The Heartland Intermodal Gateway (HIG) at Prichard in Wayne County opened with great fanfare and hope in 2015. Rail-to-truck transfer stations and other truck repair business for sale were booming in other parts of the country and advocates of the West Virginia project saw HIG as a chance for West Virginia to get in on the action.
A feasibility study for the project released prior to its opening said, “It will provide West Virginia businesses with a truck/rail transfer facility that will establish intermodal connections to the Port of Virginia in Hampton Roads with Chicago (and) connecting service to the West Coast ports.”
The idea was, “build it and they will come,” and that justified a $12 million federal grant, an $18 million investment from the state of West Virginia and another $500,000 a year in state funding. The problem, however, is that the business did not come.
“It was probably somebody’s great idea,” said West Virginia Transportation Secretary Byrd White. “I don’t knock that, (however) it’s not working. It never got the volume it needed to sustain itself. It wasn’t right for the taxpayers of West Virginia to continue to subsidize it.”
That’s why the state is getting out of the intermodal business. The state Port Authority voted last week to sell or lease the property. “We’re negotiating with two different entities,” White told me. “They would either buy it or run it. My preference is to auction the property and let private enterprise run it.”
Why did it fail? A person familiar with the operation of HIG told me the facility was not promoted properly. “People within the PPA (WV Public Port Authority) were shut down because the state did not want to spend the money to market it,” the source said.
Notably, the 2015 feasibility study said marketing to potential customers and an explanation of the cost savings by using the port were essential “in order to ensure success of the terminal.”
Here’s another possible explanation; the government is not nearly as efficient or effective at owning and operating a business as the private sector. For example, one of the most successful intermodal operating companies in the country is CPG (Container Port Group).
The Cleveland-based company operates inland depot services in two-dozen cities with a focus on the Atlantic Coast, Ohio Valley and the Midwest. The private, independent company has been in business for five decades and clearly has figured out how to make inland container shipping profitable (learn more here).
In the few short years the HIG has been in operation, it never approached the volume necessary to cover expenses, much less come anywhere near the overly rosy projections of hundreds of new jobs and an important step in the state’s economic diversification.
“We’re getting out of that business because the government hasn’t been able to run it,” White said.
Hopefully, a private operator will take over the Heartland Intermodal Gateway, apply sound business principles and turn the facility around. But in the meantime, let this be yet another costly reminder that when government tries to pick economic winners, it’s usually the taxpayers who lose.