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Railroads Pull for Public-Private Partnerships

North Valley Business Journal

At the 20th Quad State Legislative Conference, held at the Holiday Inn in Martinsburg, the QuadCo group of economic developers had representatives of the two large railroads in the region make presentations on improvements they are making and looking to make in the 1-81 corridor,

Before those presentations, Mike Ross, president of the Franklin County Area Development Corporation, gave a few remarks on the region's economy.

"The valley has a very vibrant economy, driven mostly by 1-81, but it is balanced, with a manufacturing sector that is stronger than the rest of the United States," said Ross. "The health-care and education sectors continue to grow, and the region has benefited from the BRAC decision [not to downsize or close Letterkenny Army Depot]. The base has emerged, with 3,000 employees and a diversified mission; its output was $150 million in 2001, and it was $500 million in 2006.

"The region's challenge is workforce development, and it will get worse before it gets better, because the baby boomers are transitioning out. Employers are continually searching for workers.

"The railroads bring the potential for more job growth. They affect the region in all positive ways as key players in our economic growth."

Jason French, CSX Corp.'s director of public affairs for Maryland and Delaware, emphasized the growing role of railroads in the nation's economy, as well as the CSX intermodal facility in Chambersburg, scheduled to open shortly.

FrenchsaidCSX'spredecessor railroad, the B&O, had been in the Hagerstown and Chambersburg area since 1830, when freight was moved west from Baltimore. "Railroads will have a very important place in the nation's future regarding economic development.

"There is a growing demand for railroad freight, especially intermodal traffic [containers that move from ships to rail to truck]. The U.S. Department of Transportation projects a 60% increase in the amount of freight by 2020, and 80% in Maryland.

"Rail is at capacity and highways are above capacity, and it will only get worse by 2020. Congestion is most serious in the eastern half of the United States.

"We believe an investment in freight rail is an important part of the solution. One train is the equivalent of 280 trucks. The mid- Atlantic ports are receiving more freight each year because the West Coast is crowded, so goods from China and India are coming east."

One of the solutions is to double-stack containers on rail cars, said French, and CSX is hoping to rework clearance problems through tunnels to accommodate such trains going from Atlantic ports-Baltimore and Portsmouth-into the Midwest and inland ports in Pittsburgh and the new one in Chambersburg.

French said CSX Intermodal, a unit of CSX Corp., chose Chambersburg for its terminal to better serve existing businesses in central Pennsylvania, which is a new growth market for the railroad. "Industry follows railroad development. It's an ideal location, near Chambers-5 Business Park and along 1-81, to better service customers. There are 30 million square feet of warehouse space within 100 miles of the terminal. It's also closer to a competing facility that Norfolk Southern has in Harrisburg.

"There was a need for public-private cooperation, and we worked with Chambersburg and Franklin County officials, who helped bring the intermodal project to fruition. We received $500,000 from the state for infrastructure improvements-water, sewer and roads."

James Hixson, Norfolk Southern's executive vice president, law and public relations and chief legal officer, lobbied for a public-private partnership in his company's $2 billion Crescent Line project, part of which parallels 1-81. "The issue is not the amount of capital out there, but the return on that capital. We are willing to pay for the private benefit, but the public should pay for the public benefit."

Hixson said that type of partnership was evident in Norfolk Southern's Heartland Corridor project, where rail lines were double stacked from Norfolk to Columbus and on to Chicago. The federal government and Virginia, Ohio and Tennessee put money into the project.

The Crescent Corridor project includes upgrading rail from New Orleans to Memphis, Atlanta and Lynchburg, north to Hagerstown and linking major markets in between. "That will make us competitive with truck traffic because we need to move freight faster, and the rail is not developed along the Crescent Corridor," said Hixson.

"It could take 1 million trucks off I-81. We're working closely with trucking companies who have told us, 'You have to take off the road our trucks that are going more than 500 miles.' They realize they need to move their [long haul] trucks off the highways."

Norfolk Southern is looking to add 28 trains in its Crescent Corridor network and build intermodal facilities in eastern Tennessee and central Maryland, as well as make track improvements, add sidings and double track the lines.

"The $2 billion cost is high for the railroad, but not for highway spending," said Hixson. "We are looking for federal and state funding, as we can substantiate the public benefits. Virginia has already given us $40 million."

Norfolk Southern is waiting for the 1-81 Freight Rail Study, commissioned by Virginia, which will be completed this fall, before going into details of how many dollars the company would ask each state to contribute to the Crescent Corridor project. "We have had discussions with Virginia over the years, and some with Tennessee and Pennsylvania, but not much with Maryland. That state is in better shape than the others; all that is needed are additional sidings and an intermodal facility.

"The next federal highway bill comes in 2009," said Hickson, "and it will have regional and national significance. Norfolk Southern can't make the case by itself; we need state support."

Statistics on Intermodal Facility at Chambersburg:

21,000 feet of tracks

1,000 parking places

3 lift machines

90,000 annual lifts, or 300 truck trips a day, 150 in and 150 out.

One inbound and one outbound train per day, to and from Chicago.