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  • OTRI.USA
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  • OTVI.USA
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  • TSTOPVRPM.ATLPHL
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  • TSTOPVRPM.CHIATL
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American ShipperIntermodalShipping

Special Coverage: Double-stack trains could boost intermodal traffic at Port of Baltimore

Port officials are hopeful the federal government will approve a $155 million grant to help increase clearances in the Howard Street Tunnel and other locations along the CSX railroad in Baltimore to accommodate trains with containers stacked two high.

photo courtesy: maryland port administration


   Improvements to a key CSX rail line in Baltimore could stimulate further container volume growth at the Maryland Port Administration’s Seagirt Marine Terminal and its adjacent intermodal container transfer facility.
   Port of Baltimore officials are hopeful the federal government will approve an application for funding under the U.S. Department of Transportation’s FASTLANE grant program to help increase clearances in the Howard Street Tunnel and at several other locations along the CSX railroad in Baltimore in order to accommodate trains with containers stacked two high.
   James White, executive director of the Maryland Port Administration, says the height restrictions in the Howard Street Tunnel, which was built in the 1890s, are “the main reason why we don’t do well with rail business going to the Midwest.” Double-stack rail service into the port would give the MPA, which is an arm of the Maryland Department of Transportation, “another tool in our tool chest in attracting more container business,” he said.
   According to White, about 75 to 80 percent of the containerized cargo moving through the Port of Baltimore is going to and from local markets that are quite attractive to shippers. The Baltimore-Washington metropolitan area is the fourth largest in the country by population and in 2015 was ranked by the U.S. Census Bureau as having the highest median household income at $93,294.
   Improving intermodal access will give the mid-Atlantic port a better chance of attracting so-called “discretionary” cargo moving to the Midwest, where it faces vigorous competition from the Port of New York and New Jersey and the Virginia Port Authority’s Hampton Roads facility.
   “Allowing for double-stacked trains to travel through the Howard Street Tunnel won’t just transform the Port of Baltimore; it will create thousands of jobs and benefit the entire state,” Maryland Gov. Larry Hogan said last fall. “Our administration is committed to getting it done.”

Life In The FASTLANE. According to CSX spokesman Rob Doolittle, the total budget for the Howard Street Tunnel corridor clearance project is $445 million—$145 million each from the state and CSX, plus an additional $155 million requested via the FASTLANE program.
   USDOT has said it will make $850 million available in the fiscal year ending Sept. 30, 2017, the second year of the FASTLANE program. In the first year of the program, the department awarded nearly $800 million to support $3.6 billion in transportation infrastructure improvements across 18 projects in 15 states and the District of Columbia.
   The department took applications for the current fiscal year in November and December of 2016. It was not clear if the Trump administration might reopen applications, but USDOT said funding for the program was included in the Consolidated Appropriations Act, 2017 (H.R. 244), which the president signed into law in early May. USDOT did not respond to further questions about the program.
   When the Maryland DOT applied for a grant in the first round of the FASTLANE program in the 2016 fiscal year, the application was denied.
   White said in a subsequent debriefing the MPA was “getting a lot of signals from the federal government that it was a great project and they wanted to add it. But the federal government has a responsibility to spread that money throughout the country and Virginia got a large chunk of it.”
   He said federal officials told the state, “‘We’d like you to resubmit,’ so we’ve done that.”
   The port and CSX were so encouraged by what they heard that they moved forward with the engineering studies needed for the tunnel project without waiting for the grant. If the funding is made available, they say the project, which involves raising clearances in the tunnel itself and 10 additional locations immediately north of the tunnel, could be completed in three and a half to four years.
   Once the Howard Street Tunnel corridor project is completed, “100 percent of CSX’s primary intermodal network would be double-stack cleared,” Doolittle said.
   According to CSX, “Over the first 30 years of the completed project’s life, between $640 million and $1.4 billion in value will accrue to Maryland, Florida, New York, Pennsylvania, Virginia, New Jersey, South Carolina, Georgia, North Carolina, Illinois, Ohio, 13 other states, and the District of Columbia. That range represents the estimated discounted value (at 7 percent and 3 percent) of the net changes in shipping costs, fuel usage, carbon emissions, highway congestion and roadway wear-and-tear, among other effects, that will result from this project.” CSX will be responsible for the engineering and proposed construction, and the tunnel and corridor will continue to be a wholly-owned asset of the Jacksonville, Fla.-based Class I railroad following completion of the project, White explained.

