Workers at Iowa Cold Storage handle about 25 semitrailer loads of frozen meat products daily at the company’s cavernous 100,000-square-foot warehouse just south of Interstate 80 in Altoona. Business has been so good for the company, which opened the facility just 18 months ago, that work has begun on a 100,000-square-foot expansion.

By next spring, co-owner Denny Franzen hopes to not only see that project completed, but also to see a shiny new set of rails extend into the industrial park and alongside the expanded building.

The proposed one-mile rail spur would connect the industrial park with the Iowa Interstate Railroad’s mainline to the south. Franzen and his partners estimate the $1.9 million investment in the spur would save the company $1.4 million a year in diesel-fuel costs by allowing them to ship goods by rail rather than truck.

The Altoona spur is one of several projects in the early stages in Central Iowa to build public rail docks or ramps, which could be the first step toward full intermodal facilities that would use specialized equipment to lift entire semitrailer containers on or off rail cars. In Bondurant, for instance, city officials plan to use $1 million in federal highway dollars that were recently approved to renovate a rail spur connecting the Union Pacific mainline with a planned 107-acre industrial park.

After two decades of consolidation to the mainline railroads’ hubs in Chicago, Omaha and Kansas City, there are just three public rail-truck intermodal loading facilities remaining in the state: in Newton, Council Bluffs and West Liberty.

However, as fuel costs soar and the interstate highways become increasingly congested, more Central Iowa companies are seeking local facilities that will allow them to load their goods bound for international markets directly onto rail cars. In fact, being located away from the main hubs may work to Greater Des Moines’ advantage in the future as it becomes a secondary hub for gathering shipments, said Franzen, who also owns a refrigerated trucking company.

Firestone Agricultural Tire, a division of Japan’s Bridgestone Corp., is among the Central Iowa exporting companies that have expressed an interest in the development of a closer rail dock. Currently, the company ships its tires by truck from its distribution center in Des Moines to Kansas City, Omaha and Chicago, where they’re loaded onto rail cars for domestic distribution or to seaports for export.

“Ultimately, it would be nice to have an intermodal facility in Des Moines,” said John Wahlert, manager of the Firestone distribution center, which ships approximately 1 million off-road tires a year. “We think there would be some savings there.”

Nationally, rail-truck intermodal shipments, which last year accounted for 77 million containers shipped, are expected to reach 100 million containers by 2010, and to double to 200 million by 2020. Part of the increased demand is coming from the need to ship agricultural products without the risk of cross-contamination.

“Businesses are becoming reawakened to the need for rail for bulk shipment,” said Larry Mesenbrink, rail development manager for the Iowa Department of Transportation. “It may not be as convenient as truck, but the economies of scale are there.”

Iowa, which ships large quantities of agricultural commodities and manufactured goods out of the state, gets relatively few shipments of goods coming in, however.

“We need to grow more intermodal business coming into the state, so we get more balanced equipment availability,” said Peggy Baer, director of the IDOT’s Office of Rail Transportation. “What I hear from companies is that it’s difficult to ship outbound because there’s not a lot of (rail) equipment coming in.”

Plans for refurbishing the Bondurant rail spur were an important factor in inducing 84 Lumber Co., a Pennsylvania-based building supply company specializing in contractor sales, to choose a 20-acre site in the industrial park for its first Iowa warehouse store, said City Administrator Darrel Steven Carlyle. That company, which would be the first tenant of the industrial park, is looking to begin construction this fall, he said. A number of other nearby companies, such as Ziegler Cat, are also interested in having access to a public dock for rail shipments, Carlyle said.

Bondurant officials are now considering several options for structuring the ownership of the rail line. Among the possibilities: a 28E intergovernmental agreement between the city and Polk County; the creation of a public-private ownership group; or through the Polk County Aviation Authority or a similar authority that would be formed. Progressive Rail Inc., a shortline railroad company based in Lakeville, Minn., is negotiating with the city of Bondurant to become the operator of the line. The company operates a 90-acre rail park operation in Lakeville that serves 17 industrial tenants.

To continue to raise financing for the project, Bondurant plans to apply for an upcoming round of Iowa Clean Air Attainment Program funds, Carlyle said.

Meanwhile, on Tuesday, Sept. 13, the Iowa Transportation Commission will consider a $480,000 loan request from Franzen and his investor group to fund the Altoona rail spur project. The funding would come from the state’s Intermodal Pilot Program, which is designed to back projects that can prove they will result in energy savings. It’s estimated the Altoona project will save a half-million gallons of diesel fuel per year by eliminating approximately 3 million loaded vehicle miles annually.

Franzen said the federal transportation bill passed this summer includes $1.5 billion in appropriations for intermodal facilities. Though the bulk of the money is meant for expanding the seaports’ capabilities, there are also funds his investor group hopes to secure with the assistance of Iowa’s congressional delegation.

For an intermodal facility to be profitable, it would need to handle approximately 3,000 “lifts” of containers on or off rail cars monthly, according to Firestone’s Wahlert. Because the tire manufacturer’s shipments would constitute only about 10 percent of that volume, it would be necessary for a lot of companies to use it to make a Des Moines facility worthwhile, he said.

Tim Woods, sales manager and intermodal director for the Iowa Interstate Railroad, said the potential shipping volume is already sufficient in Central Iowa to make a facility workable. Woods said he has been approached by economic development agencies from cities all along his railroad’s east-west corridor through the state about intermodal facilities.

“I never have to send an empty container out,” Woods said. “You have to get the containers here, and you have to have the facility. The volume is there.”

The cost of building a complete intermodal facility with the space and equipment to load and unload entire semi-trailer containers can easily reach $10 million. But given the potential savings, both the Bondurant and Altoona groups say interest has been keen among private investors in putting money into rail parks, with the idea of eventually adding the intermodal loading capability.

Franzen, who is also an investor in Altoona’s industrial park, said rail spur access will likely be included in the purchase price of land at the park, depending on the tenant’s needs. For Iowa Cold Storage, a track running alongside the building will allow it to load products directly into refrigerated boxcars. Currently, the products are loaded onto trucks to be sent to the company’s Waterloo facility for loading onto rail.

From Franzen’s perspective, “I think the next phase of it ought to be connect cities like Des Moines and Minneapolis so they can collect freight and send it to the major hubs,” he said. Trucking companies are increasingly moving to more regionalized hauling within a 500-mile radius and letting the railroads handle more of the long-haul freight.

“It’s been a long time coming, where we’re starting to get the trucking companies and the rails to work together to move freight more efficiently,” he said.