VA. INLAND PORT HIT BY TRAFFIC DROUGHT IN ITS FIRST FULL YEAR

VA. INLAND PORT HIT BY TRAFFIC DROUGHT IN ITS FIRST FULL YEAR

The first year of operation for the Virginia Inland Port - the Port of Hampton Roads' effort to reach deeper into the American heartland - has fallen far short of expectations.

When the rail-truck transfer facility opened a year ago in early March, port officials predicted that it would handle up to 20,000 containers in its first year. Instead, the Front Royal, Va., facility has handled a little less than 5,000 boxes."It's half the train it's supposed to be," said W.A. Eckhardt, director of international marketing for Norfolk Southern Corp., the railroad that runs the trains between the inland port and Hampton Roads.

The failure to capture a significant amount of traffic for the inland port is due to mistakes made in the marketing program for the facility, according to port and railroad officials.

"We misread what was going to happen," said John Covaney, senior managing director ofmarketing services for the Virginia Port Authority. "I take the responsibility."

Other ports are watching the Virginia experiment with interest to see if they, too, need to start establishing inland container stations to channel containers directly to their docks by rail.

Port interests in Philadelphia, for example, are discussing the establishment of an inland port at Pittsburgh or Lancaster, Pa.

The Virginia Inland Port was designed to cut into international traffic that, because of distance and cost, normally would flow through Baltimore.

Shippers and carriers that traditionally routed movements through Baltimore for carriage overseas or for subsequent movement down to Hampton Roads by barge would have the option of dropping off loads at Front Royal for direct rail movement to Hampton Roads.

Baltimore port officials, already smarting over steady cargo losses to Hampton Roads, consistently have maintained that the Virginia Inland Port concept is flawed and can only be kept operating through subsidies that drain port resources.

"The proof in the pudding is in the few moves they have done," said Anthony Chiarello, deputy executive director of the Maryland Port Administration.

Virginia port officials say that from an operational standpoint, the inland port is a success. During a brief strike in Baltimore in early February, they said, the facility ran at full steam. An extra train was even added to the schedule.

"What we were able to prove is that the facility would run at its designed capacity just like we said it would," said Richard Knapp, assistant general manager for Virginia International Terminals - the operating subsidiary of the Virginia Port Authority.

The marketing plan for the facility, however, had to be completely revamped. Originally Virginia tried to market the port with a bill of lading specifically naming Front Royal as the point where cargo was turned over to steamship lines.

But steamship lines balked at the notion of taking over cargo at the inland port.

That billing system did not fit the traditional rate structure established by steamship conferences - marine carrier rate-setting groups. They preferred to stick with their regular port tariffs and rely on traditional truck and barge moves to maintain their door-to-door services.

That meant Virginia port officials had to shift their focus. Instead of trying to secure large chunks of traffic controlled by steamship lines, they had to go to individual shippers and receivers and convince them that the inland port was the best way to get loads to and from their carriers at Hampton Roads.

Or, in the case of carrier door-to-door service, the port salesmen had to convince the carriers that the inland port was the lowest-cost route for delivery of a specific shipment.

"We've built it one container at a time," said Mr. Covaney.

That strategy, of course, takes longer to pay off. But Virginia officials expect it to start bearing fruit in the near future.

Several major traffic deals are in the works, they said. The facility should start doing enough business to cover its costs by March 1991, according to Mr. Covaney.