NETWORK APPALACHIA 

Enhancing access and economic opportunity, 

improving transportation coordination and 

capacity, and achieving important new energy 

and environmental benefits in the global 

economy of the 21st century.

Access to Global Opportunity
Foreword

At the 2007 Appalachian Regional Commission (ARC) summer meeting, the Commission established a 

regional Study Group comprised of economic development, transportation, and international trade 

professionals from across Appalachia. Under a planning initiative labeled “Network Appalachia”, ARC 

directed its Study Group to carefully evaluate changing macro-economic trends and project the affects of 

these trends on the Region’s future commerce and on the movement of goods to, from, and across 

Appalachia. This document reports on the research and work done by the Network Appalachia Task 

Force including the findings of the four regional workshops. 

The Study Group participants have been appointed by each of Appalachia’s 13 member-states and the 

Development District Association of Appalachia. Study Group members include:

Alabama

Mr. Rick Tucker - Executive Director, Huntsville 

International Airport

Mr. James Loew - Director, Florence/Lauderdale 

County Port Authority

 

Georgia

Ms. Jane Hayse - Chief, Transportation Planning 

Division, Atlanta Regional Commission

Kentucky

Mr. Greg Jones - Executive Director, Southeast 

Kentucky Economic Development Commission

Maryland

Mr. Robert Gordon - Director, 

Hagerstown/Eastern Panhandle Metropolitan 

Planning Organization

Mississippi

Mr. Don Waldon - President, Tenn-Tom Waterway 

Development Council (Retired)

New York

Mr. Don Rychnowski - Director, Southern Tier 

West Regional Planning & Development Board

North Carolina

Ms. Susan Howard - Federal legislative 

Coordination, North Carolina Department of 

Transportation

Ohio

Mr. Tracy Drake - Executive Director, Columbiana 

County Port Authority. 

Pennsylvania

Mr. Herb Packer - Executive Director, Penn Ports

South Carolina

Mr. Steve Pelissier - Executive Director, 

Appalachian Council of Governments

Tennessee

Ms. Jeanne Stephens - Director, Long Range 

Planning, Tennessee Department of 

Transportation

Dr. Mark Burton - Director, Center for 

Transportation Research, University of Tennessee

Virginia

Mr. Wayne Strickland - Executive Director, 

Roanoke Valley-Alleghany Regional Commission

West Virginia

Mr. Patrick Donovan - Director, Public Port 

Authority, West Virginia Department of 

Transportation

Development District Association of Appalachia

Mr. Robert Augenstern - Director, Southern Tier 

East Regional Planning Development Board

Mr. Robert Culver - Executive Director, Top of 

Alabama Regional Council of Governments

Network Appalachia also benefits from the support and guidance of ARC’s Export Trade Advisory Council. 
Table of Contents

1.0 Introduction......................................................................................................................... 1

1.1 A Region Apart................................................................................................................. 1

1.2 ADHS - Access to Opportunity......................................................................................... 2

1.3 Transition to the Global Economy................................................................................... 2

1.4 Network Appalachia ........................................................................................................ 4

2.0 Global Trade Patterns.......................................................................................................... 5

2.1 Containerization of Trade................................................................................................ 6

2.2 Trade Barriers.................................................................................................................. 7

2.3 Information and Communication Technology ................................................................ 8

2.4 Demographics.................................................................................................................. 8

3.0 Appalachian Trade Perspective ......................................................................................... 16

3.1 Demographics and Consumption .................................................................................. 16

3.2 Regional Transportation Infrastructure......................................................................... 20

3.3 Strategic Highway System ............................................................................................. 21

3.4 Strategic Railway System............................................................................................... 22

3.5 Strategic Waterway System .......................................................................................... 23

3.6 Inland Ports.................................................................................................................... 26

3.7 Coastal Ports – Global Access........................................................................................ 26

3.8 Connectivity: Inland and Coastal Links.......................................................................... 31

3.9 Economic, Energy, and Environmental Success – And Expanded Capacity................... 33

4.0 Access Evaluations............................................................................................................. 34

4.1 Access Definition ........................................................................................................... 36

4.2 Proximity........................................................................................................................ 36

4.2.1 Interstates.............................................................................................................. 38

4.2.2 ADHS/ National Highway....................................................................................... 39

4.2.3 Intermodal (Container) Rail Terminals.................................................................. 40

4.2.4 Multimodal Rail Terminals..................................................................................... 41
4.2.5 Inland Waterway Terminals .................................................................................. 42

4.2.6 Intermodal Rail – Interstate Highway Intersection ............................................... 43

4.3 Data Compilation and Normalization............................................................................ 44

4.4 Weighting and Ranking.................................................................................................. 44

5.0 Engagement and Collaboration......................................................................................... 47

5.1 Building Capacity for the Future.................................................................................... 47

5.2 Putting the Capacity to Work ........................................................................................ 47

5.3 Engaging the Region...................................................................................................... 49

5.4 Many Voices. Many Ideas. One Future.......................................................................... 50

5.5 Strategic Priorities......................................................................................................... 52

5.6 Tactical Opportunities................................................................................................... 53

6.0 The Way Ahead ................................................................................................................. 57

6.1 Projecting Forward: A Changing World of New Challenges and Opportunities........... 57

6.2 Positioning for Success in the 21st Century: Network Appalachia................................. 59

6.3 Proactive Planning: The Way Ahead ............................................................................. 64
Table of Figures

Figure 2.1: World Exports of Manufactured Goods and Real GDP ................................................................. 5

Figure 2.2: Containerization of Natural Rubber Imports................................................................................ 6

Figure 2.3: Percentage of Population at Retirement Age and Average Age................................................... 8

Figure 2.4: Share of US Household Expenditures Goods and Services............................................................ 9

Figure 2.5: Manufacturing Labor Costs in US Dollars at Prevailing Exchange Rates...................................... 9

Figure 2.6: Employment Shares by Type of Activity 1957 - 2006.................................................................. 10

Figure 2.7: Employment Trends in Industries Manufacturing Containerizable Goods ................................. 11

Figure 2.8: Global Trade in Manufactured Goods, Oil & Metal Commodities and Agricultural Goods........ 12

Figure 2.9: US International Container Volume Trade and Real GDP, Indexed to 100 in 1980 .................... 13

Figure 2.10: US Containerized Trade for Major Foreign Trade Routes......................................................... 14

Figure 2.11: TEUs per 1000 Persons ............................................................................................................. 15

Figure 3.1: Population Density...................................................................................................................... 16

Figure 3.2: Retail Sales.................................................................................................................................. 17

Figure 3.3: Density of Warehouse Businesses.............................................................................................. 18

Figure 3.4: Projected Population Increase.................................................................................................... 19

Figure 3.5: Projected Population Growth Rate ............................................................................................. 20

Figure 3.6: Strategic Highway System .......................................................................................................... 21

Figure 3.7: Strategic Railway System............................................................................................................ 22

Figure 3.8: Emerging Intermodal Rail Corridors ........................................................................................... 23

Figure 3.9: Strategic Waterway System ....................................................................................................... 24

Figure 3.10: Emerging Intermodal Marine Highway Corridor...................................................................... 25

Figure 3.11: Enhancing Access to International Ports.................................................................................. 27

Figure 3.12: ARC 2007 Import Volumes........................................................................................................ 28

Figure 3.13: ARC 2007 Export Volumes ........................................................................................................ 29

Figure 3.14: Top ARC Import Volumes.......................................................................................................... 30

Figure 3.15: North Asia LCMA and 2007 Import Volumes............................................................................ 31

Figure 3.16: North Asia LCMA and 2007 Export Volumes............................................................................. 32

Figure 4.1: ARC Counties showing Geographic Centroids (Blue) and its closest 5-Digit Zip Code (Red)....... 37

Figure 4.2: National Highway Planning Network Version 2005.08 .............................................................. 38

Figure 4.3: The ADHS network (2007)........................................................................................................... 39

Figure 4.4: The ICTF network used in the study ............................................................................................ 40

Figure 4.5: The Multimodal Freight Rail Network ........................................................................................ 41

Figure 4.6: Selected Inland Waterway Ports................................................................................................. 42

Figure 4.7: Selected Rail – Interstate Intersection Locations........................................................................ 43

Figure 4.8: Access Evaluation Map............................................................................................................... 46

Figure 5.1: Venue/Dates of Regional Workshops and Members of the Study Group................................... 48

Figure 6.1: The Appalachian Development Highway System ....................................................................... 60

Figure 6.2: Intermodal Corridors of Commerce ............................................................................................ 61

Figure 6.3: Inland Container Ports................................................................................................................ 63
 
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1.0 Introduction

1.1 A Region Apart

Appalachia. This is a land stretching for over 1,000 miles along the spine of the ancient 

Appalachian Mountains from southern New York State to northeastern Mississippi. It 

encompasses a rugged landscape more than twice the size of Great Britain. Yet, with a 

population of only about one-third that of its trans-Atlantic neighbor, Appalachia is known for its 

rural lifestyles and is home to abundant natural resources, spectacular beauty, and a distinctive 

cultural heritage. 

Famous for its rich coal deposits and dense hardwood forests, its mountain peaks and deep, 

forest-lined valleys have provided residents with seemingly endless natural resources. Yet, 

these same mountains have stood throughout history as nearly impenetrable barriers to socioeconomic interaction, commerce, and prosperity. When the builders of America’s Interstate 

Highway System confronted the rugged terrain of Appalachia, they chose to build around the 

Region rather than to penetrate this mountainous land with their modern highway system, a 

system that would shape American economic prosperity for the remainder of the 20th century. 

Appalachia is a place apart, a place where people have long-suffered the chronic economic 

consequences of physical isolation. Recognizing both the obstacles and the potential facing the 

Region, the President’s Appalachian Regional Commission (PARC) opened its 1964 report to 

President Lyndon Johnson, with the following: 

Appalachia is a region apart-geographically and statistically. It is a mountain 

land boldly up-thrust between the prosperous Eastern seaboard and the 

industrial Mid West – a highland region which sweeps diagonally from New York 

to Mississippi...

Responding to this report, Congress passed the Appalachian Regional Development Act of 1965, 

creating the Appalachian Regional Commission (ARC). The PARC report focused attention on the 

need for investment in basic public facilities and stressed that programs must also be initiated 

which are focused directly upon the people themselves. Finally, the report argued that progress 

can only be realized through the coordinated effort of a regional development organization, 

with state and local development units, with research and demonstration centers, and with 

multiple state and federal agencies. From these priorities grew unique partnerships between 

federal, state, and local interests, partnerships that remain at the very heart of the Appalachian 

Regional Commission nearly a half century later. 
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1.2 ADHS - Access to Opportunity

Recognizing the linkage between isolation and economic distress, the PARC report emphasized, 

“Developmental activity in Appalachia cannot proceed until the regional isolation has been 

overcome.” So fundamental was the need for enhancing Appalachia’s access that the 

Appalachian Regional Development Act of 1965 devoted 85% of appropriated funds to improve

transportation access to, from, and within the Region and authorized the establishment of the 

Appalachian Development Highway System (ADHS). 

Unlike conventional roadways, ADHS is a 3,090 mile near-interstate grade highway system 

composed of 31 individual corridors and designed to stimulate socio/economic development 

throughout the 13-state Appalachian Region. Specifically, ADHS was designed to provide the 

following benefits: 

1. Link Appalachia to key external markets.

2. Enhance the flow of commerce, opening isolated areas to economic opportunity.

3. Facilitate commutation to work and delivery of key social services to residents.

Now nearly 85% complete, the impact of ADHS has been both widespread and profound. It is a 

bridge that overcomes the obstacle of isolation and provides important access that remains 

today critical to Appalachia’s economic growth and prosperity. In establishing its Strategic Plan 

for the time period 2005-2010, ARC called for the continued development of ADHS as one of its 

primary goals and committed to an increased focus on maximizing the system’s economic and 

employment benefits to the Region. 

Looking to the future, ARC commissioned a study in 2008 entitled Economic Impact Study of

Completing the Appalachian Development Highway System. The research determined that by 

completing the yet unfinished segments of ADHS, the Region would benefit from $3.2 billion in 

new wages, $5 billion of increased economic activity, and 80,500 new jobs. The study 

highlighted the importance of these final links in completing ADHS; a system and its resultant 

benefits that would be abbreviated for all time, if left unfinished. Finally, the study confirmed 

that ADHS benefits extend far beyond the borders of Appalachia, as the capacity, safety, and 

efficiency of ADHS is of growing importance, as so much of the nation’s highway capacity is 

becoming increasingly overburdened with congestion. 