Practice Makes Perfect. The $445 million price tag for improving the tunnel clearances is much lower than the $1 billion to $3 billion estimate that was made just a few years ago.
   That’s because CSX has gained a great deal of experience in improving rail clearances in tunnels and below bridges in recent years.
   Since 2008, CSX has invested about $850 million in its “National Gateway” project, which Doolittle said was conceived in large part to improve intermodal service, primarily between mid-Atlantic locations—including the ports in Baltimore, Hampton Roads and North Carolina—and the Midwest, especially points served via the railroad’s hub in North Baltimore, a city in Western Ohio.
   North Baltimore, originally called New Baltimore, was founded in 1860 and has had a long relationship with CSX. The city’s historical society says CSX’s predecessor, the Baltimore and Ohio Railroad, first came to the city in 1873.
   In December of last year, CSX announced partial completion of a key component of the National Gateway project, the Virginia Avenue Tunnel in southeast Washington, D.C.
   That project is expected to be a boon for the Port of Baltimore’s arch-rival, the Virginia Port Authority.
   Like the Howard Street Tunnel, the Virginia Avenue Tunnel, built in 1872, was not high enough to accommodate double-stack intermodal trains. CSX is replacing the passage with two side-by-side tunnels, each with its own track, through which double-stack trains will be able to pass. The first tunnel opened in December, and work on the second, intended to alleviate congestion, is due to be completed next year.
   With the completion of the first phase of the project, CSX can now operate double-stack trains to and from the Virginia Port Authority’s terminals in Hampton Roads and other locations further south.
   Trains traveling from south of Baltimore to locations in the Midwest such as CSX’s North Baltimore hub turn west after passing through the Virginia Avenue Tunnel, moving through central Maryland to Cumberland, Md., western Pennsylvania and Ohio.
   Doolittle says that although about 95 percent of CSX’s intermodal network can already accommodate double-stack trains, the Howard Street Tunnel expansion is still considered a crucial project for the railroad.
   To improve clearances through the tunnel, the roadbed will be lowered in some locations, the tunnel will be “notched” (another word for increasing its ceiling height) in others, and in some areas both methods will be used.
   The Holland Street Tunnel is built with brick, and in some sections, epoxy will be injected into gravel behind the brick, so it becomes a supporting structure and the brick can be removed, White said.
   The Baltimore project will benefit from “engineering techniques that we at CSX have more or less mastered during the National Gateway project, which in addition to the Virginia Avenue Tunnel, includes 61 other clearances of a variety of types,” said Doolittle. It’s this experience that has given CSX confidence that it can accomplish the Howard Street Tunnel project for a fraction of the previously envisioned cost.
   White noted the new construction techniques are also far less disruptive to the local community because ground will not have to be broken.
   The project will take several years to finish, in part because the tunnel will continue to be used during construction.

