October 1, 2007
thought leaders | The DC Velocity Q & A

Time to ride the rails: interview with Gil Carmichael

time to ride the rails: interview with Gil Carmichael

Former Federal Railroad Administrator Gil Carmichael is convinced that the answer to our nation's infrastructure problems is right under our noses.

By Mitch Mac Donald

When Gil Carmichael began his career more than five decades ago, the Interstate Highway System still lay some years in the future. The nation's railroads were in decline, and the concept of containerized freight on ocean vessels was unknown.

Over the years, those roads were built, the rails' fortunes improved, and containerized trade exploded, changing the transportation landscape in ways no one had foreseen. By the time Carmichael arrived on the Washington policy scene in 1973, the newly completed highway system was already showing signs of stress from burgeoning freight volumes and passenger traffic. As he learned more about the overall picture, it became increasingly clear to him that roads alone would never be able to meet the nation's growing transportation needs. Within three years' time, the man who had arrived in Washington a strong believer in highway transportation had become a vocal advocate of the railroads.

Today, Carmichael is the champion of what he calls Interstate II, a proposed high-speed, multiple-track inter-city rail network that would serve as the backbone of a vast, efficient intermodal freight system that seamlessly links ports, highways, and airports across North America. He preaches the gospel of intermodalism from his pulpit as senior chairman of the University of Denver's Intermodal Transportation Institute, an institution he helped establish in the '90s to promote education and research on intermodal transportation.

His résumé suggests a willingness to take on difficult issues. He helped revive the Republican Party in Mississippi at a time when the Democrats dominated the South. Unsuccessful bids for the U.S. Senate and for governor caught the attention of national GOP leaders, and he served in public policy posts during three different decades, most notably as federal railroad administrator under President George H.W. Bush from 1989 to 1993—a period of rail consolidation and retrenchment.

As federal railroad administrator, he managed the nation's rail safety and research programs, supervised international railway technical assistance programs, and sponsored the first World Railways Congress in 1991, which brought together senior government and railway officials from 60 nations. In 1990, he received the Founder's Gold Medal Award from the Pan American Railway Congress for his paper on the role of rail transportation in the 21st century.

During the same period, he served on the board of Amtrak, the nation's rail passenger service. Later, he chaired the Amtrak Reform Council, which was charged with making recommendations to help the beleaguered company reach financial self-sufficiency.

Throughout that time, Carmichael continued to push the intermodal agenda. He helped to develop President Bush's National Transportation Policy, which included intermodal transportation initiatives. In 1997, he chaired the North American Intermodal Summit, which brought together the transportation secretaries of the United States, Canada, and Mexico for high-level discussions on intermodal policy.

Carmichael holds a business degree from Texas A&M University and was a fellow in the Institute of Politics at Harvard University's Kennedy School of Government in 1976.

He met recently with DC VELOCITY Group Editorial Director Mitch Mac Donald to discuss both his background and his vision of the freight transportation system of the future.

Gil Carmichael Q: At 80 years old, you've probably had the longest career in logistics and transportation of anyone we've featured in our Thought Leaders Q&A series. Tell us a little about your background.

A: My first job out of college was working as a field salesman for The Wall Street Journal. At the time, the Journal was expanding its focus beyond the stock market to become a mainstream national business daily. My job was to call on business people and explain what the paper was all about in hopes of getting them to subscribe. After eight years in the business, I quit in 1958 and went into the business of importing German cars. I have been in transportation ever since.

My career in public service dates back almost as far. In the 1960s, I returned to my native state of Mississippi and got involved in politics because I didn't like the "Dixie" politics of the day. I hoped to create a Mississippi Republican Party at about the same time that a fellow named George Bush was doing the same thing over in Texas. The South was pretty solidly Democrats. Getting a Republican Party going in the South was a pretty interesting thing. I believed in it. I ended up running for governor twice and for the U.S. Senate one time back in the '70s.

I think because of my politics back in the '70s and my running for the Senate and everything, the White House took note of me. President Nixon called me up and I was put on the highway safety project for the U.S. Department of Transportation. I have been involved with the DOT since 1973. I ended up working as the federal railroad administrator later on when George H.W. Bush became president. As I got involved in various activities in that position, including a study of the nation's transportation system, I found that I wasn't really a railroad guy but had become something we didn't even have a term for back then. I had become an "intermodalist."

Q: I suppose that made you something of a man ahead of your time.

A: It was a whole new science of transportation. In my four years as a federal railroad administrator, the railroads themselves were almost going out of business.

After I became the administrator, I met with the president of the Association of American Railroads (AAR) and asked him about the group's plans for the industry's future. He said, "Well, we don't have any." This was 1989. I told him it would be really helpful if I could get some estimates of what they thought the future held for their industry. They came back to me in a couple of weeks and presented two scenarios. Problem was, both called for a decline in the railroad industry in this country. One called for a slow, steady decline, and the other called for rapid decline. There was a third scenario, I thought, which the rail industry itself hadn't even considered. Quite simply, they didn't see the explosion of containers coming. They still saw themselves as haulers of slow-moving, heavy bulk freight.

