Port's hopes dealt a jolt by CSX boss

Snow says tracks need much work to handle a giant terminal's cargo

Age, clearance faulted

Rail CEO also heads Sea-Land, but says he'll stay out of decision

Shipping

April 01, 1999|By Robert Little | Robert Little,SUN STAFF

WASHINGTON -- Railroad tracks in and out of Baltimore must be significantly improved before the city can accommodate the huge marine terminal that two shipping lines are considering building in Dundalk, the top executive of the East Coast's largest railroad said yesterday.

John W. Snow, chairman and chief executive officer of CSX Corp., said Baltimore's rail lines are too old and lack the clearance to move the 550,000 cargo containers a year that shipping giants Maersk Inc. and Sea-Land Service Inc. would bring to the city if they choose it for a new hub terminal.

Specifically, Snow said, CSX's rail lines out of Baltimore need enough clearance for trains hauling containers stacked two-high. And lines shared with commuter trains are too congested, he said, and could need to be augmented with a parallel track.

"I think those issues need to be addressed, ultimately, for Baltimore not only to be successful here but to be successful in the future," Snow said.

Snow said his concern about Baltimore's rail network is rooted in his mandate to keep the CSX railroad competitive. But as chairman of CSX, which owns Sea-Land, Snow could have the authority to stop the shipping lines from selecting Baltimore when they announce the site for a new marine terminal later this month.

He said Sea-Land and Maersk officials will make the final decision and he will not intervene, but Snow's comments were the first public sign that negotiations with CSX and Norfolk Southern, the city's two railroads, are complicating a deal that would triple container cargo business at the port of Baltimore.

CSX has argued in the past that, without double-stack clearance, trains must be longer and more expensive to operate. That ultimately can mean higher rail rates that could make the port of Baltimore less competitive than ports in cities such as New York, the other top contender for the Maersk/Sea-Land business.

The primary hindrance to double-stacked access in Baltimore is the Howard Street Tunnel, a mile-long stretch of track beneath the city built in the late 1800s. Increasing its height couldcost more than $60 million.

Speaking at a luncheon with several reporters, Snow stopped short of suggesting that Maryland officials must pay to improve the Howard Street Tunnel to win the Maersk/Sea-Land terminal. But he said he does not consider it CSX's problem to fix. "It comes down to dollars," Snow said. "We don't have to pay for improvements like that in New York."

State officials would not comment, saying negotiations to bring Maersk and Sea-Land to Baltimore are continuing.

"We realize this is a critical element of what has been an uphill struggle to bring Maersk and Sea-Land to Baltimore," said Maryland Transportation Secretary John D. Porcari. "We're meeting and discussing with both railroads on an ongoing basis."

Officials with Maersk and Sea-Land, two of the world's largest shipping lines, are close to deciding where to build a consolidated cargo terminal that would become their primary hub on the East Coast. After several delays, the companies now say a decision is expected by the end of April.

Maersk and Sea-Land selected Baltimore, New York and Halifax, Nova Scotia, as finalists in December, and have since focused their search on the two U.S. cities.

While the lease rates, labor costs and terminal construction that Baltimore is offering are generally considered superior, rail service is a key to the city's bid because more than half the cargo shipped through the new terminal would likely originate from or be destined for New York.

The Dundalk Marine Terminal, site of the proposed facility, is currently accessible by just one railroad -- Norfolk Southern. Officials with the Norfolk, Va.-based railroad have reportedly agreed to share access to Dundalk with CSX for certain concessions that state officials are negotiating.

Despite his comments about Baltimore's rail lines, Snow said that both Baltimore and New York are viable contenders for the new marine terminal.

"We're getting close to a decision," said Snow. "It's very complicated, and it's going to have major implications for the shipping patterns of the United States."

Pub Date: 4/01/99

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