1.3 Transition to the Global Economy

Throughout the nearly half-century since the launch of ADHS, the economy of Appalachia, and 

of the United States, has been undergoing an unrelenting transformation from one almost 

completely dominated by domestic commerce to a new and much broader international 

marketplace, powered by the telecommunication forces of the world wide web and facilitated 

through the creation of a fully-coordinated intermodal global supply chain. This is an economic 
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transition that continues to present both challenges and opportunities, as it reshapes the flow of 

commerce to, from, and across Appalachia. 

As the Region was preparing to enter into the 21st century, a 1999 study commissioned by ARC, 

entitled An Assessment of Intermodal Transportation Plans, Systems, and Activities in 

Appalachia stressed the importance of better coordinating the region’s often disjointed

transportation resources. The study identified only seven locations throughout the 200,000 

square mile Appalachian Region that can accommodate the intermodal interchange of freight 

containers between trucks and trains, termed intermodal container transfer facilities (ICTF). 

Such limited intermodal access results in higher shipping costs and a pronounced competitive 

disadvantage for Appalachian businesses. Warned the study, “While ADHS has served as the 

centerpiece of ARC’s economic development program, highways alone are no longer sufficient 

to help Appalachia’s communities compete in the global marketplace.” 

Six years later the Nick J. Rahall, II Appalachia Transportation Institute undertook an important 

strategic look into ARC’s future entitled, Meeting the Transportation Challenges of the 21st

Century, Intermodal Opportunities in the Appalachian Region. The report identified emerging 

east-west and north-south trade lanes across Appalachia, representing important new channels 

of economic growth and opportunity. Taking advantage of its natural cross-roads location 

between the northeast, mid-Atlantic, southeast, and Midwest, the report highlighted an 

opportunity for Appalachia to serve as an inland-bridge, linking key coastal ports with major 

supplier and consumer markets in the east, south, and Midwest. The report encouraged 

Appalachia to position itself to attract and accommodate these growing volumes of commercial 

activity to, from, and across the region. The study warned that, should Appalachia fail to take 

advantage of this potential, these emerging corridors of commerce, and the economic benefits 

that they represent, could simply bypass Appalachia. The study concluded with a seven-point 

development blueprint for a 21st century logistics network that maximizes ADHS benefits by 

positioning Appalachia to capture the full economic potential of these emerging corridors of 

commerce: 

1. Establish the institutional capacity to plan for and encourage transportation 

development across local, county, and state inter-jurisdictional boundaries. 

2. Expand inter-disciplinary cooperation between economic development, transportation, 

and international trade interests.

3. Increase planning, coordination, and investment between public and private sector 

interests to maximize economic and employment benefits to Appalachia.

4. Through a developing system of inland ports, enhance intermodal cooperation to better 

connect transportation modes and strengthen the link between the Region’s economy 

and its transportation network.

5. Take full advantage of advanced technology to strengthen the performance, 

responsiveness and safety of the Region’s transportation network. 

6. Track changing economic and commodity flow trends and proactively position 

Appalachia to benefit from emerging corridors of commerce.
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7. Advocate for a 21st century transportation system that can enhance the competitiveness

of Appalachia’s existing businesses and attract new enterprise and employment into the

Region.

1.4 Network Appalachia

At the 2007 ARC summer meeting, the Commission established a regional Study Group

comprising economic development, transportation, and international trade professionals from

across Appalachia.  Under a planning initiative labeled “Network Appalachia”, ARC directed its

Study Group to carefully evaluate changing macro‐economic trends and project the effects of

these trends on the Region’s future commerce and on the movement of goods to, from, and

across Appalachia.    Next, the Study Group was charged with reviewing the Region’s

transportation capabilities and their effect on Appalachia’s access to both domestic and global

markets.  Building on the Appalachian Development Highway System platform, the Study Group

was asked to provide the Commission with a comprehensive package of recommendations on

how to develop a 21st century transportation network that can maximize both economic and

employment benefits to the Region and ensure that Appalachia will never again find itself “a

region apart”.    

The following chapters report on the research and work of the Network Appalachia Study

Group, including the findings of the four regional workshops.

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Figure 2.1: World Exports of Manufactured Goods and Real GDP, Indexed to 100 in 1950 and Number 

of Ports Reporting Container Volumes

Source: World Trade Organization, Containerisation International, Moffatt & Nichol

Table 2.1: World Exports of Manufactured Goods and Global Real GDP Growth

Source: World Trade Organization, Moffatt & Nichol

Average Average Ratio of 

Trade Growth GDP Growth Trade to GDP Growth

1950 - 2007 7.6% 3.8% 2.0

1996 - 2007 6.6% 2.9% 2.3

2.0 Global Trade Patterns

Despite episodes of oil price spikes, several financial crises, and flare ups in geopolitical tensions, 

global trade in manufactured goods has grown on average 7.6 percent per year over the last six 

decades, while inflation adjusted global GDP has grown 3.8 percent, according to World Trade 

Organization data, and Moffatt & Nichol estimates for 2008. 

The volume index of world exports of manufactured goods has increased 64-fold between 1950 

and 2008, while global real GDP has only increased 8-fold as shown in figure 2.1
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As shown in Table 2.1, world trade in manufactured goods has grown over time twice as fast as 

world GDP. While economic growth is an underlying driver of trade growth, it does not fully 

account for trade growing twice as fast. Other long term structural factors have contributed to 

high growth levels. The good news is that trends for these structural factors are such that trade 

will continue to grow faster than GDP through the end of the next decade. The differential in 

the growth rates can be attributed to at least four structural factors, each of which still has 

ample room to continue driving global trade. 

2.1 Containerization of Trade 

Figure 2.1 shows, among other things, that the number of ports around the world reporting 

container volumes since 1970 increased from 75 to over 550 since 1970. Containerization lowers 

the cost of trade and therefore allows manufacturers to reach a larger market or relocate 

production operations to lower cost locations. Most recently there has been an increasing trend 

of containerizing traditional breakbulk commodities. As noted in Figure 2.2, as recently as 2004, 

29.6% of imported natural rubber was containerized and 70.4% was not; as of September 2008 

the trend has reversed where 62.1% of the imports were containerized and 37.9% was not. This 

is only one example of a global trend, and one that is expected to continue over the next 

decade. 

The outlook for future and continued containerization of commodities can be linked to the 

growing trade between developing economies and the rest of the world. Some of the fastest 

Figure 2.2: Containerization of Natural Rubber Imports

Source: US Census Bureau; Moffatt & Nichol

29.6%

38.6%

42.2%

51.9%

62.1%

70.4%

61.4%

57.8%

48.1%

37.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2004 2005 2006 2007 2008

Container Non-Container

29.6%

38.6%

42.2%

51.9%

62.1%

70.4%

61.4%

57.8%

48.1%

37.9%

0%

10%

20%

30%

40%

50%

60%

70%

80%

2004 2005 2006 2007 2008

Container Non-Container
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Table 2.2: World Free Trade Agreement Facts

Source: Business Roundtable, Moffatt & Nichol

FTAs negotiated globally Aproximately 300

FTAs negotiated since 2002 in Asia-Pacific 119

Percentage of world trade occurring through FTAs 50%

Countries with which China is negotiating or has proposed FTAs 28

EU FTAs 21

US FTAs 10

growing trade routes in 2008 are between South America and the rest of the world including the 

US and China. Many of these South American nations, including Brazil, Colombia and Peru, have 

growing container trades which are being developed out of very primitive facilities. The Port of 

Callao in Peru, for example, handles approximately 25% of the volume of the Port of New 

York/New Jersey’s roughly 4 million TEUs (Twenty-Foot Equivalent Unit – a standard 

measurement of container size). What makes Callao impressive is that the current volumes are 

handled without the use of a single dockside modern gantry crane (these are the cranes used to 

load/off load containers from a vessel) while the Port of New York/New Jersey operates with 

approximately 50 such cranes. Callao is currently undergoing a development program, including 

the purchase of modern cranes, which will roughly double the port’s current capacity.

Within the US there is a growing tendency to ship agriculture exports in containers as well. The 

soybean industry has found in recent years that shipping in containers can help reduce costs as 

well as help deliver a specialized product. This refers to the customer demands for particular 

grades of soybeans being used in various products. By placing the soybeans in containers, the 

exporters have reassured customers that they are receiving the desired soybean grade which 

hasn’t been mixed with other grades. It has become a quality assurance mechanism, one which 

is increasingly being sought after in other agriculture products. The USDA has also promoted 

containerization as a means of maintaining the competitiveness of US agricultural exports.

2.2 Trade Barriers

Between 1947 and 2008 there have been nine global trade agreements beginning with the 

Global Agreement on Trade and Tariffs at the Geneva round and most recently the failed Doha 

Round which began several years ago. In the meantime the Maastricht Treaty in Europe and 

NAFTA contributed significantly to trade growth as did China’s ascension to the WTO in 2001. 

The Business Roundtable estimates that 50% of world trade takes place under Free Trade 

Agreements, with about one third of them having been established in Asia since 2001. This is 

presented in Table 2.2.

In November 2008, China and Peru signed a free trade agreement. Canada and Colombia also 

signed an agreement that same month. This is indicative of two changing dynamics which are 
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mutually dependent. First, it shows the world is becoming more and more integrated. Nations 

which have existed relatively independent of one another are now becoming trade partners. 

Second, it shows that many of these nations which have historically relied on the US to trade 

with are turning elsewhere for support, which implies that the US is losing some of its clout in 

the global trade economy, particularly with South America. If the US is to maintain its 

dominance and influence with South and Central America it is important for FTAs to be 

established between the US and these nations.

2.3 Information and Communication Technology

The Internet is accessible worldwide so that businesses can operate production and distribution 

software, such as SAP, that allows them to globally manage their activities from virtually 

anywhere in the world. These improvements in communication technology greatly facilitate 

global sourcing – enabling firms to optimize production efficiencies.

2.4 Demographics

The populations of Europe, North America and Japan are aging as their baby boom generations 

enter retirement. In 2007 3.4 million Americans turn 62, while in 2008 an even greater number 

will make this transition. This group will continue to downsize residences and purchase new

goods when they move to new homes. The demographic projections from the US Census Bureau 

shown in Figure 2.3 indicate that:

• From 1980 – 2000 just 1 in 5 people were of the retirement age

• By 2030 close to 1 in 3 people will be of the retirement age

Figure 2.3: Percentage of Population at Retirement Age and Average Age

Source: US census Bureau, Moffatt & Nichol
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Figure 2.4: Share of US Household Expenditures Goods and Services

Source: Bureau of Economic Analysis, Moffatt & Nichol

Figure 2.5: Manufacturing Labor Costs in US Dollars at Prevailing Exchange Rates

Source: International Labor Organization, Business Monitor, Moffatt & Nichol

The demand for services (leisure & entertainment, healthcare, financial advising, legal services) 

by older people grows faster than their demand for manufactured goods as shown in Figure 2.4. 

Therefore, as the service sector bids labor away from manufacturing, the manufacturing sector, 

which is less location sensitive, will continue to outsource to lower cost labor locations. 

Manufacturing is less location sensitive due to containerization, lower trade barriers and better 
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Figure 2.6: Employment Shares by Type of Activity 1957 - 2006 

Source: Bureau of Labor Statistics, Moffatt & Nichol

information technology. Wages have been and remain lower in Asia. Those countries also have 

younger populations and offer higher demand growth for low cost manufactured goods than in 

mature industrialized economies. Given these patterns, indicated in Figure 2.5, outsourcing 

trends to Asia are not likely to reverse soon with these labor cost disparities. 

Given the aging population and the cheap available labor overseas it is not surprising that 

employment in the US has shifted from manufacturing to services, as shown in Figure 2.6. The 

total value of manufactured goods produced in the US continues to rise. However, 

manufacturing activity in the US is increasingly capital-intensive and concentrated in high 

intellectual property goods such as power and transportation equipment

This perspective implies that not all industries are likely to outsource simultaneously. The lower

profit margin ones would go first and this process would continue with the next lowest profit 

margin ones and so on. One way to see this is to review patterns in US labor employment shown 

in Figure 2.7. Monthly employment for industries that manufacture containerizable goods are 

shown from 1990 through the middle of 2008, indexed to 100 in January 1990 to make the chart 

easier to read. Given that employment levels by industry vary significantly, the chart shows that 
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Figure 2.7: Employment Trends in Industries Manufacturing Containerizable Goods

Source: Bureau of Labor Statistics, Moffatt & Nichol

10

20

30

40

50

60

70

80

90

100

110

120

130

199019911992199319941995199619971998199920002001200220032004200520062007200820092010

Food Manufacturing

Misc Manufacturing

Nonmetallic Mineral Products

Plastic and Rubber Products

Wood Products

Beverage & Tobacco Products

Machinery

Motor Vehicles and Parts

Furniture

Printing and related support

Petroleum and coal products

Paper and Paper Products

Electrical Equipment and

Appliances

Computer and Electronic Products

Textiles

Leather and Allied Products

Apparel

Ranked in order of decline

Dec-90 = 100

12 Month Moving Average

the clothing-related industries have outsourced the most and industries related to automobile 

manufacturing and home construction have outsourced the least.

