Serving a number of different industries, Palmetto Railways is a Charleston-based short line railroad company that has been transporting industrial goods and products across South Carolina since 1890. Jeff McWhorter, President and CEO of the company, sits down to talk about the long, winding history of Palmetto and why a recent expansion has them set up to take their overall business to an entire new level.
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In the early 1890s, an organization of New York based railroad investors sought to build and operate the East Shore Terminal Company railroad, the earliest predecessor railroad to Palmetto Railways. This company expanded through the 1890s along the Charleston Harbor waterfront until its city franchise and assets were transferred to the Charleston Terminal Company in 1903.
Following this transition, the Charleston Terminal Company allowed the waterfront and rail assets to fall into disrepair causing the Port of Charleston to lose some southeastern transportation market share. The City of Charleston took notice of this in the 1910s, and the topic of how to correct the problem became a key focus of the 1919 mayoral race. Candidate John Grace won the general election and immediately pursued the dissolution of the city franchise for the Charleston Terminal Company. At the same time, the South Carolina General Assembly passed legislation “to authorize cities having a population of fifty thousand or more to acquire, purchase, establish, improve, maintain, and operate the port utilities of such cities.” One month after that legislation, in April of 1920, the Charleston City Council officially refused the franchise renewal of the Charleston Terminal Company.
The Public Utilities Commission of Charleston was born four years later which encompassed the entirety of the old Charleston Terminal Company under the City of Charleston management. Over the next twenty years or so, a system of railways were built and maintained until their use grew so big that the State of South Carolina decided it would need to establish its own Port Authority to more effectively monitor and track the rapidly increasing import and export activity occurring across the region.
However, making this tricky was the fact that the rail workers were formally unionized, while those working down at the port were not. “After a couple decades of this, they decided to spin off the port and rail operations, creating the South Carolina Public Railways Commission in 1969,” says McWhorter. He says that over the next two decades the rail operation grew quickly through established partnerships with other transportation businesses in the state like CSX, and local industrial leaders like AMOCO Chemicals. “We really became a trusted transportation service provider for the State of South Carolina, and in the early 90s, during some restructuring under then Governor Carroll Campbell, a department of commerce was created,” he says, adding, “And because of our activity in recent years and the role we had played in the state’s success, the Governor decided that we would be a division of such, which really paved to way to our modern identity and the name Palmetto Railways.”
Since then, the company has evolved to the point where today it operates three different railroad subdivisions, and serves a customer base that includes BP Chemical, Nucor Steel, and BMW. “Our Charleston and North Charleston subdivisions provide switching services to the South Carolina State Ports Authority terminals and other various industries, and our Charity Church location is strictly industrial transportation for a defined set of customers.”
McWhorter says that one of the defining factors in Palmetto’s success over the years has been its commitment towards a safe and flexible approach towards its customers and fellow rail providers in the market. He says he’s particularly proud of their safety track record, pointing to 2013 in particular when the company lost no time due to injuries, had no FRA reportable derailments, and no human factor derailments. “Our success throughout the last few decades and into today has been largely predicated upon our close, secure relationship with our customers and the guarantee that we will do whatever we can on our end to help improve their overall performance.”
Close to the Customer
It’s why when BMW announced last year its plans to invest more than $1 billion into an expansion of its campus in Spartanburg County to accommodate increased production and shipping of its new X7 sports utility vehicle, Palmetto Railways soon followed with an expansion of its own in response.
In May of this year, Volvo announced to build its first North American manufacturing plant in the Charleston region. The $500 million dollar factory is expected to manufacture roughly 100,000 vehicles when the plant opens in 2018. Rail service to and from the plant will be a critical component and Palmetto Railways is expected to play a vital role in Volvo’s success.
The expansion included a $3.2 million infrastructure improvement project at the Port of Charleston’s Columbus Street Terminal, where nearly 4,300 feet of track was added, bringing the overall capacity to 14,616 feet. “We also built a bridge over a creek at the north end of the terminal, and overall the expansion was done in response to BMW’s announcement, whom we presently receive and originate an 80-to 100-car unit train for, seven days a week.”
He adds that the infrastructure upgrades will allow Palmetto handle significantly more rail cars at the terminal, something particularly important given BMW’s planned increased annual production from 350,000 units to 450,000, and the fact that 70 percent of its X-series vehicles are exported through the Port of Charleston.
Intermodal Facility and Beyond
And yet, overshadowing and influencing all of this is Palmetto’s planned Intermodal Container Transfer Facility that is currently in the midst of the permitting process. With an estimated cost of over $200 million, the project is being designed and built by Palmetto upon a 90-acre site at the former Charleston Naval Complex (CNC) in North Charleston. “Think of it as a hybrid on-dock/near-dock facility,” says McWhorter, adding, “It will operate as an on-dock facility, so the drayage between the facilities will operate as an internal drayage, and won’t be out on public railroads and highways.”
Presently, there are two existing intermodal terminals in the Charleston region, which include the CSX Ashley Junction intermodal terminal and the NS 7-Mile intermodal terminal. However, both of these terminals are operating high volumes and are either at or near their throughput capacity, and with BMW’s announcement as well as a number of other industrial expansions from other South Carolina-based companies coming, an additional facility was needed. “This facility will provide capacity to meet the projected future intermodal growth within South Carolina, something Palmetto is clearly heavily invested and interested in.”
The site will be accessible by NS and CSX, will have Over-the-Road (OTR) truck gate operation for the handling of international and domestic containers, and incorporates direct access to the new SCPA Navy Base Container Terminal via a private access road, eliminating the public drayage. “This facility is really going to take Palmetto—and our customers by extension—to a whole new level of performance and activity and we’re very excited about it.”
Palmetto’s proactive role in South Carolina’s economy is why it was recently named the 2015 Short Line Railroad of the Year by Railway Age. The award, which nationally recognizes outstanding achievement in any of the following areas—innovation in operation or maintenance, turnaround situations, consistent excellence, customer service, enhanced productivity, community relations, safety improvement, or ingenuity in dealing with the unexpected—further highlights the company’s commitment to being dynamic and reliable in each and every operation. “At the end of the day, we are strong proponents of economic development in this state, and we continually seek ways to provide cost-effective rail solutions and efficient freight movement in order to promote and bolster the local, regional, and statewide economy,” says McWhorter.
With that in mind, it’s easy to see why Palmetto Railways is performing and progressing so smoothly today, and with the new intermodal facility, an expanded track, and an everlasting commitment to safe and efficient delivery solutions, it appears as though the short line railroad company will be keeping business on track for decades to come.