Howard Tunnel revival still possible

There are compelling reasons to think a deal with CSX might still get done

Our view:

Misfortunes often come in threes. For Baltimore economic development, the first two serious setbacks of recent years originated in Annapolis when the Red Line light rail project was canceled and the State Center redevelopment put on hold. Each represented thousands of jobs and billions in investment. But the third blow came from Florida last fall. That’s when CSX Transportation abruptly withdrew from a planned public-private partnership to renovate the Howard Street Tunnel and make it possible for double-stack trains to carry freight to and from the port of Baltimore.

The decision was a huge loss not just to the city but to the region. As many as 7,800 direct and indirect jobs were estimated to be at stake. The expansion would mean thousands more cargo containers coming through Maryland because double-stacking represents the most cost-effective way for railroads to handle shipping containers from increasingly large ships. Baltimore’s port continues to prosper, but the Howard Street bottleneck can only hamper future growth.

Yet unlike the Red Line proposal, which is in full rigor mortis, and the State Center plan, which is in legal limbo and looks to be diminished in scope and job creation if it is revived, Howard Street isn’t nearly as ghostly as it may appear. There are several reasons for this, and two of them are just flat-out numbers — 74 and 455. The former is the current share price of CSX, which was hovering around $51 a share last November when the company’s cost-cutting, efficiency-minded CEO announced the reversal on the Howard Street project, and the latter is the total cost in millions of the project, only $145 million of which would be paid by the railroad, the rest coming from the state and federal governments.

That makes the Howard Tunnel a profitable opportunity not just for the port but for CSX. James J. White, executive director of the Maryland Port Administration, won’t get far asking executives in Jacksonville to expand their investment in Baltimore out of a sense of civic duty, but he can make the case for profits. As Baltimore’s shipping business expands — it handled a record of more than 21 million tons of goods worth over $28 billion in the first half of this year — so does the opportunity for CSX to profit. And growth is something the company, and other railroads, have failed to achieve in recent years. As recently reported by the Journal of Commerce, railroads have been losing ground in intermodal service to trucks since 2016. Granted, trucks can often get to market faster than trains carrying tens of thousands of tons of cargo, but part of the loss is the railroads’ own doing — with too much focus on cost-cutting and profit margins and not enough on reliability and quality of service.

And here’s the other reason. The project keeps getting cheaper. When port officials were first considering renovating Howard Street years ago, they pegged the cost at more than $1 billion, perhaps more than $2 billion. Later, engineers discovered that the 128-year-old tunnel might be rebuilt more cheaply. And now, CSX is focused on technology that could make it less costly still by using precast sections that could reduce the time to complete the project — and most importantly, reduce the time trains can’t use the tunnel — by years. So let’s review: CSX is more profitable today. It’s under new management since the Howard project was derailed last year. It has a chance to expand its services under a partnership in which state and federal taxpayers foot two-thirds of the bill. Perhaps that’s why the MPA appears to have more or less abandoned its “Plan B” for Howard Street, a somewhat harebrained scheme to float containers by barge from Seagirt to its Masonville (Fairfield) Marine Terminal, bypassing the tunnel but likely incurring substantial additional operating costs.

So how about it, CSX CEO James M. Foote, can we do business? Members of Maryland’s congressional delegation remain confident the Port of Baltimore can find support from the Trump administration for a project that would benefit half the country by taking thousands of tractor-trailers off congested interstate highways. Gov. Larry Hogan may have to scramble to find the money in the Transportation Trust Fund and, of course, there are short-term worries about tariffs and a trade war with China. But this is one partnership that makes too much sense for all involved to let it stay derailed.