Date: Friday, April 26, 2024
Source: Sourcing Journal
The Francis Scott Key Bridge collapse has dealt yet another financial blow to the supply chain—with two Class I railroads already feeling the brunt of millions of lost sales.
CSX and Norfolk Southern, the two major North American rail companies that provide service to the Port of Baltimore, are expected to see at least $25 million per month in negative revenue impacts related to the March 26 incident.
CSX is estimating a net revenue headwind of $25 million to $30 million for each month the port remains closed, said chief commercial officer Kevin Boone in an April 17 earnings call.
And Norfolk Southern, which is currently undergoing a proxy fight, expects a similar $25 million to $35 million hit to monthly sales, chief financial officer Mike George told investors and analysts Wednesday.
Both companies attributed the impacts to pressure in their export coal businesses and have had to divert a portion of their overall Baltimore volumes elsewhere. And both railroads pivoted to mitigate supply chain disruptions in the wake of the collapse by launching new dedicated intermodal service lines to facilitate the flow of freight between Baltimore and New York.
Boone highlighted CSX’s ability “to react quickly and provide solutions for our customers was highlighted by our efforts in Baltimore, where we rapidly stood up an alternative solution to meet the intermodal needs of the community.”
“We are diligently working with our customers to provide alternate supply chain solutions, and the increased network fluidity is providing the capacity necessary to execute on those solutions,” said Norfolk Southern chief marketing officer Ed Elkins in the earnings call.
As the cleanup efforts at the site of the Francis Scott Key Bridge collapse continue, a fourth temporary channel officially opened Thursday, and will stay open until either Monday or Tuesday depending on weather.
Two ships have thus far passed through the new 35-foot channel, with the Panama-flagged Balsa 94 bulk carrier headed for St. John, Canada after passing through Thursday morning.
Two tugboats guided the Balsa 94 through the channel, one in front and one behind. It passed slowly by the wreckage of the bridge and the Dali, the 985-foot container ship that caused the collapse when it slammed into one of the bridge’s support columns after losing power.
The Balsa 94 was followed shortly before noon by the Saimaagracht, a Netherlands-flagged general cargo ship. The ships represented two of five stranded vessels expected to pass through the new, temporary channel, and one of seven commercial boats that were still stuck in Baltimore’s harbor.
According to the Unified Command recovery team in charge of cleaning up the wreckage, the Port of Baltimore’s main channel is set to reopen by the end of May after the ship has been removed.
Teamsters division sees ‘no reason to support’ current Norfolk Southern regime
While the area awaits its return to normalcy, Norfolk Southern has new opposition in its board battle with activist investor Ancora Holdings, this time coming from an unlikely source—the Teamsters.
The Brotherhood of Maintenance of Way Employees Division of the International Brotherhood of Teamsters (BMWED-IBT) said Thursday that it determined a change in leadership is necessary.
“The BMWED-IBT, after more than a year of non-committal hedging on reasonable, needed changes and untenable shakiness in management at Norfolk Southern, has determined that a change in leadership is needed for the freight rail carrier and its employees,” said Tony Cardwell, president of BMWED-IBT, in a statement. “Following yesterday’s earnings call and a reasonably constructive meeting with a potential new leadership team, our Brotherhood has determined that a change at the top would be the best course of action for BMWED-IBT members.”
In the 14 months since the East Palestine, Ohio train derailment, Cardwell says the union has not been reassured by current Norfolk Southern leadership that it would implement policy and procedural changes to prevent similar instances from reoccurring.
“At this juncture, seeing no path forward, we see no reason to support the current administration at Norfolk Southern,” Cardwell said.
The Teamsters division’s positioning against CEO Alan Shaw and Norfolk Southern’s board runs counter to the wider union support that the rail company has received.
Last month, the AFL-CIO’s Transportation Trades Department, a coalition that represents 37 unions across transportation modes, voiced its support for Shaw, with president Greg Regan saying that replacing him would be “a tremendous mistake and a detrimental step” for the company.
Norfolk Southern shareholders will determine the outcome of the proxy war at the railroad’s annual meeting on May 9.