The following column is from Otis White’s Urban Notebook. Otis is a regular contributor on Smart City each week, and his daily missives are instructive to anyone who cares about cities. This one on multi-modal centers and the changes that make them less attractive as economic engines has special importance to Memphis.

New Breaks in Transportation

Transfer Points for the Global Economy

There are several academic theories about why big cities are where they are. One is called the break-in-transportation theory. It’s easy to grasp: Where large volumes of goods come in on one form of transportation and are transferred to another, cities grow. In past centuries, these transportation breaks gave us Chicago (lake steamers to trains), New York (ocean ships to trains, river barges and coastal vessels), and New Orleans (river barges to ocean ships). Interestingly, these shipping breaks are still building cities, though not as powerfully as they once did, and now they tend to be on the edges of metropolitan areas.

The great growth in freight these days is in containerized shipping. A manufacturer in Thailand places TVs for the American Midwest in a 40-foot metal container. The container is loaded on a freighter bound for Oakland, Calif. There, it’s plucked off the ship and loaded on a truck that takes it through the city to an outlying rail hub like Stockton, Calif., where it’s placed on a freight train, which hauls it across the country to a rail hub in the Midwest like Rochelle, Ill. In Rochelle, it’s again placed on a truck, which drives it to a distribution center, where the container is opened and the TVs routed on smaller trucks to individual stores.

Two things stand out in this journey: First, the breathtaking efficiency of it. Except for a possible customs inspection or security scan, the container goes straight from Bangkok to a distribution center in suburban Chicago without ever being opened. This is how the global economy works these days. Second, there are at least three breaks in transportation inside the U.S. (ship to truck in Oakland, truck to rail in Stockton, rail to truck in Rochelle). Hence, three opportunities for urban growth.

The Wall Street Journal took a look at one of these transfer points recently, the small city of Rochelle, where three years ago the Union Pacific railroad built a giant rail-to-truck complex (transportation professionals call these “intermodal inland yards”). The Rochelle yards are hardly a thing of beauty. Set on two square miles, the complex is surrounded by earthen berms that shield 23 rail tracks. Big cranes lift containers off the trains and plop them on the back of trucks. This is not an industry every city could accommodate (requirements: a major freight line or two and direct access to an interstate highway; nice to have: proximity to a major metro area).

Nor is it the kind of industry some cities would welcome. Union Pacific approached two cities closer to Chicago in the late 1990s; they said no thanks. (Perhaps they feared the traffic and noise. The yards are at only 18 percent capacity and already 500 trucks a week roll in.) So the company built in Rochelle, 80 miles from the city.

Rochelle’s business leaders are delighted with the growth the yards are bringing. Big distribution centers are popping up nearby, people are moving in (population, which grew very little in the 1990s, is up 3,000 since 2000 to 54,000) and restaurants are thriving, the Journal said. And there’s almost certainly more growth ahead. “The rock is just penetrating the pond, so to speak, to start the ripples,” one civic leader told the newspaper. Land prices are rising; so is the city’s tax base.

And yet there’s a difference between these transportation breaks and the ones that created great cities in the 19th and early 20th centuries. The real value then was the manufacturing that sprang up nearby. Goods were expensive to ship in those days, so most shipping was raw materials – rubber from the Far East, cotton from the American South, grain from the Midwest and so on. When these materials reached a place like Chicago or New York, they were used to make tires, clothes and refined wheat, which were then placed on the final leg of the trip to the consumer.

Transportation costs have dropped precipitously in the last 50 years, so now it’s cheaper to make TVs in Bangkok and ship them to the other side of the world than to import the parts to Rochelle and make TVs there. Hence, there’s growth near these transfer points, but it’s not the kind that creates large and prosperous communities anymore. “Distribution isn’t a high-labor activity,” one logistics consultant told the Journal. “It’s not a manufacturing plant.”