May 11, 1997
BALTIMORE'S PORT could benefit handsomely from the accord worked out between CSX Corp. and Norfolk Southern Corp. to split up Conrail, the dominant railroad in the Northeast. Not only does Baltimore get a second Class I carrier (Norfolk Southern) with a reputation for aggressive pursuit of new business, but the city will see the two remaining East Coast rail behemoths compete head-to-head for port cargo.
Both CSX and Norfolk Southern are paying top dollar for their respective shares of Conrail: For $4.3 billion, CSX will gain most of the former New York Central lines in the Northeast and Midwest; Norfolk Southern will pay $5.9 billion to take over the old Pennsylvania Railroad lines, including tracks in Maryland. Having overpaid, the two railroads must maximize profits by enlarging their markets.
That should be good news for the Port of Baltimore. Norfolk Southern, in particular, has promised to push hard to gain new local business. It intends to provide double-stack container access from Baltimore to the Midwest, build an intermodal facility at the port, aggressively pursue new cargo for its AutoRailer ship-truck service and build an auto distribution center. In addition, NS officials say they have big plans for Hagerstown, with another intermodal center to take advantage of the town's prominence on key east-west and north-south rail and interstate highway routes.
CSX, too, must add market share to make the Conrail purchase work. With Norfolk Southern offering tough competition in a region (Maryland) where CSX is used to having a lock on much of the cargo, CSX could be forced to bid aggressively for business.
It will be up to officials at the port to form strong partnerships with both rail lines and to offer incentives to bring more cargo into Baltimore. Norfolk Southern, as the new guy in town, has been receptive to suggestions of cooperation. Its stress on double-stacking cargo -- while CSX remains lukewarm -- could give the newcomer an edge.
In the cutthroat world of maritime trade, margins are low -- and shrinking. A battle for Baltimore cargo between two rail giants of comparable size and financial girth can only mean better rates for shippers and better service at the port.
Pub Date: 5/11/97