This can be attributed to the boom in the housing market and strong auto sales that were 

supported through most of this decade by loans with low market interest rates. The decline in 

residential real estate and automobile sales is pressuring the profits and financial viability of 

companies in these sectors. The survivors are most likely to be the ones that have been offshoring their production operations. Given this outlook, US manufacturing employment could 

continue to fall on average by 2% per year, which would support US container volume growth – 

particularly during recessions, assuming the world financial system does not freeze up again.

World trade in manufactured goods has not only grown faster than global GDP but also faster 

than trade in energy, metals and agricultural commodities. However, this gap is expected to 

close. Prior to globalization beginning in the early 1970s, emerging markets exported raw 

materials to industrialized nations and imported manufactured goods. As factories were moved 

from industrialized nations to emerging market locations, there was less need for commodities 

to be shipped around the world. Therefore, between 1970 and 1990 commodity trade was 

relatively flat while trade in manufactured goods rose steadily. Since 1990, commodity exports 
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Figure 2.8: Global Trade in Manufactured Goods, Oil & Metal Commodities and Agricultural Goods

Source: World Trade Organization, Moffatt & Nichol

Table 2.3: Container Volume by US Region and Real GDP Growth

Source: American Association of Port Authorities, Bureau of Economic Analysis, Moffatt & Nichol

from mature industrialized nations to emerging markets have begun to grow. This supports 

increased manufacturing in those emerging markets. The recent growth in US commodity 

exports was due to the weakening foreign exchange value of the dollar and the ongoing change 

in the structure of world trade. It is expected that global trade of all types of goods will continue 

to grow. Figure 2.8 illustrates these trends.

2.5 United States Trade Trends

The global trends discussed above are particularly evident in the US. Over the last 27 years US 

container volumes have grown seven-fold while real GDP slightly more than doubled. Most 

consumer goods and some bulk commodities arrive in the US in containers. 
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Figure 2.9: US International Container Volume Trade and Real GDP, Indexed to 100 in 1980

Source: American Association of Port Authorities, Bureau of Economic Analysis, Moffatt &Nichol

Figure 2.9 shows container volumes and real GDP, indexed to 100 in 1980. Containerization of 

trade began in the 1970s; however, it only became a standard for global trade in the 1980s. The 

chart shows that US container volume trade has grown even during recession years and nearrecession periods following mid-cycle Fed funds tightening. Off-shoring of manufacturing rises 

during periods of slow growth as companies try to sustain profit margins by cutting costs to 

offset flat or declining revenues.

Not all ports and regions benefited equally from growing US container volume trade. Some 

regions experienced higher growth than others, presented in Table 2.3. There are several 

reasons for this. US trade has grown fastest with Asia, beginning with Japan and Hong Kong, 

then Korea and other emerging Asian economies and most recently with China. Most of Asia’s 

trade arrives in the US via trans-Pacific services operated by various global ocean carriers. These 

volumes are mostly offloaded at West Coast ports. Some Asian volumes arrive via the Panama 

Canal at East Coast ports on “all water” service offered by the ocean carriers. South and 

Southeast Asian volumes move via the Suez Canal. 

Figure 2.10 displays the share of US containerized trade by each of the major foreign trade 

routes, and how they have changed from 1997 to 2005, and the projection of share for 2015. 

This clearly demonstrates the dominance of the Asian trade route, reflecting the impact of the 

outsourcing of manufacturing to Asia. 
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Figure 2.10: US Containerized Trade for Major Foreign Trade Routes

Source: PIERS, Moffatt & Nichol

While Figure 2.10 indicates a relatively small share for the North – South trade routes for the 

West Coast and East Coast of South America (WCSA, ECSA) there may be potential that could be 

recognized beyond these projections. While Chile has a penetration measured in TEUs (twenty 

foot equivalent units) per 1,000 people approaching that of the US, as shown in figure 2.11, the 

other economies fall far behind. With further port development in Brazil and Argentina, and 

continued development of these economies, the North – South trade routes could show 

additional growth, potentially benefiting some segments of Appalachia.

Forecasts, presented in Table 2.4, call for loaded container trade volume to grow at a 

compound annual growth rate (CAGR) of 6.2% over the next twenty years, sustained by further 

off-shoring of manufacturing and removal of trade barriers. Near to mid-term growth is 

expected to be slower due to the current recession; however, beyond that it is expected that 

trade growth will return to its historical average of 6.2%. Beyond 2020 container volume growth 

may slow as the structural drivers of trade will have ended.
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Table 2.4: Loaded Forecasts by Trade Lane

Source: MarAd, Moffatt & Nichol

Figure 2.11: TEUs per 1000 Persons

Source: Containerisation International, PIERS, MarAd, Census Bureau, Moffatt & Nichol

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Figure 3.1: Population Density

Source: US Census Bureau

3.0 Appalachian Trade Perspective

The previous sections reviewed the history of the growth in world trade, the structural drivers of 

that growth, and the outlook for the continuation of these fundamental drivers of growth 

beyond the current recessionary period. 

The following section will focus on a closer look at international trade characteristics and 

patterns as they specifically affect the Appalachian Region. The objective of this review is to 

identify and understand these characteristics and patterns as a foundation to assist in the 

identification of opportunities for transportation and trade development in the Region that can 

capitalize on the global and national trade trends in order to create economic development.

3.1 Demographics and Consumption

As indicated earlier, demographics are a key structural driver of the growth of trade. Population 

trends related to the aging of the population have driven labor conditions that have supported 

the outsourcing of manufacturing from the US. Population density impacts trade patterns in 

other ways including its impact on consumption patterns and the resulting location of 

transportation and distribution facilities.
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Figure 3.1 displays population density in the Appalachian Region at a county level. While the 

Region has a number of dense population centers on its periphery, it has relatively few such 

dense centers within its boundary. On the west the Region is bounded by Memphis, Nashville, 

Cincinnati, and Columbus, with the Northeast corridor, Charlotte, and Atlanta on the east. 

Within the Region, the major centers of population include Birmingham, Chattanooga, Knoxville 

and Pittsburgh. 

Figure 3.2 displays the magnitude of retail sales by county and shows that retail consumption 

patterns, not surprisingly, follow population density. The value of retail sales in this analysis has 

been adjusted to reflect sales that correspond to commodities that might be shipped as 

containerized cargo. Gasoline sales, for example, are not included.

Figure 3.2: Retail Sales

Source: US Census Bureau
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Similar patterns are seen in examining the geographic distribution of warehouse business 

revenue, as displayed in the Figure 3.3.

In evaluating future development opportunities it is appropriate to also consider expected 

growth in population (and the consequent growth in consumption and business revenue.) 

Figures 3.4 and 3.5 display population growth in terms of absolute growth, as well as rates of 

growth on a county level, based on projections by the various states. 

These projections are largely consistent with the national demographic trends discussed earlier. 

Population growth is higher in the southern parts of the Region, and particularly strong in 

counties bordering rapidly growing Atlanta, for example.

Figure 3.3: Density of Warehouse Businesses

Source: InfoUSA
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There is also growth in counties bordering the Region in the mid-Atlantic, northern Virginia area, 

as well as the Charlotte area. Similar patterns are evident in the Regional boundary areas near 

Memphis and Nashville. In the northern portion of the Region population growth is generally 

stagnant or even declining.

These population, and related consumption patterns and projections, can represent challenges 

for certain kinds of transportation and logistics development. However, there may be 

opportunities to develop facilities within the Region to serve the more densely populated 

and/or faster growing regions near the Regional boundary. International and regional 

distribution centers in northeastern Pennsylvania, for example, can serve the NY/NJ 

metropolitan region, bringing well-paying warehouse and transportation employment 

opportunities. With appropriate development, including additional transportation 

infrastructure investment, similar opportunities may exist in other parts of the Region. In 

addition, while the outlook for stagnant population and consumption growth can be viewed as a 

Figure 3.4: Projected Population Increase

Source: US Census Bureau
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challenge to certain types of development, the investment in enhanced freight mobility may 

have the effect of changing the growth outlook. The goal of enhancing these growth rates 

through transportation investments is consistent with the mission of the Appalachian Regional 

Commission as reflected by its investment in the ADHS.

3.2 Regional Transportation Infrastructure

Appalachia is served by a collection of highway, rail and inland waterway systems. These 

include the strategic highway system made up of the ADHS and connecting interstate highway 

routes in the Region. There are several other significant freight transportation resources to be 

considered in developing strategies and project proposals for enhancing freight mobility, 

particularly intermodal freight that would be utilizing the coastal deep water ports. These 

include the Region’s strategic rail system, and the strategic waterway system. 

Figure 3.5: Projected Population Growth Rate

Source: US Census Bureau
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3.3 Strategic Highway System

Appalachia’s Strategic Highway System is comprised of the 3090 mile Appalachian Development 

Highway System (ADHS) and key interstate highway connections. ADHS is the first highway 

system in America authorized by Congress for the purpose of stimulating economic 

development. It features 31 individual corridors located throughout the 13 Appalachian states 

and is now approximately 85% complete. Appalachia’s strategic highway system helps link the 

Region to key external markets and enhances the flow of commerce, opening often-isolated 

areas to new economic opportunity. The system also helps facilitate commutation to and from 

work and supports delivery of key social services to the residents of Appalachia. 

Importantly, the benefits of the Region’s Strategic Highway System extend far beyond the 

boundaries of Appalachia. The system serves as an important part of longer-distance trade 

corridors extending to, from, and through the Region, providing important reliability, capacity 

and cost efficiency benefits to the entire nation. Appalachia’s Strategic Highway System is 

illustrated in Figure 3.6.

Figure 3.6: Strategic Highway System
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3.4 Strategic Railway System

The “Strategic Railway System” of the Appalachian Region includes those mainline rail corridors 

providing the Region with key access to both domestic and international markets. While many 

of the routes were originally built to support mining and lumbering interests, the system today 

serves a diverse selection of both domestic and international commodities, including natural 

resources, manufactured goods, agricultural products, chemicals, and advanced technology 

components. Importantly, the Region’s system of shortline railroads plays an important role in 

assuring continued access to these mainline rail corridors for hundreds of the Region’s smaller 

towns and rural areas. Appalachia’s Strategic Railway System is illustrated in Figure 3.7

Looking to the future, private and public sector interests are joining together in support of new 

emerging intermodal rail corridors that will significantly expand Appalachia’s connections to 

both domestic and international markets. These emerging intermodal rail corridors improve 

access to key coastal ports and feature an expansion of new inland container ports throughout 

the Appalachian Region. These emerging corridors include the Norfolk Southern Heartland and 

Figure 3.7: Strategic Railway System
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Crescent Corridor initiatives and the CSX National Gateway Corridor program. Figure 3.8

illustrates Appalachia’s new emerging intermodal rail corridors. 

3.5 Strategic Waterway System

Appalachia benefits from a 1,500 mile network of inland waterways that include the Ohio River, 

the Tennessee River, the Cumberland River, and the Tennessee-Tombigbee Waterway. This 

system serves Pennsylvania, Ohio, West Virginia, Kentucky, Tennessee, Mississippi, Alabama, 

and northern Georgia. Historically the inland waterway system has primarily been used for the 

movement of large quantities of bulk commodities, raw materials and similar cargoes that 

require low cost transportation and can accept relatively slow transit times. Coal and petroleum 

(including crude oil and petroleum products) are the largest commodities by volume moving on 

the inland waterway system, followed by grain, aggregates, chemicals (including fertilizers) 

minerals, and products such as steel. The system is served by many terminals, including both 

private and public port facilities. Figure 3.9 illustrates Appalachia’s Strategic Waterway System.

Figure 3.8: Emerging Intermodal Rail Corridors
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A recently updated report published by the Texas Transportation Institute for MARAD and the 

National Waterways Foundation indicates that in 2005 the inland waterways maintained by the 

U.S. Army Corps of Engineers handled over 624 million tons of freight resulting in an average 

transportation cost of $11/ton translating into more than $7 billion annually in transportation 

savings to America’s economy. The report also estimated the public benefits of the entire 

National Waterway System in terms of congestion issues, emissions issues, energy efficiency, 

safety impacts and infrastructure impacts. Among the results of this study are:

• Major waterways help avoid the addition of 58 million truck trips to our highway systems 

annually.

