Norfolk Southern Corp. is expanding its rail yard at the Navy Yard in South Philadelphia by 15 acres as part of an eventual 2,500-mile, high-speed rail route aimed at getting more freight onto trains and away from congested highways.

Gov. Rendell and Norfolk Southern chief executive Charles "Wick" Moorman yesterday announced an $11 million investment to expand the current 45-acre yard here to handle more large steel containers and trailers that can be transferred between rail cars, trucks, and ships.

"We plan to give the shippers and producers in Philadelphia and Pennsylvania the option to ride the rails all the way," Moorman said at a briefing at the Independence Seaport Museum.

Rendell said the public benefits would be big - creation of jobs, additional tax revenue, and new business opportunities, as well as safety and environmental benefits.

U.S. freight volume is projected to grow 88 percent by 2035. To handle that freight - all the things Americans need for their everyday lives - the nation's railroad networks need to be updated.

The Navy Yard terminal, which will be served by two daily trains, will connect to Norfolk Southern's planned Crescent Corridor, 2,000-plus miles of high-speed service for transporting consumer products, food, textiles, mail, and auto parts between metropolitan New York and New Orleans.

The South Philadelphia rail yard will handle more than 72,000 containers and trailers annually. Construction is scheduled to begin next year.

"The Navy Yard terminal is a key component of Crescent Corridor because of its strategic location as a major gateway for truck-competitive freight transportation into Southeastern Pennsylvania, southern New Jersey, and Delaware," Moorman said.

Pennsylvania is taking the lead with Virginia, Tennessee, Alabama, and Mississippi in seeking $300 million in federal funds for the corridor from the U.S. Department of Transportation, he said.

When the Crescent Corridor is fully operational in about 2020, annual benefits to Pennsylvania are expected to include cargo on 700,000 trucks diverted to rail, nearly 10 million gallons of diesel fuel saved, and a reduction of 10,000 tons of carbon dioxide emissions, Norfolk Southern officials said.

"One train can take 280 trucks off the highway," Moorman said.

Rendell said rail freight's benefits to the country were enormous, calling the corridor "one of the most important regional transportation projects to come down the pike in a long time."

"It's good for the economy because it gives our shippers a choice," the governor said. "The competition will inherently reduce costs, and shippers will have a lower cost of moving goods."

Pennsylvania pledged $5 million to the terminal expansion here, and Norfolk Southern promised $6 million. In coming years, Pennsylvania will spend $40 million more from state transportation funds, Rendell said.

Total cost of the Crescent Corridor will be $2.5 billion, including a new $95 million terminal in Greencastle, Franklin County, Pa.; $52 million in improvements to a terminal in Harrisburg; and track and signal upgrades in nine Pennsylvania counties. The rail lines already exist.

Today, less than 25 percent of consumer goods, such as electronics, toys, clothes, paper products, and furniture, move by rail between the Northeast and the South, compared with 50 percent between New York and Chicago and 80 percent between Los Angeles and Chicago, officials said.

Three railroad lines serve the Port of Philadelphia: Norfolk Southern, CSX, and Canadian Pacific. Most of Norfolk Southern's "intermodal" cargo now goes to a larger terminal in Morrisville, Bucks County, once a Conrail yard.

"We're talking about more jobs, less congestion, reduced fuel consumption," said Mayor Nutter. "What more can we ask for?"

"With this $11 million investment," he said, an expanded terminal at the Navy Yard "will benefit shippers and consumers in the city, and lead to further economic development opportunities in the Philadelphia area."

Contact staff writer Linda Loyd at 215-854-2831 or lloyd@phillynews.com.