built, Arizona stands to be where the trade passes through," said Marisa Paul Walker, executive director of CANAMEX Corridor and Cyberport Projects. "The key question is how to add value to that movement ... let's not just let it run through the state. We want that trade to benefit the region. We can't leave this to the railroad to envision. Their goal is just to move the goods.

"We knew the community is weighing a lot of issues and whether there would be any potential benefits associated with the project," Walker continued. "We asked Arnold (Maltz) to put together a basis for discussion."

After transportation into Arizona, the containers would be processed in one of three ways, Maltz said.

- About half the containers would be transferred to eastbound trains without additional handling after clearing Customs.

- About 30 percent would be unloaded for further processing, such as labeling and repackaging, then be sorted for various destinations and reloaded onto larger domestic containers.

- From 5 to 15 percent of the inbound containers might be put on trucks for delivery within a 500-mile range.

At a minimum, Maltz said, Yuma would need an intermodal yard to move containers around, transloading facilities to reload goods and Customs facilities.

He said he also expects some warehousing would be needed to hold goods until retailers commit to their delivery. Importers could be looking at warehouses of 500,000 square feet and bigger.

"In what is called the Inland Empire (Riverside and San Bernardino counties in Southern California), there's over 300 million square feet of warehouse space" to store goods that come in through L.A./Long Beach, he said. "Five to seven years ago, that was the entire warehouse space in Chicago."

An additional 14 buildings reportedly are under construction there.

At a conservative estimate, Maltz said, 10-million to 20-million square feet of warehousing could be absorbed in the Yuma area. That means jobs and a need for supplies and services, he said.

Another potential opportunity for Yuma could be development of a distribution center for agriculture products that could then be transported by rail across the nation, he said.

"We've got to have rail to move cargo. Trucks won't do it anymore," said Magrino, speaking from personal experience as the owner of a trucking company. "I'm not minimizing concerns about possible routes. I just ask the community to explore the options."

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Joyce Lobeck can be reached at jlobeck@yumasun.com or 539-6853.