State lawmakers believed they’d finally found the money for an access road to the planned port terminal in North Charleston. The state had wasted years trying to develop another site and had just recently beat back court challenges from local environmentalists regarding the road. Then developer Robert Clement III stood before the Charleston delegation and made the ballsy request that they move it.
The road is in the way of Clement’s proposed transfer center, also known as an intermodal facility, that would take containers unloaded at the new port and load them on trains moving inland. Logistic migraines aside, the proposed project also carries the baggage of a rail industry dispute, with the CSX company holding the only available rail line. In cooperation with CSX, Clement and his partners, Shipyard Creek Associates, could hold a lucrative monopoly on rail-based transport to and from the terminal.
Rep. Wallace Scarborough has suggested changing the path of the road would delay port development and further damage the state’s competitive edge. Scarborough is on his way out after Tuesday’s elections, and it’s unclear how the rest of the delegation will respond to the request. According to the State Ports Authority, a change in the road alignment would require another round of laborious permitting and potentially set the project back several years.
On a drive from Charleston to Columbia a few days later, Clement was philosophical about Scarborough’s response.
“This is something they should have considered a long time ago,” he says. “Rep. Scarborough was right in the sense that we are falling behind, and the reason why is that here in Charleston we don’t have on-dock or near-dock intermodal facilities.”
People may point to the single rail lines that run to the Columbus Street and Union Pier terminal, but Clement is talking about a yard that could house large, double-stacked trains. “That’s how we’re going to regain our footing,” he says. “It’s what all of our competitors have been doing, and it’s what we should be doing to get back our edge.”
Clement is still roughing out the details of the plan for the 110 acre Macalloy site, which could cost up to $60 million.
“The problem is that, as currently configured, the access road separates us from CSX’s Cooper River rail yard,” Clement says. “If you move the road, that opens up the potential of combining our site with theirs and then we could devote even more of the Macalloy site to distribution center development.”
Clement isn’t the first person to think of redeveloping the property into a transfer facility. It was a keystone of Carolinks, which three years ago announced it would link the site by barge and rail to 1,300 acres in Orangeburg County.
Dubai-based Jafza International has since bought the Orangeburg property, but Macalloy lay fallow until Clement and his partners began to visit other regional port communities around the country to determine the highest and best use of the site. What Clement saw in Savannah and Norfolk, Va., and Jacksonville, Fla., convinced him that transfer facilities are the future.
But some worry the development would hand CSX a monopoly on moving cargo from the new port terminal, and that would ultimately be bad for shippers, and the port, and could actually stymie future economic development in the state.
South Carolina Public Railways, a division of the state Department of Commerce, has tried to broker a deal that would allow the Norfolk Southern railroad to also access the Macalloy site, but so far, CSX has yet to warm to a deal.
In early October, Commerce Secretary Joe Taylor and S.C. Public Railways President Jeff McWhorter urged the Senate Transportation Committee to keep terminal access for Norfolk Southern at the forefront as the committee evaluates the new port plans.
Even if transfer facilities are an undeniable trend in the ever-globalized U.S. economy, the nation is also in the midst of a significant push-back by shippers and others unhappy with the uncompromising nature of the nation’s top railroads regarding price and service, including CSX.
In fact, even in this year of retrenchment of the world’s economy, the nation’s railroads still raised their prices on shippers by between 6 percent and 9 percent.
The situation has become so heated that bills recently passed by U.S. House and Senate judiciary committees would strip the railroads of their anti-trust exemption and increase regulations over their pricing and the ability to merge with smaller railroad operators.
Bob Szabo, executive director of Consumers United for Rail Equity, a coalition of freight rail customers seeking more competition among the nation’s railroads, says that since the rail industry was deregulated in the 1980s, its seven remaining large freight railroads have essentially established regional monopolies that hold many shippers captive.
Having single access to a transfer facility serving the new terminal could be even worse for the port than it is for shippers, Szabo says.
“Simply put, depending on the ultimate destination of your cargo, you’re going to move it through the port at which you have the most inland options and therefore can get the best deal,” he says.
Clement sympathizes with many of the sentiments regarding dual access, but he says there’s little he can do to break the CSX monopoly.
“First of all, we would all like to see dual access (for both CSX and Norfolk Southern), but I’ve got to be realistic about that,” he says, noting that it just doesn’t happen.
“I think what you’ll ultimately see is a situation similar to that which occurs in other parts of the country, where the two will work together in situations where one has what another one needs,” he says. “But that said, I’m not CSX and I don’t control their line.”
Szabo says the prospects of a single rail company lording over the access for another can spell trouble for the broader opportunities for economic development in Charleston’s transport market.
“People don’t invest in being captive,” he says. “Not if they can help it.”