Railroad companies have forged through the recession with continued investment in infrastructure and innovations in real estate practices,  with all signals pointing to a bright future for the century-old industry.

On August 1, the first train cars will roll into CenterPoint Properties’ $2 billion Intermodal Center in Joliet.

The 3,600-acre facility will be an inland port for Union Pacific Corp. and will handle Los Angels to Chicago freight traffic. The success of Burlington Northern Santa Fe Corp’s 2,500-acre intermodal center in nearby Elwood, also developed by Centerpoint, triggered interest from Union Pacific as the real estate practices at the Elwood site demonstrated significant savings.

Centerpoint Intermodal Center - Joliet

Together, the two sites will create the largest inland port in the nation.

“Elwood really set the standard for intermodal centers,” says Neil Doyle, executive vice president, Infrastructure and Transportation Development for CenterPoint. “Other firms want to adopt this model. It would be like trying to compete with Class A office space if you were working with Class C space.”

The intermodal centers allow retailers and distributors to cut down on shipping costs by locating warehouses much closer to rail yards. The savings from moving a container to a distribution center only a half mile away as opposed to 5-10 miles can be significant.

These innovations have made rail a much more enticing bet from mega investors such as Warren Buffet, who bid $26 billion for BNSF in November of 2009.

“Some of the smartest money is chasing rail right now,” says Doyle.  “If you are bullish on rail, you should be bullish on Chicago.”

Chicago has long been known as the rail hub of the country, but in the past few decades the Midwestern giant has gained a reputation for being more of a bottle neck for freight traffic, rather than a geographically convenient route.

The establishment of the Intermodal centers in Elwood and Joliet will hopefully alleviate heavy traffic in the Chicago region from western ports. The two centers are capable of handling freight from eastern ports, but as of now they are only set up for western traffic, says Doyle.

This makes sense as the twisting rail yards of Chicago often account for the congestion and lengthened shipping time as freight passes through the region. The location of the intermodal centers on the western edge of the Chicago region allows freight traffic to avoid the major urban areas all together.

“The trip from Joliet to Chicago may only be 40 miles, but with all of the rail congestion and traffic, it often was a day to get it there,” says Doyle. “This can save shipping companies an entire day, which is significant money.”

Efficiencies in rail travel have also made the mode of shipping more enticing. As fuel prices are predicted to only increase in the future, rail offers a less energy intensive and greener mode of transportation.

According to the Association of American Railroads (AAR), trains transported a ton of freight 457 miles on one gallon of diesel fuel on average in 2008, a 94 percent increase since 1980.

Like the economy in general, the rail industry experienced a huge dip in 2009. So far 2010 has proven much better, as shipping numbers continue to steadily escalate.

The AAR reports that in the first 25 weeks of 2010, 13 reporting U.S., Canadian and Mexican railroads totaled 9,208,258 carloads, up 10.4 percent from last year, and 6,507,218 trailers and containers, up 12.9 percent from last year.

However, the rail industry is not waiting for a full blown recovery to reinvest in its product. The Wall Street Journal recently reported that during this recession the rail industry has invested close to $20 billion in capital improvements.

All of this could give the Chicago area something to be positive about as the near future may signal the return of a robust rail industry.

“We hope a renaissance for rail means a renaissance for Chicago,” says Doyle.