$15.6 million railroad facility opens Des Moines to global markets

Des Moines will build a long-awaited $15.6 million railroad transfer station on the city's southeast side next year.

City officials say the "transload" facility will be a boon to the local economy, lowering shipping costs for Des Moines companies while luring businesses that sidestep central Iowa for the likes Omaha and Kansas City, which have more robust rail systems. 

“It’s a huge opportunity for central Iowa,” said Des Moines Mayor Frank Cownie.

A transload facility — also called a railport — is a transfer point where bulk materials move from semi-trailers to trains, which ship products at a lower cost.

According to a University of Northern Iowa study, the facility could have a $4.8 million annual economic impact and create 50 new jobs, including 20 jobs tied directly to the railport. 

Des Moines plans to build its facility across the street from the Richard A. Clark Municipal Services Center, 1551 E. Martin Luther King Jr. Parkway, along four rail lines that link Des Moines to destinations across the country.

► More:Des Moines rail facility could hold key to cheaper shipping options

The project has long been an objective for local city and business leaders. 

The Des Moines Area Metropolitan Planning Organization on Tuesday was awarded an $11.2 million U.S. Department of Transportation grant that will allow the project to break ground and possibly open by the end of 2019.

Without the grant, it likely would have been built in phases over the next three to five years.

“It allows us to be competitive with other metropolitan areas in the Midwest that we often compete with for projects,” said David Maahs, executive vice president of economic development for the Greater Des Moines Partnership. 

An MPO study found that companies with access to multiple railroads can save up to 50 percent on shipping costs. The Des Moines site has access to three Class 1 rail lines — Union Pacific, BNSF and Norfolk Southern — and the Iowa Interstate railroad.

Des Moines' only existing railport facility is limited, the MPO study says. It is only accessible to the Union Pacific railroad and it is only capable of handling one product: plastic pellets.

Most central Iowa companies do not have a local option to ship products by rail, said Zach Young, a principal planner at the MPO. Those who want to ship their goods by train must first truck the materials to Kansas City, Omaha or Chicago, he said.

Des Moines' new facility will handle multiple commodities like grain, steel, lumber and cement.

It will add "another arrow to our quiver," said Luke Schryver, the vice president of business development for Green Products Company. The company, based in Conrad, about 65 miles northeast of Des Moines, ships large amounts of bulk products across the country. 

Some of his customers would prefer rail transportation over trucking, which is more expensive, he said. But saving money is not the main draw. 

"For our company, it’s less about absolute cost savings and more about the ability to increase flexibility (i.e. service) to our customers," Schryver said in an email. 

It should benefit the entire region, Young said.

Located at the junction of Interstate Highways 35 and 80, Des Moines is already a trucking hub. The transload facility provides another option for shippers already moving goods through the city.

It is expected to serve companies within a 150-mile radius, which includes the vast majority of Iowa and parts of northern Missouri, eastern Nebraska and southern Minnesota.

“It will bring businesses to the Des Moines area, but it will also allow businesses that were already here to expand their operations as well,” said Todd Ashby, executive director of the MPO.

The Iowa National Guard, one of the parties that wrote a letter in support of the grant, said it could use the facility to transport military equipment rather trucking equipment to Kansas City to access rail lines there. The Des Moines facility would save the Iowa National Guard about 60 percent on its transportation costs, Young said.

Looking for operator

The city of Des Moines and Des Moines Area Metropolitan Planning Organization have been working on this project for more than five years.

Des Moines Transload, a private company that was originally expected to operate the facility, has since pulled out of the project. 

The MPO will to interview prospective companies this month and select an operator in January. The city of Des Moines owns the site.