Jim White, executive director of the Maryland Port Administration, considered the tunnel the port of Baltimore’s Achilles’ heel, limiting the port’s container business. So when the federal government announced last month it would pony up $125 million to help pay for a $466 million tunnel expansion, White immediately began spreading the word to major Asian shipping alliances about the project, which stands to make Baltimore a more attractive and cost-effective port.
“We’ll be selling our future ability to compete with all the other major U.S. ports in double-stack,” White said. “We’ll go from not having good rail service here to having competitive rail service. Once we get the Howard Street Tunnel done, we’ll have a tremendous package here to offer container lines.”
One hitch remains to be resolved, and of course it’s money. The federal grant is $103 million less than the state had sought. Maryland has promised $147 million for the work, and CSX, which owns the tunnel, committed $91 million.
Gov. Larry Hogan, who called the project Maryland’s “most significant economic development accomplishment,” is preparing to negotiate with the Jacksonville, Fla.-based railroad and other unnamed stakeholders over how to cover the shortfall.
The Republican governor called the shortfall “minuscule, compared to the potential return on investment.” The project would double the tunnel’s freight capacity, remove trucks from highways and bring economic benefits valued at more than half a billion dollars to 25 Eastern states, he said.
Citing “sensitive negotiations,” Hogan declined to say whether the state might contribute more money, but he promised to “push in all directions,” seeking investments from those who stand to benefit from the project and the thousands of jobs it is expected to create.
CSX declined to discuss the negotiations but said in a statement that it “will continue our collaborative relationship with our state and federal partners as they evaluate” the project. Not two years ago, the railroad backed off an earlier $135 million commitment to the project, saying it couldn’t justify such an investment. CSX came back to the table in December but with less money.
Originally, White said, the port administration was authorized only to match CSX’s $91 million contribution, but Hogan was willing to make a larger bid, signaling to railroad and federal officials Maryland’s desire to move forward.
“We’re going to find a way to make it happen,” Hogan said. “The journey’s not over yet.”
The original cost estimate for the tunnel expansion was far higher — to the tune of billions. Rerouting the freight train traffic was expected to be an expensive, logistical nightmare. The project’s timeline was expected to be about five years.
But it became more attainable when CSX’s engineering department came up with a far less expensive strategy, called the Tunnel Enlargement System, using 20-foot supports and a machine inside the tunnel that allows trains to run underneath it continuously during the work, White said.
“Through the Tunnel Enlargement System, they felt they could get it done in three years or less, while running trains 24 hours a day,” he said.
To create the needed clearance for taller trains, the tunnel’s arched ceiling would be notched, its floor would be lowered and steel crossties, which lie lower than wooden ones, would be installed.
The long-sought tunnel expansion became even more critical for Maryland after the Panama Canal’s expansion in 2016. The larger, deeper canal allowed a new generation of mammoth container ships carrying goods from Asia to more quickly reach the U.S. East Coast.
Since the expanded canal opened, the port of Baltimore has experienced double-digit growth in container volume. A record 1.02 million 20-foot-equivalent units — the standard measure because containers generally come in 20- or 40-foot sizes — crossed the docks at the port’s piers last year.
The port of Baltimore has the advantages of deep berths, large cranes, the nation’s fourth-largest local consumer base and convenient highway connections. Its position as the farthest-inland port on the East Coast is a mixed blessing, requiring ships to travel an extra 155 miles up the Chesapeake Bay and back, but lowering costs for inland shipments once they arrive. It has led in the country in shipments of cars, trucks, farm equipment and other four-wheeled cargo for years.
But the port’s container business has long lagged well behind that of its East Coast competitors in New York and Norfolk, partly because of the railroad bottleneck. Most of the containers imported in Baltimore are picked up from the port on trucks, and 90 percent of those containers stay within 150 miles.
Because of its heavy reliance on trucking, the spiking container volume led to such horrible congestion on the Seagirt docks that truckers picketed outside the terminal in freezing temperatures last winter to protest hours-long waits to pick up cargo.
Ports America Chesapeake has spent tens of millions in the past nine months to upgrade about 80 percent of its container-handling equipment in an effort to reduce those wait times to under an hour, White said.
The company, which did not respond to a request for comment, will implement an automated operating system in the next two months, dredge an additional 50-foot container ship berth and install four more towering container cranes at Seagirt by 2021, White said.
“We have a lot of things in motion right now that are going to lessen congestion on the docks,” he said.
Increased capacity at the Howard Street Tunnel is expected to transfer some of the long-haul trucking business to rail, but truckers, too, could see an increase in cargo headed to distribution centers in Philadelphia and southern New Jersey if more shipping companies opt to make Baltimore one of their first East Coast ports of call.
“You get the lion’s share of discretionary cargo if you’re the first or second port of call,” White said.
Members of Maryland’s congressional delegation held joint phone calls with U.S. Transportation Secretary Elaine Chao to push for the federal funding. Maryland now needs to “negotiate hard” with CSX and other stakeholders and look for other sources of federal money that can be used to help pay for the project, said Sen. Ben Cardin (D-Md.). He called the railroad’s $91 million bid “a good starting offer” which, he said, “should have been higher.”
“There are ample opportunities to make sure we have all the funding we need,” he said. “This is doable.”
The port’s unionized dockworkers participated in the push for federal money, calling and writing letters to advocate for the project, said Scott Cowan, president of the International Longshoremen’s Association Local 333.
“This will not only create jobs for longshoremen, it’s going to create many other jobs for truckers and warehouse workers,” he said. “It’s not just about the longshoremen, it’s about everybody else connected to the port as well.”
John S. Connor, a century-old, Baltimore-based firm that handles international shipping logistics and regulations for Phillips Seafood and other clients, expects the tunnel expansion to make the port significantly more attractive for customers with shipments headed to and from the Midwest, vice president Butch Connor said.
The ability to double-stack containers on freight trains will be “an incredible advantage — finally — for the port,” he said.
“It should be a big gain for us with the volume through port,” Connor said. “You’re doubling your volume. That’s a pretty important option for us.”