• Cargo towed on the inland waterway system generates 19.27 tons of greenhouse gases per 

million ton-miles, while rail freight and truck freight generate 26.88 tons and 71.61 tons 

respectively.

• Inland freight towing achieves 576 miles per gallon of fuel per ton of cargo as compared to 

413 miles for rail and 155 for truck.

Figure 3.9: Strategic Waterway System
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• Inland marine freight has only one fatality per billion ton-miles while rail has 22.7 and truck 

has 155.

There is a growing interest to more fully utilize the inland waterway system through moving 

containerized cargo along these marine corridors. Such container-on-barge services are 

common throughout Europe and Asia and are generating increased support in the United States 

as interest grows to find new transportation capacity and to achieve new transportation-related 

energy and environmental benefits. Encouraging such development, the U. S. Department of 

Transportation has launched its Marine Highway Corridor program, aimed at utilizing inland 

waterway capacity to help alleviate highway congestion along a growing number of interstate 

highway corridors. Appalachia’s inland waterway interests are banding together to pursue such 

opportunities through an Intermodal Marine Highway Corridor, as illustrated in Figure 3.10

linking Pennsylvania, West Virginia and Ohio in the north to the Tenn-Tom Waterway serving 

Mississippi, Tennessee and Alabama and the new coastal container port in Mobile, AL.

Figure 3.10: Emerging Intermodal Marine Highway Corridor
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3.6 Inland Ports

In addition to Appalachia’s key highway, rail and waterway corridors, the Region is also served 

by a variety of transportation and logistics centers, referred to as inland ports that provide a 

direct link between Appalachia’s businesses and its transportation system. These inland ports 

include both facilities designed to expedite the transfer and movement of containerized cargo, 

often referred to as Intermodal Container Transfer Facilities (ICTF), and facilities utilized to serve 

non-containerized cargo, often located in the Region’s smaller towns and in rural areas. 

Regardless of design, these facilities help to streamline shipping costs for local businesses, thus 

enhancing their competitiveness. Because of such benefits, these facilities also support 

community efforts to attract new enterprise and employment.

3.7 Coastal Ports – Global Access

The strong historic growth of international trade and the fundamental structural drivers of this 

trade that are expected to continue after the current recessionary period have been discussed 

in earlier sections of this report. This growth trend of international containerized trade has had 

a significant impact on the transportation and logistics industry in the US presenting many 

challenges as well as opportunities, including development potential in the Appalachian Region.

The coastal deep water ports of the US that handle this containerized trade have experienced 

rapid growth in demand over the past several decades. As demand has grown, ports and other 

components of the transportation system have reacted by adding capacity to satisfy this 

growing demand. The railroads that transport many of the containers to and from inland 

locations, have been investing in new capacity, including the major emerging corridor projects 

discussed earlier. The growth of Asia as a source of a large share of imports has also had its 

effect. Many of the Asian imports destined for regions throughout the US arrive at west coast 

ports, including Los Angeles and Long Beach, which, until recently, have experienced some of 

the highest volume growth rates. The stress on port and rail infrastructure and labor at these 

ports has led to growing “all-water” ocean shipping services from Asia to the Gulf and East Coast 

ports. The Panama Canal is being expanded to accommodate this growth. 

Ocean ports face some unique problems in handling growing volume demands. The relative 

scarcity of land adjacent to deep water makes adding acreage to existing ocean ports or 

developing new ocean ports environmentally sensitive and very costly. As volume at ocean 

ports increases, absent increases in acreage, there are only two alternatives for increasing 

capacity. Containers can be “turned-over” more rapidly - that is the time they spend dwelling at 

ports either waiting to be picked up for delivery to customers or loaded on ships - can be 

reduced. This is typically achieved by charging a higher rate for this dwell time – called 

demurrage. Or, containers being stored in the container yard can be stacked higher and closer 

together – that is the storage density can be increased. This is achieved at the expense of more 

costly equipment and more labor. Therefore, achieving higher container yard capacity comes at 

a cost to terminal operators and port authorities. There are other capacity limits at ports on the 
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water side, such as berth capacity, which is equally, if not more costly to address. On the land 

side, gate capacity and roadway capacity in the port vicinity and approaching the port can also 

become stressed with a variety of congestion and environmental challenges.

An alternative of moving containers off the port more quickly to increase capacity requires an 

inland storage and staging area for these containers – an inland port. This concept usually 

includes an intermodal rail facility and various other distribution and logistics functions. This 

may include warehousing, value-added facilities and transloading facilities to transfer cargo 

between international containers and domestic trucks or containers to serve the domestic 

customers. The Appalachian Region has locations that are potential sites for the development 

of these types of services. In the distribution economy, inland ports and distribution centers 

have become significant job creation and economic development generators. In addition to the 

opportunity for the development of new inland ports, the proximity of Appalachia to the coastal 

ports is an important variable in understanding and pursuing any development potential that 

relates to connectivity to the international economy, as shown in Figure 3.11.

Figure 3.11: Enhancing Access to International Ports
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A first step in understanding the relationship of the Region to coastal ports is to examine origins 

and destinations of containerized cargo in and near the Region. The Journal of Commerce 

publishes data developed from Customs manifests for international trade through US ports. 

This data (Port Import Export Reporting System – PIERS) has been used to develop a data base 

of containerized trade in the Appalachian Region. Using the PIERS data, and statistically 

enhancing it to better identify inland origins and destination, a mapping of the total imports and 

exports of containerized international in the Region has been developed.

Figures 3.12 and 3.13, display the density of imports and exports at a BEA, (Bureau of Economic 

Analysis Region) level throughout Appalachia. Imports are typically shipped inland to centers of 

distribution resulting in high activity in a relatively few locations, generally close to population 

centers. However, some shipments do move directly to their ultimate destination. Exports are 

Figure 3.12: ARC 2007 Import Volumes
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much more widely distributed, following the locations of manufacturing and production 

locations. This difference in the origin and destinations of containers leads to issues in having 

sufficient empties available for exports. The containers are owned by the shipping lines and 

they bear the cost of repositioning the containers. The costs involved in getting empties to 

locations where exporters may need them might not be justified in some cases by the shipping 

rate that can be charged.

A summary of all imports and exports in the Appalachian Region by foreign trade region, 

commodity, shipper (company) and port of import/export is presented in Figure 3.14. It can be 

seen from these summaries that for 2007 North Asia was the dominant origin for imports with 

65% of the imports in the Region, followed by Europe with 17%. For exports, North Asia was 

also the most popular foreign destination, although it did not dominate as greatly as on the 

import side. North Asia was the destination of 25% of the exports closely followed by Europe 

Figure 3.13: ARC 2007 Export Volumes
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with 24%. Imports to the Region were most likely to arrive through the port of NY/NJ, followed 

by Charleston and Savannah, with exports moving through Charleston, Houston and Savannah. 

Imported commodities include auto parts, furniture, footwear and other general cargo, while 

exports also include resins, waste paper, and also auto parts. The major companies identified 

for both imports and exports are consistent with the commodities, including auto companies, 

chemical companies, and consumer products.

It should be understood that the origin and destinations identified in these analyses are for the 

international containers themselves and not necessarily the ultimate destinations of the 

contents of the containers. For example, many international marine containers come to the 

Port of Savannah and are then transloaded into domestic vans or domestic containers at major 

international distribution centers in the immediate vicinity of the port. These “domesticized” 

products are then shipped by road or rail to regional distribution centers that ultimately supply 

retail stores. Much of these domestic shipments could be bound for the Appalachian Region. 

This phenomenon is less likely to occur on the export side, although there are cases where some 

products may be shipped in bulk to a central point where it is consolidated and stuffed into 

containers.

Figure 3.14: Top ARC Import Volumes

Top ARC Imports by Trade Routes Top ARC Imports by Commodity

Rank Trade Route TEUS Share Rank Trade Route TEUS Share

1 NORTH ASIA 355,800 65% 1 AUTO PARTS 31,823 6%

2 EUROPE 94,073 17% 2 FURNITURE 30,819 6%

3 SOUTH EAST ASIA 29,562 5% 3 MISCELLANEOUS GENERAL CARGO 25,676 5%

4 MEDITERRANEAN 26,671 5% 4 FOOTWARE 19,247 4%

5 EAST COAST OF SOUTH AMERICA 12,165 2% 5 AUTO & TRUCK, TIRE & TUBES 16,868 3%

OTHERS 28,366 5% OTHERS 422,202 77%

Total 546,636 100% Total 546,636 100%

Top ARC Imports by Company Top ARC Imports by Port

Rank COMPANY TEUS Share Rank Trade Route TEUS Share

1 ORDER 78,959 14% 1 NEW YORK 156,597 29%

2 DAIMLERCHRYSLER MFG INTL 14,928 3% 2 CHARLESTON 78,025 14%

3 L G SOURCING 10,820 2% 3 SAVANNAH 73,073 13%

4 ADIDAS 10,556 2% 4 LOS ANGELES 65,413 12%

5 RED BULL 8,148 1% 5 LONG BEACH 56,851 10%

OTHERS 423,225 77% OTHERS 116,678 21%

Total 546,636 100% Total 546,636 100%

Top ARC Exports by Trade Routes Top ARC Exports by Commodity

Rank Trade Route TEUS Share Rank Trade Route TEUS Share

1 NORTH ASIA 111,284 25% 1 SYNTHETIC RESINS 34,426 8%

2 EUROPE 110,573 24% 2 PAPER & PAPERBOARD (+ WASTE) 30,651 7%

3 CARIBBEAN 75,442 17% 3 AUTO PARTS 17,935 4%

4 MEDITERRANEAN 43,517 10% 4 MISCELLANEOUS GENERAL CARGO 16,299 4%

5 CENTRAL AMERICA 30,386 7% 5 FABRICS (+ RAW COTTON) 15,043 3%

OTHERS 80,814 18% Others 337,661 75%

Total 452,016 100% Total 452,016 100%

Top ARC Exports by Company Top ARC Exports by Port

Rank COMPANY TEUS Share Rank Trade Route TEUS Share

1 MERCEDES BENZ 14,169 3% 1 CHARLESTON 97,534 22%

2 E I DUPONT DE NEMOURS 10,720 2% 2 HOUSTON 58,050 13%

3 ORDER 7,802 2% 3 SAVANNAH 51,846 11%

4 R J REYNOLDS TOBACCO 6,106 1% 4 JACKSONVILLE 41,680 9%

5 EXXON CHEMICAL 5,717 1% 5 NEW YORK 38,478 9%

Others 407,503 90% Others 164,429 36%

Total 452,016 100% Total 452,016 100%
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3.8 Connectivity: Inland and Coastal Links

Further analysis of the relationship between the various regions of Appalachia and the coastal 

ports that serve the inland regions can be aided through the identification of the most 

economical routing of international containerized cargo between foreign ports and domestic 

inland points. For this analysis a “Least Cost Market Area” (LCMA) is developed for each port. 

An LCMA analysis is based on estimating the total cost to deliver an import (or export) from the 

foreign port to each inland point (zip code) through each alternative domestic port. Each zip 

code is assigned to the least cost port and the collection of all the least cost zip codes for a 

particular port make up its LCMA. The cost estimation incorporates ocean freight costs, port 

costs, and inland transportation by truck or rail. Well established cost models are used to 

estimate each of these cost components. Because the ocean costs vary depending on the 

foreign region, LCMA’s are developed for each of the major foreign trade regions.

Figure 3.15: North Asia LCMA and 2007 Import Volumes
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Figures 3.15 and 3.16 display the LCMA’s for North Asian imports and exports respectively, 

indicating the least cost port for imports and exports for the entire Appalachian Region in 

accessing a selection of major coastal ports. It can be seen that for some sub-regions access to a 

particular port is least costly by rail and for others truck would be the optimal mode. Similar 

analysis and maps have been prepared for other major foreign trade regions and are included in 

the appendix. In addition to the North Asian analyses shown here, further analyses of 2007 

actual trade in the region, broken out for each significant foreign trade region was reviewed. All 

of these analyses and maps were used in the regional workshop sessions to supplement the 

local knowledge and experience of the workshop participants in identifying initial specific 

project or strategic concepts for enhancing Appalachian connectivity to the international 

marketplace and spurring economic development.

