Sunday, August 1, 2010

Setting the record straight on the North Charleston rail plan

By R. Keith Summey
Mayor, City of North Charleston

Recently I met with a packed auditorium of North Charleston residents to discuss a proposed rail plan that would boost the port’s competitiveness, pump up our state’s economy, and ensure continued success of neighborhood revitalization that is so critical to our city. On August 5, 2010 at 5:30 pm in City Hall, our city council will hold a public comment session on an agreement between North Charleston, CSX Transportation and a local developer to remove rail lines running through our neighborhoods. In doing so, about 77 acres would be transferred to the city for community redevelopment.

Why do I support this plan? First, it delivers the kind of rail connections to the port’s new terminal that has helped competing ports pull ahead of Charleston. Second, it allows both major carriers – CSX and Norfolk Southern – to compete for business. Third, it would substantially change the way CSX moves goods through our city, allowing us to reconnect communities and enhance our citizens’ quality of life.

Critics of the proposal have raised four concerns:

Dual access

The smoke screen of “dual access” has overshadowed discussion about strategies for restoring the port’s competitiveness. The port’s standing as the No. 2 container port on the East Coast has slipped to No. 4, as ports in Norfolk, Va., and Savannah, Ga., have continued to thrive.

How did Savannah do it? In 2001, the Georgia Ports Authority built a taxpayer-funded intermodal facility exclusively served by Norfolk Southern and waited for the volume to increase enough to make it cost effective to build a second terminal. In 2008, the ports authority built a second intermodal facility dedicated to CSX. How did Savannah fare during the eight years when only one railroad operated a near-dock intermodal facility? Container volumes soared.

Similarly, Norfolk Southern handles more than 95 percent of the intermodal container volume in Virginia, yet the port’s container volume vastly surpasses Charleston’s.

No monopoly

Critics of our plan claim that CSX would have a “monopoly” on moving containers. Yet there is nothing in our plan that prevents Norfolk Southern from continuing to move containers just as they do today.

Today, vessels that call on Charleston have the option to dock at one of five terminals. Containers are then trucked (or “drayed”) to either a CSX or Norfolk Southern intermodal facility. Under our proposal, vessels that call on the new port terminal would have the option to dray containers to the CSX facility – or a short distance to the existing Norfolk Southern facility. Vessels calling on the other terminals would continue to truck containers to either intermodal facility.

Switching fees: A common practice

Our critics also claim that switching fees would make the port noncompetitive. However, switching fees are not unusual, and certainly are not unique to Charleston. They happen every day at every port in the country.

A switching fee is a payment made by one railroad operator to another for crossing its tracks or bringing cargo over its lines. For example, Norfolk Southern is the carrier for the BMWs manufactured in Spartanburg and exported through Union Pier. But the final leg of track leading to Union Pier is owned by CSX. For years, the two carriers have worked out an arrangement satisfactory to both for Norfolk Southern to use CSX’s tracks.

What keeps prices competitive in these situations is that the two railroads do business with each other at several ports along the Eastern Seaboard. If CSX were to charge Norfolk Southern an exorbitant fee at one port, Norfolk Southern could retaliate by charging higher fees somewhere else. This interdependency keeps things competitive.

BMW unaffected

BMW has no part of this debate. That’s because BMWs exit Charleston via the Union Pier terminal in downtown Charleston. This roll-on roll-off (or “Ro-Ro”) cargo is not part of the State Ports Authority’s expansion plans for the new port terminal, which will be dedicated to container cargo.

So why bring BMW into the debate now, when it has no relevance to the discussion? We can only assume, as the Golden Goose of South Carolina’s export industry, that creating the impression we could loose BMW’s business would serve to stifle discussion.

Seat at the table

More discussion is exactly what we need to move this plan forward in a transparent, inclusive manner. Yet Norfolk Southern claims it was not brought to the table, and our deal with CSX was made behind closed doors. In fact, Norfolk Southern’s plan reflects no input from the city or the community. As far as I know, only the Department of Commerce had input into their plan. The people who would have to live with the burdens of the Norfolk Southern plan were left out.

By contrast, CSX officials presented their framework for a rail plan with the community in mind. It was clear from their creative ideas and extensive research that their goals were not only to meet the needs of the port, but also to enhance livability in our city. That is why their plan won my ardent support.

Read the details of the North Charleston rail plan here.

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