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Home / News & Reviews / News Wire / New CSX strategy dooms Ohio and North Carolina terminals NEWSWIRE

New CSX strategy dooms Ohio and North Carolina terminals NEWSWIRE

By Bill Stephens | November 2, 2017

Railroad also kills Howard Street Tunnel clearance project in Baltimore

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A 2011 CSX Transportation video touting North Baltimore’s place in intermodal strategy. Via YouTube.

JACKSONVILLE, Fla. — The days of CSX Transportation’s hub-and-spoke intermodal strategy are drawing to a close.

The railroad aims to end container sorting at its busy intermodal terminal in North Baltimore, Ohio, by Nov. 11. And CSX will not build the Carolina Connector, a similar $270-million terminal planned for Rocky Mount, N.C., Trains News Wire has learned.

The railroad also pulled out of the long-sought project to raise clearances in the Howard Street Tunnel in Baltimore. The tunnel is a barrier to double-stack service to and from the Port of Baltimore, as well as on CSX’s Interstate 95 Corridor linking New Jersey and Florida.

The developments are part of CEO E. Hunter Harrison’s drive to improve efficiency and profitability.

The Northwest Ohio Intermodal Terminal was the second-busiest on CSX last year, lifting more than 809,000 containers — or 29 percent of all intermodal moves on the railroad. Nearly all of the volume involved sorting containers between trains, plus block-swapping.

In October, CSX began diverting traffic from the terminal by dropping intermodal service between low-volume origins and destinations both on and off the CSX system. Now CSX is focused on moving high-volume lanes away from North Baltimore, according to people familiar with the situation. It’s also moving some intermodal traffic into the merchandise network.

The Carolina Connector was not proposed as an identical twin of North Baltimore, which was built almost exclusively as a sorting hub with very little local traffic in mind.

The Rocky Mount terminal was being designed to access the fast-growing Mid-Atlantic market, and 60 percent of its volume was projected to be local traffic. The balance was going to be container sorting and block-swapping that would build the density required to serve smaller markets as part of the hub-and-spoke strategy.

Construction at Rocky Mount was set to begin in 2018. Subsequent expansion was to push its capacity to 500,000 loads annually, CSX officials had said.

CSX would not confirm that Harrison has scuttled the Carolina Connector.

It was not immediately clear whether the removal of the hub-sorting volume was a factor in killing the project. North Carolina transportation officials say they were unaware of the cancellation.

The demise of the terminal will leave a hole in CSX’s intermodal map in the Carolinas, says Larry Gross, an analyst with FTR Transportation Intelligence. Gross had applauded CSX’s hub-and-spoke strategy to gain new intermodal traffic.

Other analysts suspected that the time and expense incurred at a sorting hub such as North Baltimore reduced the profitability of CSX’s intermodal traffic. And that means it doesn’t fit into CSX’s plans.

CSX Transportation CEO E. Hunter Harrison, right, speaks to the Surface Transportation Board in October. Outgoing CSX Chief Operating Officer Cindy Sanborn is seated to Harrison’s right.
R.G. Edmonson
The $425 million Howard Street Tunnel clearance project was envisioned as a public-private partnership that would have relied on a combination of federal, state, and railroad funding.

Maryland Transportation Secretary Pete Rahn said CSX’s decision to back out was “both surprising and incredibly troubling.”

“This is an essential project for the Port of Baltimore, Maryland, and the entire East Coast,” Maryland Gov. Larry Hogan said in a statement in December 2016. “Reconstructing the Howard Street Tunnel will create thousands of jobs, open up new trade lanes for the port and improve overall freight rail service across our nation.”

CSX says the tunnel project is no longer a priority, even though the railroad would only shoulder roughly a third of the cost.

“Given the operating changes that CSX’s new leadership team has made over the last several months, and upon an updated evaluation, we determined that the Howard Street Tunnel project proposal no longer justifies the level of investment required from CSX and our public partners at this time,” says CSX representative Christopher Smith.

“Intermodal is an important part of CSX’s business and we are committed to supporting the freight rail needs of our customers and the Port of Baltimore through frequent, reliable, on-dock service,” Smith says. “This business decision is in no way a reflection on the leadership of Gov. Hogan, who has supported this initiative to the greatest degree possible on behalf of the businesses and citizens of Maryland. CSX appreciates the partnership we have developed with the state and we look forward to continuing the dialogue with our partners about our new operating plan.”

CSX had been prepared to spend $145 million, while Maryland had earmarked $125 million for the project. Maryland officials in December applied for a $155-million federal Fastlane grant, then reapplied this summer after the Trump administration changed the program requirements.

CSX said in 2016 that the project, if funded, would remove additional trucks from highways and create more than $640 million in benefits to 25 eastern states.

A spokeswoman for the Maryland governor’s office did not return an email seeking comment.

