Maersk pushes for dual rail access

Shipping giant Maersk Line, the Denmark-based company that stirred up the waterfront community last year, sent a letter to federal, state and local lawmakers taking a firm stand on another volatile issue: rail in the Charleston region.

Maersk President for North America Michael White dangled his company's pending new contract with the State Ports Authority in a letter obtained by The Post and Courier. White wrote that access at Port of Charleston must include both major railroad companies "to ensure its competitive future relative to other major ports."

Maersk is the port's largest customer.

North Charleston Mayor Keith Summey recently signed an agreement with railroad company CSX Corp. and developer Shipyard Creek Associates that calls for redevelopment of CSX's Cooper Yard and Shipyard Creek's Macalloy property into an intermodal rail facility and warehousing space to serve the port.

CSX's primary competition, Norfolk Southern Corp., instead supports a train operation on another piece of land just to the north of Macalloy known as the Clemson property. The narrow property, across the street from a wind-turbine research site, would let both railroads serve the port, with Norfolk Southern coming in from the north and CSX from the south.

On Wednesday, CSX, Shipyard Creek and the city of North Charleston jointly released a study from a Texas-based research firm saying that their plan, once operational, would generate for South Carolina $73.4 million in economic output per year and 869 permanent jobs.

The study, paid for by Shipyard Creek, found that the Norfolk Southern proposal supported by the S.C. Department of Commerce's Division of Public Railways would instead take away $426 million in economic output and 4,963 permanent jobs, in part because it requires demolition of buildings currently in use.

White's letter pointed out that dual access seemed impossible during the development of his company's marine terminal in Portsmouth, Va. He credited "cooperative efforts of both railroads and the unwillingness of stakeholders to accept less than this as a solution."

White's letter comes at a crucial time: A legislative oversight committee for the port meets today to discuss rail service.

Sen. Larry Grooms, a Bonneau Republican, chairs that group and received White's letter. He read a cautionary message in the brief note.

"Up until now, Maersk has been quietly watching our deliberations. However, it is clear to me that they are sending our state a strong message that equal, dual rail access is an essential element in remaining a competitive port," Grooms said. "If an inferior rail plan is adopted, I fear that Maersk and other steamship lines will begin to look to our neighboring ports as places where they will take their business."

Maersk, the largest container carrier in North America, relies heavily on rail to move freight efficiently.

Two years ago, the company faced a volume decline and hoped to save money by moving into the so-called "common-use" area of the Wando Welch Terminal, where SPA workers would perform jobs that otherwise fall to pricier union labor. Unable to reach a cost-saving agreement amenable to both the SPA and the International Longshoremen's Association, Maersk launched public discussions that pulled in lawmakers and carried on after the resignation of then-SPA Chief Executive Officer Bernard S. Groseclose Jr.

The three local maritime unions rejected Maersk's cost-cutting proposal in December 2008, and the company responded by announcing it would strip all services from Charleston by the time its contract runs out at the end of this year. By March, Maersk's calls to the Port of Charleston had dropped by nearly half.

A little more than a month on the job, new SPA Chief Executive Officer Jim Newsome announced at his first State of the Port address in October an agreement that would keep Maersk. The company operates in a dedicated part of the Wando Welch Terminal, though now it occupies a smaller space.

The terms of the agreement, including concessions to Maersk, were not made public.

Port officials and experts said the SPA faced no other option than to keep Maersk's business if it wanted to remain globally competitive.