Immediate Impact. White said that although the intermodal container transfer facility (ICTF) adjacent to the Seagirt Marine Terminal in Baltimore was designed to handle upwards of 130,000 to 150,000 containers annually, the port is only handling about 20,000 to 30,000 intermodal containers each year between CSX and competitor Norfolk Southern. Containers moving through the Port of Baltimore on the Norfolk Southern line are trucked to a terminal about four miles from Seagirt.
   “We think that an additional 80,000 to 90,000 [intermodal containers] could be realized very quickly” once the tunnel is improved, said White.
   “Right now we’re at a cost disadvantage because we only have single-stack,” he explained. “In some cases, we’re more expensive than competing ports because they have double-stack.” With double-stack trains, “you need half the assets on the rail side to move the same amount of business.”
   In January 2016, CSX announced a deal to have Ports America, which operates the Seagirt Marine Terminal, also operate the adjacent ICTF.
   At the time, Ports America said it saw big opportunity for the Port of Baltimore, both because of its deep water—Seagirt has a 50-foot berth and super-post panamax cranes—and the opening of the new locks at the Panama Canal.
   The ICTF at Seagirt is somewhat unusual in that like those in Mobile, Ala., and Port Everglades, Fla., it handles a mix of domestic and international cargo.
   “The domestic freight helps us, it allows for more frequency,” said White. Because there is domestic containerized freight coming into the facility from the Midwest on a daily basis, “imports coming off the ships will have daily service. If we were just handling international freight, the railroads would probably want to wait until they had a full train,” he said.
   “That’s what we’re hearing in the Hunter Harrison model, too,” said White, referring to the former Canadian National and Canadian Pacific executive who became chief executive officer of CSX in March. “He wants to move full trains and not trains that are at 80 percent capacity of the locomotives. So that should fit well into his plans.”
   Fredrik Eliasson, executive vice president and chief sales and marketing officer at CSX, said during a phone call with investment analysts to discuss the the company’s first quarter 2017 financial results the railroad expects intermodal business to grow at or above the rate of the economy as whole. Over time, CSX has seen intermodal traffic increase significantly, 5 percent per year in 2013 and 2014, and 4 percent in 2015, although total volume declined 2 percent in 2016 due to competitive losses.
   Doolittle told American Shipper CSX views its intermodal network as integral to its overall success.
   “It connects all major population centers east of the Mississippi River and positions the company to capture a significant share of the growing domestic intermodal market opportunity, currently estimated at 9 million truckloads in the eastern United States that move more than 550 miles,” he said. “The company’s highway-to-rail initiative assists in growing this traffic by helping customers identify new conversion opportunities for both domestic intermodal moves and the U.S. portion of international intermodal moves.”

Friendly Competition. Baltimore is the third largest container port on the East Coast north of Cape Hatteras, N.C., and is in strong competition with both the Port of New York and New Jersey and Hampton Roads for containerized cargo.
   Even so, White says Baltimore was eager to see the Port Authority of New York and New Jersey complete the raising of the Bayonne Bridge, which will allow ships as large as 18,000 TEUs to call terminals west of the span starting July 1, 2017.
   “That gives the East Coast a greater opportunity to attract the larger ships,” he said. In addition, the port expects to benefit from the realignment of container carrier alliances that went into effect in April.
   Mediterranean Shipping Co. (MSC) has long had a presence in the Port of Baltimore, and with MSC and Maersk Line forming the 2M Alliance in early 2015, “within a year we saw 100,000 containers from Maersk,” said White. He said the vessel sharing agreement currently accounts for about 300,000 containers of the port’s yearly volumes, and with Hyundai Merchant Marine signing a deal to share space with the 2M, he now expects to see the Korean carrier’s boxes moving through Baltimore as well.
   Evergreen is another long-time user of the Port of Baltimore and will continue to call Seagirt as part of the newly formed OCEAN Alliance with CMA CGM, COSCO and OOCL, meaning the terminal will also see cargo from those carriers cross its docks. According to maritime research firm BlueWater Reporting, the alliance’s eastbound round-the-world Taiwan Straits (TWS) loop, which will call Maher Terminal in Elizabeth, N.J., and Virginia International Gateway in Norfolk in addition to Baltimore, operates with ten vessels—eight from Evergreen and two that have yet to be announced—with an average capacity of 8,414 TEUs.
   “We did not get THE Alliance, but we just came back from Asia and we talked to some of those carriers and they say they want to take another look at Baltimore,” said White.
   In 2016, the Port of Baltimore handled 538,567 containers, 3 percent more than in 2015, and in the first three months of 2017, total container volume is up 8.6 percent year-over-year to 137,283 boxes.
   White said the port had not seen that kind of growth in a decade.
   “So we’re encouraged by that, and we think a lot of that has to do with the 2M alliance,” he said. “I think that will continue with the OCEAN Alliance as their members start to redirect freight [to Baltimore].”

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.

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