Figure 3.16: North Asia LCMA and 2007 Export Volumes
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It should be noted that the LCMA analysis reflects a somewhat simplified model of the criteria 

that effect the routing of cargo. The cost modeling in this process is based on average costs for 

example, and in the marketplace, actual prices paid by various customers reflect a myriad of 

variables and great complexity. In addition, transportation cost is not the only criteria in 

determining routing decisions. Time, reliability, convenience and many other issues come into 

play. The PIERS data is also not a perfect representation of the actual shipments in any specific 

region. The source data itself is replete with gaps and the process for enhancing it, while 

carefully thought out, is fundamentally based on “educated guesses.” Nonetheless, these 

analyses and data provide additional insight and guidance, that combined with local knowledge 

and experience can contribute to the development of useful project and strategy concepts.

3.9 Economic, Energy, and Environmental Success – And Expanded Capacity

Transportation plays an important role in shaping economic success, while at the same time it is 

recognized as a major factor in addressing the energy and environmental challenges facing both 

Appalachia and America. While Appalachia enjoys well-developed highway, railway and 

waterway systems, these systems tend to be disjointed and offer too few connections between 

the individual modes. By better integrating the individual modes into a single, coordinated 

intermodal network it is possible to not only generate new economic benefits to the Region, but 

to also improve the energy and environmental performance of the system, as well. Through 

better coordination, shippers have more alternatives in how and where freight moves. They are 

better able to select the most appropriate mode of transport, depending on the cargo itself and 

its destination. While some cargos and trip distances are particularly well-suited for highway 

movement, others can be more cost-efficiently moved by rail and/or water transportation 

services, if such services are both available and accessible to the shipper. 

Beyond economic considerations, the energy and environmental benefits of rail and water, 

especially over longer-distance trips, can generate increasingly important new benefits in 

reducing energy consumption and improving the overall environmental impact of the 

transportation system. As an example, studies indicate that moving one ton of cargo by rail is 

more than twice as energy efficient as by highway trip. Further, inland waterway energy 

efficiency for such a movement can be three times more efficient than over-the-road 

transportation. Both railways and waterways can also offer significant environmental benefits 

in terms of greenhouse gas emissions, as well. 

While each mode of transportation provides critically important benefits to shippers, by better 

coordinating the transportation system, and the commodities that move throughout this 

network, it is possible to achieve important economic, energy, and environmental benefits, 

while at the same time expanding the overall capacity of the network.

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4.0 Access Evaluations

This section describes the process employed in quantifying access to/from the Appalachian 

region. “Access” in this context is measured at the county level. While not intended as a 

“county by county” ranking, it is a relative measure of the transportation connectivity of the 

county to the global marketplace. It can be viewed as broadly estimating the relative 

attractiveness of the various counties for starting a new business, or improving and expanding 

an existing one with global reach. Typically, these businesses would be import or export 

related. The access measure also helps to highlight counties where transportation 

enhancements could make an improvement in the global competitiveness of business in that 

county. In addition, the measure proved to be a valuable tool in the regional workshops helping 

participants focus on the variables affecting access.

Various factors are considered when establishing a new business, most of which fall under the 

classical “Site Selection Criteria” that are used in site selection studies. These can be broadly 

classified into 4 groups:

I. Business and Operating Conditions: This addresses issues such as transportation 

and utility infrastructure, access to market, workforce availability, capability and 

scalability.

II. Geographically Variable Costs: These refer to costs associated to work force 

wages & salaries, taxes, real estate, incentives.

III. Real Estate/Site: within a specific geographic area, real estate considerations 

include availability, fit, access, supporting infrastructure and lease terms.

IV. Risks: Risk factors are always taken into account when starting a new business 

or expanding one. These factors include natural disaster, political environment, 

social/safety issues and economic/currency concerns.

However, it is important to note that each study is unique and may consider only some factors. 

Within the selected factors, the decision makers will look at a subset of those factors more 

closely than others. That is, some factors will have more weight (importance) than others within 

the context of the relevant study.

For the Network Appalachia Access measure, factors that have been used to quantify access 

have included only proximity measure to transportation link and nodes. These include 

proximity to:

a) Interstate Highway – These are the primary links to move freight to/from global 

gateways (Ocean & River Ports, ICTFs etc)
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b) ADHS/ National Highway – Also important are the ADHS and National Highway System 

routes that provide connections to the Interstate.

c) Intermodal (Container) Rail Terminals – This designates the Class I terminals that offer 

international intermodal services between ocean ports and ICTFs.

d) Multimodal Rail Terminals – This includes the short line railroads and the Class I 

railroads excluding the intermodal routes.

e) Inland Waterway Port – A well established navigable river system serves the western 

and northern part of the Appalachian Region. Distances to selected waterway ports on 

this system were included in quantifying the access of the region.

f) Intermodal - Interstate Intersection – These are locations where developable land is 

available close to both an intermodal rail line and an interstate highway, which is 

assumed to have potential to establish a new business, such as a transload facility or a 

warehouse. As such, proximity measures to these locations were included in the 

analyses. 

g) Coastal Ports – The proximity to major coastal ports is an important factor in describing 

the transportation access. Relatively small distances to inland markets can be served by 

trucks, where as larger distances are better served by rail and barge. In either case, 

smaller distances from inland markets to coastal ports are deemed to be more cost 

effective, not only in terms of transportation costs but also in transporting goods of time 

sensitive value.

Other demographic and trade related factors are also important in assessing the desirability of 

siting decisions. While not used in determining access, these factors are important when 

planning for development opportunities. These factors include:

• Population density

• Workforce Availability

• Workforce Development Capability

• Wage Rate

• Import/Export Demand

• Production Density

• Warehousing Density (# of Establishments)

• Developable Land

• Utilities

• Energy Costs

• Telecommunications – Broadband Internet & Cellular Phones
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4.1 Access Definition

As mentioned in 4.0, seven proximity measures were used to quantify the access ranking. A 

brief methodology is presented in this section that documents the ranking process.

In general, the ranking process requires estimating the distances from each county within the 

Appalachian region to each of the ranking factors. Once the distances are established, the data 

generated was then normalized to depict comparable numbers for individual data ranges. More 

on this will be covered in section 4.2. The next step carried out was applying weights to each of 

the factors. These weights introduce a relative importance hierarchy for the criteria. Once the 

weights are established, the final step is to compute a weighted sum of the proximity measures 

to produce the access ranking for each county. A three category classification was then used to 

produce presentation maps.

4.2 Proximity

Distances from each county to the seven other factors were measured by a number of ways. All 

methods required zip codes to be established as origins and destinations, as zip to zip distances 

are relatively simple to compute. The first step was to establish a representative zip code for 

each county. First, the geographical centroid of each county polygon were found. Following 

that, the 5-digit postal code closest to the centroid was found. This zip code, referred to as 

centroid zip in this report, was then used as an origin to measure distances from the said county. 

Figure 4.1 shows the zip codes selected for each county. 

Depending on the potential business being assessed, its optimal location within a county may be 

best positioned close to populated zones, in a rural setting with considerable land availability, or 

anywhere in-between. For counties with large areas, there could be a significant bias in 

measuring distances using the centroid zip. However, for the purposes of this study, with a view 

of keeping methodologies uniform, the centroid zips have been used throughout. For future, 

more detailed studies, zip code points may be manually selected to better represent the 

business case study.

In subsequent sections, these centroid zips will be referred to as the origins for distance 

calculations.
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Figure 4.1: ARC Counties showing Geographic Centroids (Blue) and its closest 5-Digit Zip Code (Red)
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Figure 4.2: National Highway Planning Network Version 2005.08

4.2.1 Interstates

One of the key measures is the “closest distance” from a county to an interstate. PC*Miler was 

used to establish these distances. PC*Miler is an industry standard road routing software. 

Through visual inspection, a number of entry/exit ramps close to the centroid of each county 

were selected. PC*Miler was then run on each of the origin (county centroid) – destination 

(entry/exit ramps) pairs and the minimum distance was selected. This distance was then 

attributed to that county’s closest distance to an Interstate. The Interstate network was 

obtained from the National Highway Planning Network. Figure 4.2 shows the Interstate network 

used in this study.
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Figure 4.3: The ADHS network (2007)

4.2.2 ADHS/ National Highway

Many of the newer ADHS links are being built to interstate standards. The availability of the 

ADHS or state highways within a county provides a better access in reaching the interstate. 

While most of the ADHS is complete and open to the public, some reaches are yet to be 

completed. For the purposes of this study, distances to the ADHS were computed, even if the 

section was not open to the public at the time of the study. This is a forward looking approach, 

assuming that the sections would be completed by the time any business plan was ready to be 

implemented. Figure 4.3 shows the ADHS Network as of 2007. The distances to the ADHS links 

were established in the same way as the interstates.
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Figure 4.4: The ICTF terminals used in the study

4.2.3 Intermodal (Container) Rail Terminals

Rail is very efficient in moving freight to and from an ocean port over large distances. Thus 

access to intermodal rail vastly expands the regions reach in terms of trade. Intermodal rail 

provides services between ICTFs. Containerized boxes are delivered to and picked up from ICTFs 

by trucks. As such, access to intermodal rail was measured as road distances from county 

centroid zips to published ICTFs. Figure 4.4 shows the ICTF network within and at the periphery 

of the Appalachian region. 
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Figure 4.5: The Multimodal Freight Rail Terminals

4.2.4 Multimodal Rail Terminals

There are a number of rail freight terminals in the Region in addition to the ICTF’s served by the 

Class I railroads. These terminals which handle a variety of types of freight other than 

containers may also be served by shortline and regional rail lines that serve specific locations 

and whose scheduling is more flexible than the published schedules of Class I railroads. 

Bureau of Transportation Statistics (BTS) Freight Rail Network was used in this study. This 

database was based on the requirements from the Commodity Flow Survey and with the 

different modes of DOT, supervised by RITA/BTS. Distance computation to these nodes was 

identical to the method used in the previous section. The Multimodal Freight Rail Network used 

in this study is presented in figure 4.5 
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Figure 4.6: Selected Inland Waterway Ports

4.2.5 Inland Waterway Terminals

A well established inland waterway system in the study region allows transportation of freight 

by barge along a roughly north-south direction. Commodities best suited to move on barge 

include heavy bulk, break bulk or goods that have delivery periods that are not time sensitive, 

such as perishables. This network data was obtained from the U.S. Army Corp of Engineers. The 

data contains numerous facilities along the waterways having multiple ports within a single zip 

code. For analysis purposes, a subset of the facilities was selected representing multi-user and 

public access facilities. Distances from each county centroid zip to each of the facilities in the 

sampled data was computed. This distance was then rounded off to the nearest 10 mile 

increment. The facilities selected for the analysis are shown in figure 4.6. 
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Figure 4.7: Selected Rail – Interstate Intersection Locations

4.2.6 Intermodal Rail – Interstate Highway Intersection

There are locations where rail lines run close to interstates or even intersect each other. All 

factors being equal, these are promising locations for rail terminals, warehouses or transload 

operations. In order to incorporate this factor, aerial and satellite imagery were scanned to 

locate places where rail and interstates were close by. Similar to previous operations, distances 

to each of these points were gathered and used in the computation. Figure 4.7 shows the 

locations of the selected Rail-Interstate intersections.
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Table 4.1: Compiled Data

State County

 Interstate 

Highway

 ADHS/ 

National 

Highway

 Freight 

Rail 

Network

ICTF

Rail - Truck 

Intersection

 Inland 

Waterway 

Port

 Coastal 

Port

Alabama Bibb 23.7 0.5 40 52 29 40 188

Alabama Blount 18.6 2.4 30 43 63 30 300

Alabama Calhoun 12.3 1.5 10 72 88 70 322

Alabama Chambers 15.3 0.0 70 101 86 130 249

Alabama Cherokee 17.0 1.4 30 85 69 50 340

Alabama Chilton 8.4 0.6 50 48 16 70 215

Alabama Clay 33.9 25.0 40 77 73 100 248

Alabama Cleburne 10.2 0.5 20 69 100 90 318

Alabama Colbert 50.2 2.2 40 73 95 10 374

Alabama Coosa 24.7 0.7 70 67 46 90 214

4.3 Data Compilation and Normalization

Once all the data for the 428 counties (including some independent cities of Virginia State) were 

obtained, it was compiled in a tabular format, a portion of which is shown in Table 4.1.

To ensure that the minimum and maximum values in each data column (Interstate, 

ADHS/National Highway etc) reflected the same effects, the data had to be normalized. 