What I found most frustrating was that the railroads had no image of what they could be, or the role they could play in the future. To top it off, I viewed the rails as the most ethical of all the transportation modes. When I use the word "ethical," I mean that they can move a ton of freight farther than trucks or planes can on a gallon of fuel. A train gets nine times farther on a gallon of diesel fuel than a truck can. That alone, especially given what we see happening today with energy costs and environmental issues, could go a long way toward establishing the rails as the mode of choice for the 21st century.

Q: Do you think those energy considerations will prompt shippers to finally start shifting more freight to rail?

A: Yes. If you look at what the railroad industry is doing right now, even out of its own revenues, it is spending about $5 billion to $9 billion a year. Investment is being made to add capacity. I think the realization has set in that more and more of the nation's freight will migrate to rail, and the industry is doing a good job of preparing for that by expanding its capacity. There are some really exciting things happening. If you go around the country right now, you will see these new logistics parks coming on the scene—2,000- and 3,000-acre facilities that are rail and truck intermodal facilities.

Q: You helped establish the Intermodal Transportation Institute at the University of Denver back in the '90s. I assume its central mission is to promote intermodal transportation in the United States?

A: It is indeed. When I left office in 1992 or 1993, I was looking for a university that would teach this new science of intermodalism and found there wasn't any place to get a degree in that field anywhere in the United States. You simply couldn't get a railroad engineering or railroad degree of any type. There were no experts on this new intermodal idea.

In time, at a conference at which I was speaking, I met a professor from the University of Denver. He and I ended up having lunch together. He invited me out to the school. From there, we talked a bit more, and it all just clicked. Our first task was to develop a curriculum and text for the program, because none really existed.We did that through the creation of a board of advisers made up largely of business people who were at the time actually pioneering the emerging intermodal field. We had a vision and brought all the advisers together in what we called a Founders Conference. We had to get some literature together, so we did a history of these pioneers and their companies. This included people like J.B. Hunt, who at the time was the most prominent person from the trucking business who saw what truck-rail intermodalism could do for his company and his customers.

As we got further into the development of the program and the curriculum, we realized that although we had envisioned this as an undergraduate-level program, it was really shaping up to be a master's program. It was not a field of study that was best suited for 20-year-olds; it seemed more appropriate for people in their 30s and 40s who had already been in the industry for a while. Fast forward to today. We've now graduated one hundred-plus students with a master’s degree in Intermodalism.

Q: It seems this program has the potential to help solve another problem we hear mentioned more and more often today—the difficulty recruiting sharp people into the logistics business.

A: That's right. They spend 18 months in the program and earn a master's degree in intermodalism. It not only helps bring good sharp business people into the field, but it also gives them a very deep understanding of intermodalism, which we think will continue to play a more and more prominent role in the logistics business, and become more and more important in supporting our economy.

And that's a significant shift in mindset from not all that long ago. In the era of transportation I grew up in, everything was vertical. Highways were stand-alone. Railways were stand-alone. Airlines were stand-alone. Everybody, all the modes, were viewed as independent, unattached, standalone industries. As recently as 10 or 15 years ago, the railroads and the motor carriers still considered themselves archenemies. Today, some of the railroads' biggest customers are trucking firms that are moving their long-haul trailers via rail.

Q: Of course, if they want to maintain that momentum, the rails will have to invest in infrastructure. I know you've been advocating the expansion and upgrade of the nation's rail system for almost 15 years. Weren't you the first to use the term "Interstate II" to describe the nation's future rail system?

A: Yes, I can claim ownership of that term. I first used it in a speech in the early 1990s to a group of road and highway construction professionals in Washington, D.C. I told them that they had built the Interstate Highway System in the last century, but what about the 21st century? I warned them they would be missing the boat, so to speak, if they didn't start looking at the construction of the railroad rights-of-way in this century.

Our Interstate Highway System was built in the 1950s and later. There are four lanes, asphalt and concrete, lanes separated. You can go from one side of the country to the other without stopping—with overpasses and underpasses, too. I call that highway system Interstate I. Interstate II, I hope, is going to be utilized as a railroad right-of-way network all around North America—Mexico, the United States, and Canada. The rail system in this country used to be double-, triple-, and quadruple-tracked. The rights-of-way are still there. The railroads, though, have scaled back in many lanes to single tracks. We are just now seeing that change with some re-establishing of at least double tracking along the rights-of-way. But if we really want to do something right, we need to go back and double-, triple-, and quadruple-track wherever we can. We also need to invest in grade separation where rails and roads intersect. The railroad rights-of-way are already bought and paid for and are just sitting out there. We should go build this thing I call Interstate II. Interstate II will be about 30,000 miles of double track connecting all the major cities.

If we put our minds to it, we should be able to do it in this century.

Q: What has to happen to make this new concept a reality?

A: It is already starting. There is no other choice. Aside from the efficiencies, the environmental benefits, and the capabilities the railroads offer, the only other real option we have for moving people and freight by surface transportation is the current Interstate Highway System. By all accounts, and without even getting into the problems that have been so heavily covered in the mainstream press since the Minneapolis bridge collapse, the Interstate Highway System is quite simply maxed out. The era of trying to expand the Interstate Highway System is at its end. The next era belongs to Interstate II and the rail industry.

About the Author

Mitch Mac Donald
Group Editorial Director
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.

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