New Orleans mayor renews push for sale of port’s switching railroad

New Orleans mayor renews push for sale of port’s switching railroad

The New Orleans Public Belt Railroad, pictured, connects the Port of New Orleans with every Class 1 railroad in the U.S., making New Orleans one-of-a-kind in this regard.

The city of New Orleans is again exploring the sale of the port’s switching railroad, a move that opponents, including the port and local maritime businesses, say could lead to higher rates and preferential service for some customers.

The New Orleans Public Belt Railroad Commission has reluctantly agreed to a city-funded study of the potential sale of the railroad, which provides switching services for the six Class 1 railroads that serve the Port of New Orleans.

Mayor Mitch Landrieu has floated the potential sale of the city-owned railroad in order to help shore up city finances. However, the idea has been opposed by local maritime businesses, the Port of New Orleans and several Public Belt commissioners.

At a hearing last month, several opponents warned that the sale could result in an increase in major railroads’ switching rates, which would be passed on to shippers. They also warned that if one of the Class 1 railroads purchased the line it could give preferential treatment to its own trains.

The New Orleans Public Belt Railroad began operations in 1908 to provide neutral switching between major railroads at the port. New Orleans is the only port served by six Class 1 railroads: Canadian National Railway, CSX Transportation, Norfolk Southern Railway, Kansas City Southern Railway, Union Pacific Railroad and BNSF Railway.

The switching railroad has 25 miles of main track and 97 miles of yard track. The Public Belt figures prominently in the port’s current efforts to develop more intermodal rail service. Earlier this year, the port opened an intermodal container transfer facility at its Napoleon Avenue Container Terminal.

The idea of selling the railroad has been raised before. Two years ago, Thomas Coleman, former chief executive officer of International-Matex Tank Terminals, expressed interest in buying the railroad. Landrieu brought up the idea again last December and suggested it again a last week.

“I started to think, what if we had a major asset that really was not a part of exactly what the City of New Orleans was doing, that we could sell it and make a good value?” he told an audience at a community meeting.

The New Orleans Advocate reported that the railroad had $1.8 million in operating income in 2015, down from $2.2 million in 2014 and nearly $2.6 million in 2013. In the first three months of 2016, income was down 64 percent from a year earlier.

It’s unclear how much the city would earn from the sale. The accounting firm KPMG, which is conducting the current study, in April estimated the line’s value between $61 million and $196 million. The railroad also owns the combined rail-highway Huey P. Long Bridge across the Mississippi River, but the bridge does not appear to be included in any potential sale.

Contact Joseph Bonney at joseph.bonney@ihs.com and follow him on Twitter: @JosephBonney.