One Port Short

Railroad Weekly April 1, 2024

courtesy: Pat Gavin

Inside This Issue   

·   One Port Short: Key Bridge Disaster Shutters Port of Baltimore

·   We’ve Got This: RRs Largely Unfazed by Baltimore Disruption

·   The Four Horsemen: Autos, Chem, IM, Energy Leading Way on RR Growth   

·   Construction Obstruction? Outlook Unclear on Construction This Year  

·   Pre-Poll Vitriol: More NS-Ancora Trash-Talking as SH Vote Looms

·   Offer Rocker: Canada’s Teamsters Unimpressed by CN, CPKC Proposals

·   Short-Selling: UP Chief Underscores Importance of Shortline Relations

·   Gold Keith: Big Payday for CPKC’s Esteemed Chief  

Track Talk

“At this time, there are many unknowns about the long-term business impacts. However, recent years have shown us the resilience of railroads and the broader logistics sector in adapting swiftly to challenges while continuing to serve our customers. Those lessons will be put to work in the days ahead to minimize disruption to the fullest extent possible.”

-Dr. Rand Ghayad, AAR SVP of Policy and Economics, responding to Baltimore’s bridge disaster and port closure

One Port Short: Repercussions of the Baltimore Bridge Disaster

·   The final week of the first quarter ended with a tragedy, and one that adds further strain to North America’s supply chain. The March 26^th collapse of Baltimore’s Key Bridge—struck by a 1,000-foot container ship—closed the city’s port indefinitely. It’s served by both CSX and Norfolk Southern.

·   How disruptive will this be? Baltimore’s port handles a wide variety of cargo, including construction machinery, agricultural equipment, lumber, iron and steel products, petroleum, etc. It of course handles intermodal containers, as the Key Bridge incident made clear (670k containers last year). But most importantly to railroads, the Port of Baltimore is a major getaway for U.S. exports of coal and imports/exports of automobiles. Last year, the port handled 28.1m short tons of coal and 847k autos (more than any other North American port). Export coal, keep in mind, has been a key area of revenue and demand strength for CSX and NS in the past year or so. Without that strong demand from abroad, the coal story for railroads would be a lot gloomier right now.

·   Fortunately, the two railroads don’t sound terribly concerned. Appearing on CNBC’s Mad Money show last week (for more on that interview, see below), NS chief Alan Shaw made clear that “Baltimore is an important port for us,” especially with respect to export coal. But he also noted the even larger coal export terminal NS uses at the Port of Virginia near Norfolk/Newport News, about 200 miles south of Baltimore—this happens to be the largest coal export terminal in the northern hemisphere.

·   Joe Hinrichs of CSX remarked just after the bridge incident: “We visited the coal piers in Newport News, Virginia, today to sit down with our partners to see what we