It is not clear what direction CSX will take with its intermodal network as Harrison rolls out Precision Scheduled Railroading across the system.

This much is clear: The railroad has not closed any intermodal terminals that originate traffic, despite scaling back hundreds of lanes. And CSX is relying much more on intermodal block-swapping, both to increase efficiency and to replace the sorting performed at North Baltimore.

Analysts expected the railroad to provide details on its intermodal strategy at an investor day, but the Oct. 30 event was postponed after management changes were announced on Oct. 25, including the pending departures of CSX’s chief operations and marketing executives.

The Northwest Ohio Intermodal Terminal opened to much fanfare in 2011 as the $175-million centerpiece of a new intermodal strategy that included sorting containers for Chicago interchange, as well as smaller markets such as Louisville, Ky.; Columbus, Ohio; and Detroit.

As recently as July, CSX executives said North Baltimore was a proven concept that would be extended to the Carolina Connector. Executives also had discussed the potential for adding a third intermodal sorting hub near Atlanta.

After it lifts its last container later this month, North Baltimore will survive as a block-swapping terminal for Chicago-bound traffic destined for BNSF Railway, Canadian Pacific, and Union Pacific, sources say.

25 thoughts on “New CSX strategy dooms Ohio and North Carolina terminals NEWSWIRE

  1. Study what happened to Illinois Central (25,000 miles to 7,500 miles) under Harry Bruce, and I think you’ll understand Harrison’s strategic plan.

  2. Hey Hunter…..Why don’t you just kill CSX? You are destroying the company and the lives of its employees. Absolutely disgraceful.

  3. Maybe the states of Maryland and North Carolina should sue CSX for breach of contract…presuming there’s any documentation stating both projects were good to go pending funding…or just sue on general principal. Heck, why not investigate CSX for investor fraud…because once EHH is gone and the next person takes over they’ll have to undue half of what has been done and restore at greater expense some cancelled projects like Howard Street…couldn’t that be considered investor fraud?

  4. Norfolk Southern and the trucking companies are laughing all the way to the bank. The Ports of Baltimore and Wilmington, maybe not so much.

  5. This whole CSX//Hunter Harrison saga gets more BIZARRE by the day!!!! Pity the employees going to work every day in this toxic quagmire.

  6. Where are all the politicians who fell over themselves to give public money to these projects and now see those promises broken. We never see government agencies demand their tax break money back do we?

  7. If it is true that the Carolina Connector and the subsequent plan to reach out for North Carolina local business is now history, there goes the “Queen City Express” and the Port of Wilmington. Between the horrible access from CSXT’s yard in Navassa across the river from the Port, and the availability of Interstates and fast running four lane divided highways across NC. I’ll see more and more containers on the highway. A shame.

    I can’t help but wonder when CSXT will let the Hamlet – Wilmington line go out for sale or lease by another operator? Sure does not seem to fit in EHH’s plan of streamlining and efficiency.

  8. EHH does not give a hoot about any public responsibility. It should warn other ventures with private railroads particularly CSX, to have some sort of liquidated damages or other consequences if a particular project is terminated with a specified time frame using public funds.

  9. The deadline for INFRA Grant applications spoken about in relation to the Carolina and Howard projects, was yesterday. So these government agencies have submitted applications for federal grant money, and find out THE NEXT DAY that CSX is backing out if their commitment. Nice….

  10. I agree with Mr McFarlane, these states should ask for their money back. EHH is a one man wrecking ball to the CSX. I guess as long as there are dividends to be distributed to the stockholders, everyone else, including good service, be damned. How can a supposedly important transportation system like the CSX be run into the ground before our very eyes and it seems like everyone of any import is standing around watching this saga. Unbelievable. EHH has become a crazed man of so called “precision railroad”. What an oxymoron.

  11. Will this finally, at long last, silence the self-appointed Hunter Harrison cheer-leading squad of Trains’ columnists and op-ed writers? The man is a disaster. Always was. Always was going to continue to be.

  12. I wonder how much Ohio and the feds have already kicked in for North Baltimore? Those new overpasses in former cornfield territory weren’t built for free.

  13. then you wonder why the stock price keeps going down everyday I look and it ,s always in the –negative . Mr. Harrison is slowly bringing the company to its knees and a slow death,

  14. If the Union was behind its workers like they should be they would call for a work stoppage until Hunter is sent packing as all he is doing is putting CSX under so he can merge it with CN or CP and have a monopoly.

  15. EHH is not looking very good in his latest public appearance. I believe too, his health issues are perhaps more serious than initially let on. Maybe this issue is affecting his decision making.

  16. Drove by the North Baltimore facility over a year ago because I wanted to see it.took some pictures from the road just south of it.Disappointed to hear this bad news

  17. I’ve tried being neutral regarding these changes, but I am getting more skeptical. How do you run a railroad—and allow for growth—by cutting the high capacity switching operations?

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