A subsidiary of Rail Services Associates, of Hammondsport, N.Y., has been established to operate six of seven subsidized railroad freight branch lines on Maryland's Eastern Shore as part of a state program to improve Delmarva's rail services.
Maryland's department of transportation said a contract was signed by the state's board of public works with Maryland and Delaware Raileoad Co., which will take over lines to Cambridge, Preston, Easton, Denton, Centreville and Chestertown.
These lines currently are being operated by Consolidated Rail Corp., under a state contract. Conrail will continue to operate a branch to Hebron, the state agency said.
A separate Rail Services subsidiary, called the Maryland and Virginia Railroad Co., already has taken over former Conrail-operated service from Pokomoke City, Md., to Norfolk, Va., including a freight car ferry across the Chesapeake Bay.
Virginia and Maryland officials sought to replace Conrail as operator over the Delmarva peninsula lines because the large railway had asked for increased subsidies.
Under terms of the Maryland contract, the cost of subsidy through next March is $295.780 - 90 per cent of which will come from state funds and the balance provided by county governments and shippers. The federal share of subsidy will decline gradually in future years, under federal rail aid legislation.
Maryland also signed a contract with the estate of the bankrupt Penn Central Transportation Co., to lease eight rail lines for the two-year period expiring next March 31. In addition to the seven lines citied earlier, the contract wiht the Penn Central estate involves a branch to Frederick. Of the $902.880 lease accord, the federal government will pay 95 per cent.
Hermann K. Intemann, secretary of Maryland's DOT, said that because of "its size and complexity" in serving 17 states, Conrail's operating costs "are among the highest in the railroad industry."
While Conrail was willing to continue operating freight trains in Delmarva as long as all costs were subsidizied, "it has a very limited interest in any long-term survival or improvement of these branches." he added.
The new shortline railroad can provide such service at lower cost and "will be more sensitive to shipper needs." according to the state officer. The Cambridge and Preston lines will be removed from Conrail on Aug. 6 and the remaining lines on Oct. 1. with no interruptions in service anticipated.