TGS Cedar Port Railroad hitches its future to Texas industrial park’s growth

Published On: April 26, 2024

By Julie Sneider, Senior Editor 

After retiring several years ago from Union Pacific Railroad, Roger Lambeth decided it was time to get back to work. He was bored with retirement, he says. Besides, he missed the rail industry.

So, five years ago, he joined the Trans-Global Solutions Inc. (TGS) Cedar Port Industrial Park (Cedar Port) in Baytown, Texas, a massive, rail- and barge-served industrial park located less than 30 miles from the Port of Houston. The park covers 15,000 acres, with more than 11,000 acres available for sale, lease and build-to-suit developments.

Lambeth is executive director of rail operations at the park, which includes TGS Cedar Port Railroad, a newly minted Class III line that started out as a non-common carrier private switching service. The short line currently serves 17 industries within the park and about 65 rail-car storage customers, according to Lambeth.

In terms of Class I availability, Cedar Port is dual-served by UP and BNSF Railway Co.

In early August 2022, the TGS private switching operation received approval from the Surface Transportation Board to begin operating private track in the industrial park as a Class III railroad. By April 2023, Cedar Port Railroad was ramped up and ready to officially deploy its Class III status, Lambeth says.

A hiccup occurred shortly after, when UP petitioned the STB to revoke the railroad’s Class III status, claiming that as a new common carrier, it didn’t have a right to interchange with BNSF as a result of conditions related to UP’s mid-1990s merger with Southern Pacific Rail Corp. TGS Cedar Port Railroad officials disagreed with UP’s argument; on April  1 of this year, the STB declined to revoke the short line’s Class III status.

With that case behind them, Lambeth and Cedar Port officials are looking forward to further serving the industrial park’s customer base, which has undergone substantial growth over the past five years.

Cedar Port is the largest rail- and barge-served industrial park in the United States, with 25 million square feet of warehouse inside the park, 14.5 million square feet of which has been developed since 2017, according to Matt Fleming, executive vice president of TGS. Fleming focuses on business development for the park and its short line.

“We cater quite a bit to the strong petrochemical base in the area, but also to the steel industry, frozen foods industry and the retail distribution markets,” says Fleming. “Inside the park are companies like Walmart, Ikea, Home Depot, and Floor and Decor — they have very large warehouses here with us.”

Cedar Port’s proximity to the Port of Houston and the acceleration of transportation bottlenecks along the supply chain that occurred pre- and post-pandemic have been major drivers of growth at the park, Fleming believes.

“A lot of the commerce moving away from the West Coast [ports] as their point of entry and into the Gulf Coast as their point of entry has been a big winner for us,” Fleming says, noting that 25% to 30% of containers that arrive at the Port of Houston are transported to Cedar Port.

Cedar Port also has benefited from the Texas Gulf Coast’s booming petrochemical industry. And as a result of the thriving polyethylene market in the Houston port region, the park now has four plastic packagers: Vinmar, Ravago, Plastic Express and PBP Inc.

The park’s growth helped convince TGS leadership of the need for more and better rail service.

“There were a lot of benefits in becoming a short line and we felt we were sized to justify it,” says Lambeth. “We inbound 47,000 cars last year — and that was 18% growth over 2022. We’re already seeing another 20% growth through the first three months of this year, so we expect to inbound over 50,000 cars [in 2024]. It was really time for us. We were acting like a railroad, so it was time to get the Class III designation.”

Becoming a short line also helped with employee recruitment and retention. When the rail operation was a third-party switcher, many employees left for jobs at Class Is as soon as they earned their conductor or engineer certifications, Lambeth says.

“This was a big deal for us,” he adds. “Since we’re now a railroad, we pay into the railroad retirement system and that’s been a huge benefit for recruitment and retention.”

Today, the short line employs 98 people, including conductors, brakemen, engineers, the track maintenance team and locomotive mechanics.

“We do all our own track maintenance, and we do all our own locomotive maintenance,” Lambeth says. “We own a fleet of locomotives that we lease outside Cedar Port.”

Rail infrastructure has expanded to 110 miles of total track feet and 125 switches. The park’s rail-car storage spots also have rapidly duplicated, with current capacity at up to 6,000 cars and the potential to increase to 8,000.

The goal is to become a one-stop shop for customers’ rail needs, says Lambeth. That’s why a couple years ago, the park opened a rail-car cleaning facility that features an automated entry system for tank and hopper cars.

“Another benefit of becoming a short-line railroad is that we could now become a designated rail-car repair agent,” Lambeth explains.

To that end, the railroad last year partnered with Cathcart Rail for handling rail-car inspection and repair needs. The Cathcart team of 12 carmen, site and regional managers inspects inbound interchange cars for defects to ensure they’re safe for movement within the industrial park and readily available for the short-line’s shipper customers.

Other benefits of achieving the official railroad status include access to technology that improves efficiency, such as the ability to exchange EDI messages with the Class Is; access to billing services via Railinc; and the ability to implement Cedar AI, an automated rail operating system.

Looking ahead, Lambeth and Fleming see even more potential for the railroad as the park continues to expand. For one, they’d like to expand intermodal opportunities.

“With so many of the intermodal volumes already coming over to the industrial park by truck, we’re now exploring alternatives to try to do more intermodal by rail,” says Fleming.

There’s also potential for diversifying the product mix of customers served in the park, according to Fleming.

“We’re doing deals right now in the semiconductor industry, the lithium battery markets and the refrigerated warehousing sector so that we have opportunities with other types of commodities,” says Fleming.

Notes Lambeth: “The growth trajectory looks really good.”