As an illustration, in table 4.1 the minimum distance from a county to the closest interstate 

ramp was 8.4 miles. Similarly, the minimum distance from a county to the closest ICTF on the 

Intermodal Rail Network was 43 Miles. These two minimums need to reflect the same effect 

(advantage or disadvantage). This was done by normalizing the data between 0 (minimum) and 

1 (maximum). Once again, taking table 4.1 and the data fields as an illustration, for the data 

column “Interstate”, 8.4 miles was transformed to 0 where as the maximum of 50.2 miles was 

transformed to 1 and all values in-between were scaled accordingly. The normalized data 

corresponding to table 4.1 is presented in table 4.2.

4.4 Weighting and Ranking

Not all of the seven criteria are deemed to offer the same advantages to businesses. Through a 

dialog amongst the study team, the following weights were attributed to the criteria. The 

weights in table 4.3 signify that the distances to Interstates, ICTFs (within the intermodal 

FreightRail Network) and the proximity to Rail-Road intersections were the most important at 

100%. The access to the ADHS and local/regional freight rail network were given a slightly lesser 

weight at 90%. The Inland waterway ports were weighted at 80%.
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Table 4.3: Criteria Weights

 Interstate 

Highway

 ADHS/ 

National 

Highway

 Freight 

Rail 

Network

 Intermodal 

Freight Rail 

Network

 Intermodal - 

Interstate 

Intersection

 Inland 

Waterway 

Port

 Coastal 

Port

100% 90% 90% 100% 100% 80% 100%

Table 4.2: Normalized Distances

State County

 Interstate 

Highway

 ADHS/ 

National 

Highway

 Freight 

Rail 

Network

ICTF

Rail - Truck 

Intersection

 Inland 

Waterway 

Port

 Coastal 

Port

Alabama Bibb 0.24 0.00 0.22 0.21 0.13 0.10 0.23

Alabama Blount 0.19 0.02 0.17 0.17 0.29 0.07 0.47

Alabama Calhoun 0.12 0.01 0.06 0.29 0.40 0.17 0.51

Alabama Chambers 0.16 0.00 0.39 0.40 0.39 0.31 0.36

Alabama Cherokee 0.17 0.01 0.17 0.34 0.31 0.12 0.55

Alabama Chilton 0.09 0.00 0.28 0.19 0.07 0.17 0.29

Alabama Clay 0.34 0.20 0.22 0.31 0.33 0.24 0.36

Alabama Cleburne 0.10 0.00 0.11 0.27 0.46 0.21 0.50

Alabama Colbert 0.51 0.02 0.22 0.29 0.44 0.02 0.62

Alabama Coosa 0.25 0.01 0.39 0.27 0.21 0.21 0.28

The final step in the computation was to apply the weights to their corresponding criteria and 

generate a weighted sum. Thus the “Access” for any county was computed as

Where n is the number of criteria included in the study, di is the distance from any county 

centroid to criteria i and wi is the weight assigned to criteria i. The reason of using the 

reciprocal of the weight is to produce a larger “access” value for smaller weights. In the 

approach applied, smaller distances are more advantageous than larger distances. The final 

“access” values for each county are then displayed using a GIS presentation with three classes, 

green, yellow and gray. Counties colored green are classified to having strong access, yellow 

denotes medium access and gray signifies low access. This is shown in figure 4.8. 
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Figure 4.8: Access Evaluation Map

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5.0 Engagement and Collaboration

5.1 Building Capacity for the Future

The 2005 ARC study entitled Meeting the Transportation Challenges of the 21st Century

The Study Group was composed of members and their alternates designated by each of ARC’s 

thirteen member-states and, by design, represented a balanced cross-section of transportation, 

economic development, and international trade expertise. It also included a designee from the 

ARC Federal Office and a representative of the Development District Association of Appalachia. 

The establishment of the Network Appalachia Study Group represents an important first step 

toward building inter-jurisdictional planning capacity and assuring the interdisciplinary mix 

necessary to prepare Appalachia for the 21st century. Members of the Study Group, as well as 

the dates and venues of the Network Appalachia Regional Workshops are shown in Figure 5.1. 

urged 

Appalachia to establish the institutional capacity to plan for and encourage transportation 

development across local, county, and state inter-jurisdictional boundaries. It also highlighted 

the importance of collaboration between transportation, economic development and 

international trade interests. Responding to these recommendations, ARC established a 

regional Study Group to provide guidance and oversight for the Network Appalachia project. 

Representing international trade expertise from across Appalachia, ARC’s Export Trade Advisory 

Council (ETAC) would also provide constant input and support to the Study Group throughout 

the planning process. Financial support for the project was provided through ADHS 

administrative funds and the Study Group was assisted by ARC staff and by the consulting firm 

of Moffatt and Nichol. 

5.2 Putting the Capacity to Work

Meeting for the first time on October 30 and 31, 2007, the Network Appalachia Study Group 

quickly formalized its planning process and outlined requirements for selecting consultant 

support to the project. The Study Group also committed to not only draw from a variety of 

research data and planning resources, but to evaluate first-hand emerging transportation and 

logistics challenges and opportunities from across Appalachia. During its first meeting the Study 

Group toured the Virginia Inland Port (VIP) in Front Royal, VA. Recognized as America’s first 

successful inland port, this intermodal container transfer facility (ICTF) offers area businesses a 

seamless intermodal link directly to the Virginia Port Authority marine terminals, located over 

200 miles away in Hampton Roads, VA. They learned of over $600 million in private sector 

investment that has financed over 6.25 million sq. ft. of new warehousing, distribution, and 

manufacturing centers and generated over 7,000 new jobs, solely as a result of the high-speed 

and cost efficient global access provided by VIP. 
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Figure 5.1: Venue/Dates of Regional Workshops and Members of the Study Group
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For its second gathering, the Study Group traveled to Huntsville, Alabama on March 12 and 13, 

2008 and met with representatives from Moffatt and Nichol, which had been selected to 

provide consulting support to the project. With the consulting team, the Study Group finalized 

the detailed structure of their planning process. The Study Group and its consulting team then 

toured the Huntsville International Airport’s International Intermodal Center (IIC), an intermodal 

container transfer facility that, like VIP, has stimulated major private sector investment and 

employment growth. 

At its third working session on July 9 and 10, 2008 in Savannah, Georgia, the Study Group 

reviewed preliminary macro-economic research that focused on changing economic trends and 

the affect that such changes were having on both commerce and the movement of goods to, 

from, and across Appalachia. Recognizing the importance of actively engaging the Region in the 

Network Appalachia planning process, the Study Group committed to host a series of Regional 

Workshops to both expand awareness of the project’s transportation, economic development, 

and international trade issues and encourage attendees from across Appalachia to provide 

direct input into the planning process. Concluding its session, the Study Group was hosted by 

the Georgia Port Authority and provided with a hands-on presentation highlighting the dramatic 

growth of both Atlantic and Gulf coastal ports. The Port of Savannah program also clearly 

demonstrated the power of the intermodal global supply chain and the economic impact of 

global commerce. 

Prior to its Regional Workshops, the Study Group convened in Washington, DC on September 

17, 2008 to review additional economic trend analysis and to carefully assess Appalachia’s 

existing transportation resources. The analysis confirmed that while some Appalachian areas 

enjoy well-developed access to both domestic and international markets, other areas suffer 

from underdeveloped capabilities, and others face serious access deficiencies. 

5.3 Engaging the Region

At its September 17, 2008 working session, the Study Group committed itself to actively engage 

the Region in the Network Appalachia planning process and detailed the structure, locations, 

and sequencing of these Workshops. With an emphasis on active attendee collaboration and 

input, each Workshop event was designed to provide an overview of the macro-economic, 

demographic, and transportation/access issues affecting the Region. In addition, a variety of 

guest speakers would present information on both emerging challenges and opportunities. 

Following these informational briefings, attendees would be called upon to provide direct input 

into the process, providing strategic thoughts, ideas and concepts, as well as specific suggestions 

on near and mid-term opportunities to enhance their own local access. Finally, the Study Group 

emphasized the importance of engaging a broad and diverse Workshop audience to assure a 

representative cross-section of the Region. Invitations were targeted to both public and private 

sector officials, a multi-modal mix of transportation planners, providers, and users, academic 

institutions, energy and environmental interests, and, importantly, a broad cross-sample of 

business interests. 
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The Study Group decided to conduct a series of four Regional Workshops targeted to serve the 

southwest, southeast, central, and northern sub-regions of Appalachia. Each Workshop would 

be hosted by the Study Group designees representing the targeted sub-region. The Regional 

Workshop locations and schedules were:

Alabama/Mississippi

Muscle Shoals, AL - November 17, 2008

Maryland, New York, Pennsylvania

State College, PA – December 17, 2008

Kentucky, Ohio, Virginia, West Virginia

Huntington, WV - January 23, 2009

Georgia/North Carolina/South Carolina/Tennessee

Asheville, NC – February 3, 2009

In addition to the four Regional Workshops, the Study Group presented Network Appalachia to 

the 2009 Annual Conference of the Development District Association of Appalachia (DDAA) 

entitled “Global Appalachia: Challenges and Opportunities”. As with the Workshops, the Study 

Group provided a project overview and sought direct input from the 250 conference attendees. 

5.4 Many Voices. Many Ideas. One Future. 

In all, these events attracted nearly 500 attendees from across the Region, who joined with the 

Study Group and with guest presenters for an engaged and collaborative look into the future of 

Appalachia. 

Highway planners and users focused on the need to complete the ADHS and to better plan for 

both improved roadways and added highway capacity across the Region. Trucking interests 

spoke of their support to the Appalachian businesses community, yet shared their concerns over 

the growing fuel costs and increasing highway congestion. They referenced a recent study by 

the Government Accountability Office showing over $8 billion of increased trucking industry 

costs caused by highway congestion and they pointed to some of Appalachia’s major interstate

highways, including I-26, I-40, I-59, I-71, I-75, I-76, I-80, I-81, and I-90, as congested highway 

corridors with growing reliability, efficiency, and safety concerns.

Railroad officials from the Burlington Northern Santa Fe, Norfolk Southern and CSX presented 

new emerging intermodal corridor programs that, through innovative public/private 

partnerships, will help to relieve highway congestion, provide important energy and 

environmental benefits, and strengthen Appalachia’s competitive access to both domestic and 

international markets. Featured in these presentations were Norfolk Southern’s “Heartland 

Corridor” through Virginia, West Virginia, and Ohio and “Crescent Corridor” serving 

Pennsylvania, Maryland, Virginia, North Carolina, Tennessee, South Carolina, Georgia, Alabama, 

and Mississippi, as well as the CSX “National Gateway Corridor” serving North Carolina, Virginia, 
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Maryland, Pennsylvania, West Virginia, and Ohio. Officials from the Genesee and Wyoming 

Railroad described the importance of Appalachia’s short line railroads in maintaining safe, 

reliable, and cost efficient rail access for the Region’s smaller communities and its many rural 

areas.

Navigation experts from both the Tenn-Tom Waterway and the Ohio River spoke of the safety, 

efficiency, and capacity offered by Appalachia’s inland waterways. They committed to work 

together, on behalf of the Region, to establish a cooperative new Appalachian Marine Highway 

Corridor, stretching from Pennsylvania, Ohio, and West Virginia through Kentucky, Tennessee, 

and Mississippi, and on to Alabama’s new Port of Mobile container terminal. Finally, the Virginia 

Port Authority spoke of the importance of strengthening and expanding intermodal links 

between coastal ports and Appalachian inland ports. They pointed to the landmark “Heartland 

Corridor” project between Virginia, West Virginia, and Ohio as an inter-jurisdictional, 

intermodal, and public/private model for transportation and economic success in the 21st

century.

From an economic and employment development perspective, officials from a number of 

communities and from many of Appalachia’s local development districts highlighted the need to 

better connect their communities and businesses to both domestic and international markets. 

Again and again they stressed the importance of assuring such access for not only larger 

metropolitan areas, but also for Appalachia’s many smaller communities and rural areas. Many 

of these same officials urged ARC to increase its efforts to expand awareness of these issues and 

to assume a stronger advocacy role in developing a balanced and inter-connected 

transportation system that takes full advantage of ADHS and maximizes economic and 

employment benefits to the Region. 

Pointing to the success of the Intermodal Container Transfer Facilities at the Virginia Inland Port 

and at Huntsville’s International Intermodal Center, and to the new non-containerized cargo 

trans-load and consolidation centers in Somerset, KY, Dubois, PA, and Lenior, NC, officials urged 

the development of a region-wide system of inland ports to strengthen the connection between 

Appalachia’s businesses and its transportation network. Representatives from the U.S. 

