Port of call: Baltimore or N.Y.?

Shipping deal: CSX cooperation may hold key in city's bid to top northern rival for cargo contract.

February 26, 1999

IN Maryland's uphill battle to win a huge shipping contract from the Maersk/Sea-Land consortium, a key sticking point has become the position of CSX Transportation, the city's major rail carrier.

It appears the railroad has nothing to gain and everything to lose if Baltimore becomes the consortium's new port of call.

Here's the rub: The railroad's parent company, CSX, also owns Sea-Land. The conflicting interests of CSX's rail and shipping lines could deny the Port of Baltimore any chance to win this bidding war.

Establishing a hub in Baltimore makes enormous sense for Maersk/Sea-Land. The port administration would build a huge facility at the Dundalk Marine Terminal and deepen the docking area to accommodate giant ships on the drawing boards.

Unlike New York, Baltimore offers a 50-foot shipping channel and a cooperative and skilled dockside union. Its costs are far lower than New York's, and Baltimore has the fastest rail and truck routes to the Midwest of any East Coast port. Come June 1, Baltimore will be in a highly competitive rail situation when Norfolk Southern joins CSX in a race to grab the consortium's business.

Yet all this could mean little if CSX decides to favor its railroad's interests over its shipping company's interests.

In talks with the state, CSX has suggested that Maryland taxpayers pick up not only the cost of enlarging the Howard Street tunnel (as much as $65 million) and improving CSX routes in Western Maryland, but also improvement of CSX routes in West Virginia and Pennsylvania.

That is unacceptable. The state should entertain the idea of cost-sharing for long-term projects on Maryland rail lines that handle normal port business. But this should not be a deal-breaker -- unless CSX is looking for an excuse to ruin Baltimore's chances.

When CSX and Norfolk Southern complete their $10 billion takeover of Conrail, CSX will be the dominant rail carrier in New York. Why would the railroad want to see one-quarter of its New York Port business shift to Baltimore, where it would have to compete more aggressively for that cargo?

In recent decades, CSX has not treated Baltimore kindly. Though the history of railroading -- and CSX's history -- started here, the railroad has shown little interest in boosting the fortunes of Baltimore's port. Indeed, CSX has gradually removed nearly all of its operations from its old home town.

Will this be the final indignity? The decision on locating a cargo hub should not be determined by CSX's rail problems. That would be unfair to its shipping partner. If Baltimore makes a superior final offer, the consortium should be allowed to accept it.

Pub Date: 2/26/99

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