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Coos Bay port buys railroad, plans for future shipping terminal

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Thursday, January 01, 2009

COOS BAY After more than a year of vociferous conflict between federal, state and regional officials and the owner of the Central Oregon and Pacific Railroad, the International Port of Coos Bay has said it will buy the 126-mile line for $16.6 million. The purchase will allow the port to reopen a critical freight route between Eugene and Coquille that’s used by forest-product, natural-gas and manufacturing companies. Reopening the line also puts the Port of Coos Bay back in a competitive position to build a $300 million to $700 million international shipping terminal.

Conflict over the line began in fall of 2007 after its then-new owner — Boca Raton, Fla.-based RailAmerica — shut down the railroad and asked the state of Oregon for $30 million to repair three of the line’s 125-year-old tunnels. It was a suggestion that Rep. Peter DeFazio (D-Ore.) slammed as “extortion.” Shippers such as Georgia-Pacific, Roseburg Forest Products and Reedsport’s American Bridge were suddenly forced to switch to trucking, which created a combined loss of approximately $500,000 a month to all rail-dependent shippers in the region. After RailAmerica tried to abandon the railroad, DeFazio and Sen. Ron Wyden took the fight to Washington, D.C., and created legislation that allowed the port to purchase the line.

But buying the railroad doesn’t solve its existing problems. Martin Callery, the director of freight mobility at the Port of Coos Bay, says the port will not act as operator. The agency will, however, need to spend $4 million to repair a minimum of three of the line’s nine tunnels — some of which have support timbers that are estimated to be 95 years old. Service to a few miles of line near Eugene, which serves facilities owned by Roseburg Forest Products and the Swanson Group, could be restored before the tunnels are fixed.

“We have to see if there’s enough revenue traffic to justify putting it in operation right away,” Callery says.

In 2007, APM Terminals, a division of the Danish container-shipping giant A.P. Moller-Maersk, approached Coos Bay about building a massive container-shipping terminal in the bay. Now that the line will reopen, Callery says that company and others are still interested in the port. Shipping firms are cutting back on new projects around the globe, Callery says, but Coos Bay is seen as one of only a few places that would help ease congestion in West Coast ports in decades to come.                         


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