Commercial Service, ARC’s Export Trade Advisory Council (ETAC), and from a number of 

Appalachia’s colleges and universities spoke of the economic distress caused by the Region’s 

historic isolation and emphasized the need to enhance the Region’s connection to the global 

supply chain, if Appalachia is to successfully compete in the global economy. Some speakers 

called for taking full advantage of emerging new technologies, while others urged the Study 

Group to aggressively incorporate both energy and environmental issues into their planning to 

encourage a smarter and greener Appalachian transportation network in the future. 

Perhaps the most compelling input was presented by Appalachia’s businesses interests, who 

more than most, understand the critical importance of competitive access to both their 

suppliers and to their consumer markets. Speaking on behalf of a new manufacturing firm in 

Alabama, a company official stressed the importance of balanced highway, rail, and waterway 
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access. He explained that had their new location not offered such reliable, safe, and costefficient access, “We would have located elsewhere.” A representative from Appalachia’s wood 

and forest products sector pointed to a recent Virginia Tech study of the competitive advantage 

offered by improved transportation access. The study confirmed that over 85% of those 

Appalachian businesses interviewed claimed transportation as one of the most important 

factors in shaping their future success. This same message was powerfully reinforced when a 

major manufacturer in Mississippi reported that “In the years ahead, assuring safe, efficient, and 

reliable access to both suppliers and markets will be the single most important factor in 

determining the success of our firm and of our employees. 

Through these Workshops, over 500 participants engaged in the Network Appalachia initiative, 

committing their time, vision, and energy in planning for the future of Appalachia. The Study 

Group then met to review and fully integrate Workshop input into the planning process. 

Through its evaluation, the Study Group assigned input into one of two categories. Entitled 

“Strategic Priorities”, the first category included ideas and suggestions that were overarching, 

medium-to-long term, and regional in scope. Combined, they help establish a comprehensive 

planning framework. Drawing from this framework and labeled “Tactical Opportunities”, the 

second category highlights very specific near and medium term examples of how to improve and 

expand local and sub-regional access to both domestic and international markets. 

5.5 Strategic Priorities

Intermodal Corridors of Commerce: Appalachia’s transportation network of the 21st century will 

feature a fully interconnected network of highway, rail, and inland waterway corridors of both 

regional and national significance. These corridors will be closely linked to Appalachian 

businesses through a region-wide system of inland ports. Taking full advantage of the 

Appalachian Development Highway System as its foundation, these corridors will attract and 

accommodate a growing flow of both domestic and international commerce to, from, and 

across the Region, to the benefit of both Appalachia and its neighbors. 

Economic Competitiveness: For Appalachian businesses to compete and succeed in the 21st

century, they will require reliable, safe, and energy/cost efficient access to both domestic and 

international markets. Such access can only be achieved through a fully developed and 

integrated highway, rail, and inland navigation network. Such a network is essential to the 

competitiveness of Appalachia’s existing businesses and to the Region’s ability to attract new 

enterprise and employment in the future. 

Planning and Coordination: The creation of the Network Appalachia Study Group represents an 

important first-step in building the Region’s capacity to plan for the future. This capacity is 

inter-jurisdictional in scope, intermodal in structure, and features a balanced blending of 

economic development, transportation, and international trade expertise. This comprehensive 

approach also recognizes the importance of both energy and environmental priorities and the 
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important benefits that can be achieved through improved public/private coordination and 

cooperation.

Partnerships: Planning for and developing Appalachia’s access to opportunity in the 21st century 

will rely on new and innovative strategic partnerships, both internal to the Region and extending 

beyond its boundaries. Expanded collaboration and interaction will better coordinate economic 

development, transportation, and trade interests and maximize the transportation network’s 

economic and employment contribution to the future of Appalachia. 

Awareness and Advocacy: The Network Appalachia Regional Workshops confirmed a widespread recognition of the need to enhance access to future opportunity, both domestically and 

globally. Importantly, those who participated in the Workshops demonstrated a powerful sense 

of enthusiasm and confidence in the Region and in its future. The awareness that these 

Workshops expanded and the optimism and regional advocacy that they unleashed should be 

sustained to support continued planning and preparation for Appalachia’s future. 

Investment: In the 21st century, Appalachia’s access to opportunity will require continued 

progress in developing the Appalachian Development Highway System (ADHS) and in better 

coordinating the highway system with the Region’s other transportation modes. A growing 

region network of inland ports, serving both containerized and non-containerized cargo, will 

assure a direct connection between the region’s transportation network and its economy. To 

achieve such success, appropriate planning and development financing, from both public and 

private sources, must be identified and established.

5.6 Tactical Opportunities

During in its planning session in Baltimore, Maryland the study group assembled a 

package of 30 tactical projects from across Appalachia that had been identified by 

participants at the regional workshops. These projects represent a broad spectrum of 

illustrative proposals, offering a variety of multi modal approaches to enhance the 

regions access to both domestic and international markets. 

1. Inland Port, Intermodal Container Transfer Facility, Binghamton, NY. Develop new 

intermodal inland port to enhance access to both domestic and global markets for 

southeastern New York and northeastern Pennsylvania. 

2. I-86 Development, NY. Undertake improvements to ADHS Corridor T to complete a new 

cross-state I-86 highway corridor.

3. Inland Port, Trans-load & Consolidation Center, Olean, NY. Develop new trans-load 

and consolidation terminal in Olean, New York to enhance access to both domestic and 

international markets for western New York and northwest Pennsylvania. 
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4. Inland Port, Trans-load & Consolidation Center, Dubois, PA. Complete development of 

the Dubois Trans-load and Consolidation Terminal to enhance access to both domestic 

and international markets for north/central Pennsylvania.

5. U.S. 219/Continental One Trade Corridor, NY, PA, & MD. Undertake improvements to 

the Route 219 leading to the completion of the Continental One Trade Corridor, serving 

New York, Pennsylvania, and Maryland. . 

6. New Cross-Lake Erie Maritime Shuttle, Erie, PA. More fully develop access to 

international commerce through the Port of Erie by launching new cross-Lake Erie 

freight and passenger services between northwest Pennsylvania and southern Ontario.

7. Inland Port, Intermodal Container Transfer Facility, Northwest PA. In cooperation with 

the Port of Erie, develop a new intermodal inland port and logistics center to enhance 

access to both domestic and global markets for northwest Pennsylvania and southwest 

New York. 

8. Inland Port, Intermodal Container Transfer Facility, Pittsburgh, PA. In cooperation with 

the CSX National Gateway Corridor project, develop a new intermodal inland port to 

enhance access to both domestic and global markets for western Pennsylvania, eastern 

Ohio, and northwestern West Virginia.

9. Inland Port, Intermodal Container Transfer Facility, Southeast PA. In cooperation with 

the CSX National Gateway Corridor project, complete development of a new intermodal 

inland port to enhance access to both domestic and global markets for southeast 

Pennsylvania, northern Maryland, and northeast West Virginia.

10. Inland Port, Intermodal Container Transfer Facility, Western Maryland. In cooperation 

with the Norfolk Southern Crescent Corridor project, develop a new intermodal 

container transfer facility to enhance access to both domestic and international markets 

for western Maryland, northeast West Virginia, and southeast Pennsylvania. 

11. Inland Port, Intermodal Container Transfer Facility, Columbiana County, OH. Complete 

development of Columbiana County Port Authority intermodal inland port to enhance 

access to both domestic and global markets for eastern Ohio, western Pennsylvania, and 

northwest West Virginia.

12. Inland Port, Trans-load & Consolidation Center, Weirton, WV. Develop new trans-load 

and consolidation center to enhance access both domestic and international markets for 

northwest West Virginia and eastern Ohio. 

13. Route 35 Highway Corridor, WV & OH. Undertake improvements to the capacity, 

performance, and safety for the Route 35 Highway Corridor across WV and OH.

14. Inland Port, Trans-load & Consolidation Center, Point Pleasant, WV. Develop new 

trans-load and consolidation center to enhance access to both domestic and 

international markets for West Virginia and eastern Ohio. 
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15. Inland Port, Intermodal Container Transfer Facility, Tri-State. Develop new intermodal 

container transfer facility to enhance access to both domestic and global markets for 

the West Virginia, Ohio, and Kentucky Tri-state area. 

16. ADHS Corridor H Completion, WV & VA. Complete construction of ADHS Corridor H in 

West Virginia and Virginia. 

17. Inland Port, Intermodal Container Transfer Facility, Roanoke Valley, VA. In 

coordination with the Norfolk Southern Heartland Corridor and Crescent Corridor 

projects, develop a new inland port to enhance access to both domestic and 

international markets for southwest Virginia and southeastern West Virginia. 

18. Inland Port, Trans-load & Consolidation Center, Western North Carolina. Develop new 

trans-load and consolidation center to enhance access to both domestic and 

international markets for western North Carolina. 

19. Murphy Gap Restoration, NC, GA, TN. Restore abandoned rail link near Murphy, NC to 

reconnect western North Carolina, northern Georgia, and eastern Tennessee rail 

corridors, enhancing rail access for western North Carolina, northern Georgia, and 

eastern Tennessee. 

20. Inland Port, Intermodal Container Transfer Facility, East Tennessee. In cooperation 

with the Norfolk Southern Crescent Corridor project, develop new intermodal container 

transfer facility to enhance access to both domestic and international markets for east 

Tennessee, southwest Virginia, and western North Carolina. 

21. ADHS Corridor K Completion, TN. Complete construction of the ADHS Corridor K 

highway corridor linking eastern Tennessee with western North Carolina.

22. Saluda Rail Restoration, NC, SC. Restore rail freight service along the Asheville, NC – 

Spartanburg, SC route to enhance western North Carolina access to both the Crescent 

Corridor and to the Port of Charleston, SC. 

23. Upcountry Intermodal Corridor, SC. Develop new intermodal rail corridor between the 

Spartanburg/Greenville area and the Port of Charleston to enhance Upcountry access to 

both domestic and international markets. 

24. North Georgia Highway Corridor, GA. Develop improved east-west highway corridor 

between I-75 and I-85, enhancing access to both domestic and international markets for 

northern Georgia. 

25. Huntsville-Mobile Intermodal Corridor, AL. Develop improved intermodal corridor 

between the International Intermodal Center in Huntsville and the Port of Mobile, 

enhancing access to both domestic and international markets for north Alabama.
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26. Atlanta-Huntsville-Memphis Highway Corridor, GA, AL, MS, & TN. Plan, design, and 

construct a new highway trade corridor between Atlanta, Huntsville, and Memphis to 

enhance access to both domestic and international markets for Georgia, Alabama, 

Mississippi, and Tennessee.

27. Inland Port, Intermodal Container Transfer Facility, Birmingham, AL. In cooperation 

with the Norfolk Southern Crescent Corridor project, develop new intermodal container 

transfer facility in the Birmingham area to enhance access to both domestic and 

international markets for central Alabama.

28. West Alabama Highway Corridor, AL. Develop improved north-south Route 43 Highway 

Corridor between Mobile and northwest Alabama, enhancing access to both domestic 

and international markets for west Alabama. 

29. Tenn-Tom Intermodal Corridor, AL & MS. Develop new intermodal container-on-barge 

services along the Tenn-Tom Waterway Corridor between northern Mississippi/Alabama 

and the Port of Mobile, enhancing access to both domestic and international markets 

for northeast Mississippi, northwest Alabama, and southern Tennessee.

30. C&G Railway Corridor, MS. Restore an abandoned rail segment to fully redevelop the 

cross-state Columbus and Greenville rail corridor, enhancing access to both domestic 

and intermodal markets for central Mississippi. 

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6.0 The Way Ahead 

From Isolation and Distress to Global Access and Economic Opportunity 

Appalachia, “A land apart.” Much of the economic growth and prosperity of the 20th century 

simply by-passed Appalachia. It was through a vacuum of advocacy and leadership, a failure of 

planning and vision, and drought of investment that, during the first half of the past century, 

doomed Appalachia to physical isolation and sentenced its residents to a long and painful 

history of chronic economic distress. Reacting to the findings and recommendations of the 

President’s Appalachia Regional Commission (PARC), the Appalachia Regional Development Act 

of 1965 established the Appalachia Regional Commission (ARC), a program of regional advocacy, 

planning, and investment, joining the Tennessee Valley Authority (TVA) as one of only two 

sustained national regional development programs in America.

