Railroad seen boosting fortune of the port But questions raised by planned entry of Norfolk Southern

Firm says it's 'committed'

Stiff competition with CSX expected to bring in business

March 16, 1997|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

Finally, Norfolk Southern may be coming to Baltimore.

But will the highly aggressive railroad that helped transform the port of Hampton Roads in Virginia into an East Coast powerhouse, often at Baltimore's expense, become the salvation many in the maritime community believe it can be?

Will it boost business at the port of Baltimore without robbing its favorite son of cargo? Or will it seek to lure or divert cargo to its own terminal in Hampton Roads?

"Down here they're saying, 'Oh my God, you're going to foresake your buddies in Hampton Roads and send all your business through Baltimore and Philadelphia,' " said Bill Schafer, director of strategic planning for the Virginia-based Norfolk Southern Corp. "That doesn't have any more logic than we're going to abandon Norfolk."

"We're committed to serving Baltimore and Norfolk," he said. "Each has strengths and we'll work with those to make a profit off the business."

After fighting bitterly over Conrail Inc. for more than four months, Norfolk Southern and CSX Corp. recently agreed to split up Conrail's 11,000-mile network. Negotiations between the two are under way. But under a tentative arrangement -- still subject to approval by regulators -- Norfolk Southern would acquire Conrail's tracks into the port of Baltimore.

The deal would preserve two Class I railroads here; CSX also serves Baltimore. But most observers are hoping it will significantly boost rail service and competition.

"It will definitely be better than what we've had, because we haven't had much," said former U.S. Rep. Helen Delich Bentley, now a consultant to the Maryland Port Administration and an outspoken critic of CSX.

Prior to 1980, Baltimore enjoyed a rate advantage because it is closer to the Midwest. After deregulation, however, rail rates were no longer determined by distance and lines began fiercely undercutting each other. Among the most aggressive was Norfolk Southern.

"We've lost cargo to South Atlantic ports because Norfolk Southern has given better rates," Bentley said.

Now many analysts expect Baltimore to reap that benefit. During the battle over Conrail, Norfolk Southern representatives clearly impressed the maritime community with promises to compete aggressively and lure more cargo to Baltimore.

In a Feb. 20 letter to Gov. Parris N. Glendening, the company pledged to build new facilities, including a distribution center for new automobiles and a new intermodal terminal for the railroad's RoadRailer, an innovative truck trailer that converts to a railroad car. In addition, the company has promised to raise clearances to accommodate high-cube doublestack container trains.

"I don't see any downside," said Sigmund Shapiro, president and chief executive officer of Samuel Shapiro & Co. Inc., a local

freight forwarder and customs broker.

"The problem all along has been the lack of aggressive competition. CSX was disenchanted with Baltimore and didn't want to do anything. Conrail was a passive service," he said.

In order to provide the ultimate competitive situation at the port, however, CSX and Norfolk Southern must agree to share tracks and facilities. Currently, CSX serves Seagirt Marine Terminal while Conrail serves Dundalk. Likewise, CSX serves the Fairfield side of the port, which handles a substantial amount of automobile exports and imports while Conrail handles cars at Dundalk.

"We would love to see both railroads getting rights to serve both sides of the port," said Brendan O'Malley, vice president of Hobelmann Port Services Inc. which operates the port's private automobile terminals. Whether Norfolk Southern and CSX provide such access remains one of hundreds of issues to be resolved before they submit a plan of operation to the Surface Transportation Board, the U.S. agency that governs railroads.

But more competition between Norfolk Southern and CSX won't erase one of Baltimore's biggest disadvantages. As steamship lines form alliances and move their cargo on bigger ships, the time-consuming and expensive journey up the Chesapeake Bay has become a more serious disadvantage.

Cargo has tapered off substantially; major lines have reduced service here. CSX officials have warned that Baltimore may not be able to support two highly competitive railroads.

"There's a fixed amount of traffic with two major carriers," said Stephen C. Thienel, CSX's regional vice president. "What will happen? Will they compete head-to-head and grow the business? Or will only one survive?"

Some in the maritime community are also skeptical.

Currently, Conrail ships million of tons of coal a year into its Consolidated Coal facility here. Much of that coal comes from mines in West Virginia and Kentucky. Norfolk Southern operates its own coal pier at Lambert's Point in Hampton Roads.

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