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January 16, 2020 2:30 PM, EST

Alliant Reconfigures $46.5 Million Freight Hub Project in Iowa

Iowa flagIowa's state flag flies in front of wind turbines on Alliant Energy Corp. property in Iowa Falls. (Daniel Acker/Bloomberg)

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Shifting market needs and ballooning costs led Alliant Energy Transportation to revamp a multimillion-dollar intermodal project on nearly 75 acres it owns, northwest of Eastern Iowa Airport in Cedar Rapids.

In July 2016, a public-private partnership including Alliant, the Iowa Department of Transportation and the U.S. Federal Railroad Administration planned to build a $46.5 million intermodal hub at Cedar Rapids Logistics Park.

The project along the Cedar Rapids and Iowa City Railway, or CRANDIC, originally included facilities for a container intermodal terminal, a rail-to-truck transload facility for bulk commodities and a cross-dock facility for consolidating and redistributing truck loads.

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At the time, state leaders, including then-Gov. Terry Branstad, touted the proposed hub as a boon to farmers and businesses, enabling them to ship goods from eastern Iowa to freight centers in Chicago, Kansas City and Minneapolis.

But in July 2019, the Iowa Department of Transportation “respectfully declined” a $25.7 million federal grant the U.S. Department of Transportation had awarded it for the project, according to the Federal Railroad Administration’s website.

Because of “changes in market conditions,” Alliant had determined that construction no longer was feasible, the site says.

More than 90% of revenue assumptions for the original hub were based on use of its cross-dock facility and container shipping service, said Jeff Woods, director of business development and marketing for Alliant Energy Transportation.

As part of a typical cross-docking operation, shipping companies could consolidate different types of freight among trucks to capitalize on unused extra space in the vehicles.

But Woods said, since 2016, Alliant officials learned that most shipping companies would not take advantage of the proposed cross-dock facility, primarily due to product sensitivity and security concerns.

Companies that ship food must abide by specific industry rules, Woods said, while, “If it’s a $7 million load they’re moving from Cedar Rapids to Dallas, they’re probably more interested in getting it there on time without having any damage” than on marginal cost savings from maximizing truck space.

Meanwhile, he continued, Alliant was unable to develop a rail shipping option that could compete with trucks in terms of time and cost to reach a primary feeder hub in Chicago.

And the intermodal project’s cost inflated over time from $46.5 million to nearly $70 million, Woods said.

Within the confines of the federal grant application, he said, “There wasn’t any wiggle room to rescope the project to make it work. ... It became apparent that the right thing to do was to return the funds to the government for use on other projects.”

Alliant Energy Transportation still has plans to develop the Cedar Rapids Logistics Park.

The company’s project web page now calls for a multipurpose warehouse facility, a bulk transload facility with team track access so commodities could be transferred between truck and rail, and a secure trailer drop yard.

Woods said shippers could use the new facilities in providing last-mile truck delivery services for products, after the freight has been brought in over long distances via rail.

After Alliant receives the necessary permits and local government approvals, construction on the facilities is expected to start in early 2021 at the latest. Though Woods did not provide a new projected cost, he said it is expected to be “appreciably lower” than the prospective $70 million figure.

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