6.1 Projecting Forward: A Changing World of New Challenges and Opportunities

The 21st century brings powerful new challenges and opportunities to the businesses, 

communities, and the 23 million people of Appalachia. Now 85% complete, the Appalachian 

Development Highway System (ADHS) has made significant progress in overcoming the region’s 

physical isolation and its chronic economic distress. While research confirms the need to 

continue ADHS development, shifting economic and demographic trends call for a broader and 

more comprehensive planning and development framework to guide Appalachian 

transportation into the 21st century. An in-depth review of macro-economic trends and of the 

characteristics and capabilities of the Region’s current transportation resources confirms the 

following; 

1. Over the past six decades, global trade in manufactured goods has grown on average 

7.6% per year, twice as fast as the inflation adjusted growth rate of global GDP. 

2. Long-term economic expansion is the underlying driver of trade growth. Additional 

factors also have contributed to the establishment of a global economy. These include 

new efficiencies in containerized intermodal transport, growth of international trade 

agreements, advances in transportation and information technology, and a long term 

pattern of demographic shifts, affecting both consumption patterns and labor markets. 

3. While annual trade patterns may vary, a half-century trend of increased international 

commerce has permanently established a global economy for the 21st century. 

4. International trade lanes between the United States and Asia will remain strong, while 

trade lanes connecting the United States with Canada, Mexico, Europe, and the Middle 

East will also remain as important corridors for international commerce. Trade lanes 

between the United States and South American show potential for new growth. 
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5. Strategically centered amidst some of America’s strongest production centers and 

consumer markets (Midwest, Northeast, Mid-Atlantic, Southeast, etc.), Appalachia is

positioned as a natural cross-roads for emerging international trade lanes linking 

America with markets worldwide. 

6. The demographic characteristics of Appalachia feature mostly rural areas, with a 

number of major population centers along its periphery. Demographic trends indicate 

the southern portion of the Region will experience the strongest population growth in 

the years ahead.

7. Imports into the Region tend to consolidate toward those areas of greatest population 

and consumption, while exports from the Region, tend to originate from dispersed 

locations, more evenly spread throughout the Region.

8. Those industrial groups within Appalachia that can benefit most from enhanced 

domestic and global access include;

• Industrial Machinery

• Lumber and wood products

• Agricultural products

• Plastics and chemicals

• Auto-parts and related products

• Furniture, household goods, and related products

• Textiles and apparel

• Electronics and communication products

• Environmental technologies

• Medical instruments and supplies

9. A more coordinated and integrated transportation network provides the opportunity to 

better balance and diversify longer-distance movements of goods, taking more 

advantage of the inherent energy and environmental benefits of both railway and 

waterway systems. Thus, a coordinated network of intermodal corridors of commerce 

can enhance competitive access and overall capacity, while at the same time achieving 

new and increasingly important energy and environmental efficiencies for Appalachia 

and for America. 

10. The Region is benefiting from improved highway access throughout the development of 

the Appalachian Development Highway System (ADHS). Appalachia also benefits from a 

network of railway routes, including a number of emerging intermodal corridors and an 

extensive system of short line railways. Importantly, the Region also benefits from a 

1,500 mile system of navigable inland waterways. Increased coordination between 

these individual modes is essential to enhance the Region’s competitive access to 

coastal ports, Appalachia’s gateways to international trade. 
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6.2 Positioning for Success in the 21st Century: Network Appalachia 

In a Region that for so long endured the economic consequences of isolation, ensuring access to 

economic opportunity in the 21st century is a priority that will shape Appalachia’s success well 

into the new century. By fully leveraging past investment and through a planning and 

development framework that expands connections to both domestic and international 

commerce, Appalachia is within reach of a transportation network that will position the 

Region as a growing cross-roads for both domestic and international commerce. It is a network 

that stresses inter-jurisdictional coordination, intermodal cooperation, and the importance of 

public and private sector planning and investment partnerships. Importantly, it is a network 

that brings new economic and employment benefits to Appalachia, while at the same time 

providing transportation capacity, safety, and efficiency benefits to many of Appalachia’s 

neighbors, including those facing congestion-related economic and environmental challenges. 

Finally, it is a balanced intermodal network that, through efficient new highway, rail, and 

maritime connections, provides important energy and environmental benefits to both 

Appalachia and the entire nation.

Network Appalachia represents a 21st century regional transportation network that establishes 

the domestic and international connections necessary for Appalachia to successfully compete in 

the global economy. It is a network that revolves around three interconnected building blocks. 

These include; 

A. Continued Development of the Appalachia Development Highway System. 

Authorized by the Appalachian Regional Development Act of 1965 the Appalachian 

Development Highway System (ADHS) is the first highway system in America authorized 

by Congress for the purpose of stimulating economic development. ADHS is a 3,090-

mile near-interstate highway system composed of 31 corridors located throughout the 

13 Appalachian states and is now approximately 85% complete. A recent ARC 

sponsored study of the economic benefits of completing ADHS highlights 80,500 new 

jobs and $5.0 billion in increased value added, including $3.2 billion in new wages per 

year for Appalachian workers by 2035. 
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Importantly, the research also spotlights ADHS benefits that extend far beyond the 

boundaries of Appalachia. The study confirmed that in addition to strengthening links 

between Appalachian communities, ADHS is an important component of longer-distance 

trade lanes, extending to, from, and through Appalachia. Figure 6.1 indicates 

Appalachia’s Strategic Highway System and pin points those sections of the ADHS that 

still need to be completed.

B. Intermodal Corridors of Commerce: Appalachian Routes to Global 

Opportunity. 

The 1999 ARC report entitled An Assessment of Intermodal Transportation Plans, 

Systems, and Activities in the Appalachia Region warned, “While ADHS has served as 

the centerpiece of ARC’s economic development program in the past, highways alone 

are no longer sufficient to help Appalachia’s communities compete in the global 

marketplace. Increasingly, the efficient movement of goods requires an intermodal 

Figure 6.1: The Appalachian Development Highway System
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transportation system that provides access to critical supplier and consumer markets. In 

the 21st century, Appalachia’s growth and prosperity will depend on its ability to develop 

integrated intermodal transportation systems.” 

Building from ADHS as its foundation, Appalachia in the 21st century will be served by an 

interconnected network of primary highway, rail, and inland waterway routes, each 

serving as designated intermodal corridor of commerce. These are corridors of both 

regional and national significance and establish important new Appalachian connections 

to both domestic and international markets. These corridors provide for the safe, 

efficient, and high-speed movement of containerized international cargo between 

inland Appalachia and coastal ports, the Region’s gateways to global commerce. In 

addition, these corridors support the flow of conventional, non-containerized cargo, 

bound to and from both domestic and international markets. Figure 6.2 shows

Appalachia’s network of Intermodal Corridors of Commerce.

Appalachian intermodal corridors of commerce are not merely a vision for the future. 

They are, in fact, taking shape today. Across the Region work continues on developing 

Figure 6.2: Intermodal Corridors of Commerce
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ADHS corridors as well as a number of other planned highway priorities, such as the 

Continental One corridor and the Atlanta-Huntsville-Memphis highway corridor. 

Important new intermodal rail corridors are also taking shape as shown previously in 

Figure 3.8. These include the Norfolk Southern Heartland Corridor serving Virginia, 

West Virginia, and Ohio and the Crescent Corridor serving Pennsylvania, Maryland, 

Virginia, Tennessee, North Carolina, South Carolina, Georgia, Alabama, and Mississippi. 

In addition, the CSX National Gateway Corridor is expanding high speed intermodal rail 

service to North Carolina, Virginia, Maryland, West Virginia, Pennsylvania, and Ohio. 

These initiatives establishing new models for public and private sector cooperation, 

improving rail, highway, and maritime intermodal coordination, and creating powerful 

new Appalachian connections to both domestic and international markets are attracting 

national attention and wide-spread recognition. 

For example, Gilbert E. Carmichael, Senior Chairman of the Intermodal Transportation 

Institute and former Federal Railroad Administrator, declared “These are models of 

collaboration, cooperation, and innovation. They prove that our often-fragmented 

modes of transportation can work together and demonstrate the potential of building 

successful new public and private partnerships. Perhaps most importantly, they are 

creating powerful new links in the global supply chain that will stimulate economic 

growth and opportunity.”

Complementing Appalachia’s emerging highway and rail corridors, a new Marine 

Highway initiative is focused on taking full advantage of Appalachia’s 1,500-mile system 

of navigable inland waterways. This was presented in figure 3.10 Patterned after 

successful programs in both Europe and Asia, these plans call for inland waterways to 

become important new links in the global supply chain, shuttling intermodal containers 

between inland port locations in Pennsylvania, West Virginia, Ohio, Kentucky, 

Tennessee, Mississippi, and Alabama and coastal ocean ports in both Mobile, AL and 

New Orleans, LA. 

C. The Inland Ports of Appalachia: Linking Economic Success to Transportation. 

While emerging corridors of commerce establish strong new Appalachian connections 

to both domestic and international markets, it is a region-wide system of local freight 

terminals, referred to as inland ports, that establish the vital connection between 

Appalachia’s transportation system and its economy. These inland ports are the 

consolidation, distribution, and warehousing centers that directly connect local 

businesses with the Region’s highway, railroad, and waterway corridors. Such centers 

come in various shapes and sizes and are tailor-designed to serve the specific needs of 

local communities. 
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Successful models include both the Virginia Inland Port in Front Royal, VA and the 

International Intermodal Center in Huntsville, AL. These are intermodal container 

transfer facilities that shift containerized cargo between trucks and trains, offering local 

businesses high speed/low cost intermodal access to gateway ocean ports. They also 

stimulate economic and employment growth, as so successfully demonstrated in both 

Front Royal and Huntsville. As part of the development of new emerging intermodal rail 

corridors, new inland container port facilities are being developed in the heart of 

Appalachia as shown in Figure 6.3.

Other models for inland port success can be found in Appalachia’s smaller towns and rural 

areas, such as Somerset, KY, Dubois, PA, and Lenior, NC. These centers are trans-load and 

consolidation terminals for conventional, non-containerized cargo. Here, local businesses gain 

multi-modal access that saves on transportation costs and expands market reach, while local 

communities gain an important new feature to attract enterprise and employment into their 

area. Building on the success of these models, inland port planning and development is rapidly 

expanding across Appalachia, opening new connections and attracting new opportunity. 

Figure 6.3: Inland Container Ports
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6.3 Proactive Planning: The Way Ahead 

A 20th century approach to transportation planning and development can no longer ensure 

Appalachia the domestic and global access that it will require to compete and succeed in the 

global marketplace. Fully incorporating the emerging economic, energy, and environmental 

priorities of the 21st century, a new, pro-active planning and development framework can both 

enhance the Region’s global competitiveness and help attract new enterprise and employment 

into Appalachia. This new framework is outlined below: 

Transportation Planning and Development Framework for Economic Competitiveness in the 

21st Century 

Appalachia’s economic success in the 21st century will depend on reliable, safe, and cost-efficient 

access to domestic and international markets. 

• Advocacy and Partnerships: Appalachia must strongly advocate for its own future, which is 

best accomplished through building innovative and collaborative new partnerships. Such 

partnerships will expand awareness of both challenges and opportunities and 

encourage/support increased local and regional planning activities. Proactive in nature, 

these partnerships will be both internal and external to the Region, feature public and 

private sector participation, expand coordination between transportation, economic 

development, and international trade interests, and strengthen Appalachia’s connections to 

both domestic and international commerce. 

• Planning and Coordination: To prepare for the future, a comprehensive and sustained 

planning process must be established that features inter-jurisdictional cooperation, 

intermodal coordination, and actively engages both public and private sector participation. 

The planning approach must be driven by economic development priorities, with strong 

attention to quickly emerging energy and environmental priorities. 

• Investment: Appalachia faces a complex economic future, filled with new challenges and 

opportunities. Building on the historic success of the Appalachian Development Highway 

System, sustained transportation investment in the 21st century must be secured that is 

both sufficient to meet the Region’s planning and development needs and flexible to 

encourage a strong commitment to intermodal coordination and cooperation. A new 

emphasis on better integrating public and private sector investment can also maximize 

economic and employment benefits to the Region. 

In its 1964 report to President Lyndon Johnson, the President’s Appalachian Regional 

Commission (PARC) stressed that, “Progress in Appalachia can only be realized through the 

coordinated effort of a regional development organization, with state and local development 

units, with research and demonstration centers, and with multiple state and federal agencies.” 

For nearly a half century, the Appalachian Regional Commission has applied this model and has, 

time and again, demonstrated the power of advocacy, planning, and investment to create 
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economic and employment opportunity. Building from its past success with the Appalachian 

Development Highway System, it is this same collaborative approach, not aimed at overcoming 

past distress, but focused on creating future opportunity, that can expand connections to 

domestic and international commerce and serve as Appalachia’s route to economic success in 

the global 21st century.