Shellpot Bridge Agreement: A Case for Public-Private Cooperation

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Shellpot Bridge Agreement A Case for
Public-Private Cooperation

• A web presentation by Michael Kirkpatrick,
  Planner III, Delaware Dept. of Transportation

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The Problem

• The 115-year old Shellpot railroad swing bridge
  was out of commission leaving a major gap in
  Delawares rail system.
• Delaware and the Norfolk Southern needed to
  cooperate on a solution to put it back to work.

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• Shellpot Bridge built by Penn. RR in 1888
• Diverted freight and express around Wilmington
  Station
• Served industries on east and south sides of
  Wilmington

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Wilmington, Delaware
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• 1995 Conrail takes bridge out of service
• Cost to repair estimated at over 10 million
• Conrail business strategy works against Shellpot

Shellpot piers slowly sinking into the Christina
River mud
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Closing The Effects

• Edgemoor Yard stranded
• Re-routing and/or loss of traffic from SB NEC
• Loss of general merchandise train pick-ups
• Degraded service into Port of Wilmington and
  points south
• Freight forced through passenger station

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The Players

• June 1999 Norfolk Southern took over Conrails
  Delaware assets
• NS had different business strategy than Conrail
• NS focused on increasing north-south movements
  into lucrative Northeastern market
• Purchase of Conrail left NS cash-starved and with
  limited capital available

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The Players

• DelDOT created Freight Rail Plan in 1999
• Goals include increasing rail mode share and
  protecting access to state network - restoration
  of Shellpot route was an important strategy
• DelDOT had financial resources
• Public-private partnership with for-profit
  company was dark territory

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• Issues included
• Justifying investment in for-profit company
  venture
• Developing a mechanism to partner with private
  company
• How to share risks rewards

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• Solution
• Part grant-part loan
• Sliding-scale payback mechanism
• Incentive-based program that shares benefits

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• The agreement
• 13 million total cost
• 5 million grant
• 9 million loan
• Minimum annual payback
• Sliding per-car tariff 35-5 based upon
  traffic volume thresholds

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• Results?
• Less than one year of data
• Upward trend in car counts during the first year
• NS reports new business due to line opening
• Edgemoor Yard using available capacity

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• Lessons learned
• Good way to leverage State funds against RR needs
• Not a universal solution
• Flexibility is important