DATE: Sunday, March 9, 1997                 TAG: 9703080575

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY KAREN JOLLY DAVIS, STAFF WRITER 

DATELINE: CAPE CHARLES                      LENGTH:   65 lines

EASTERN SHORE RAILROAD TRYING TO SECURE PLACE AS INDUSTRY CONSOLIDATES

Unless you're in the railroad business or ship by rail, chances are you haven't heard of the Eastern Shore Railroad.

No, it's not a Norfolk Southern - not even close. But the Eastern Shore's little railroad is a vital link from Hampton Roads to the Northeast struggling to secure its place in an industry increasingly dominated by a few Goliaths.

Eastern Shore Railroad runs 64 miles of track through Northampton and Accomack counties to Maryland. The railroad owns the track and has barge loading docks in Cape Charles and Little Creek. There, Eastern Shore Railroad either picks up or delivers from barges freight containers and other cargo. It expects to gross about $3.5 million this year.

The short line hauls mostly coal, stone and grain. It transports cocoa beans from Hampton Roads docks as well as clay, concrete, brick, fertilizer, cars, propane, pulp board and plywood.

The railroad employs 32 people, both full- and part-time. Its history dates to 1884, and it took its current corporate form in 1981 when it was bought by the Accomack-Northampton Transportation District Commission.

Eastern Shore Railroad is among about 500 short lines scattered throughout the United States. Together, these little railroads occupy about a third of the nearly 150,000 miles of railroad track in the country. They often provide a short but necessary link for long-distance carriers.

The Eastern Shore line is one of three small railroads in Southeastern Virginia. Norfolk and Portsmouth Beltline Railroad has 38 miles of track in Norfolk between port terminals, and is jointly owned by Norfolk Southern and CSX Transportation Inc. Chesapeake and Albemarle Railroad runs 66 miles from Norfolk to Edenton, N.C.

In recent years, the Eastern Shore Railroad has been on a downhill ride.

``Marketing wasn't being done,'' said Larry LeMond, general manager for the line. ``Plus, the Class One railroads diverted some of the traffic and cut us out.''

A decline in business over the past two years has hurt Eastern Shore Railroad's ability to cover its rate covenant. But LeMond doesn't expect the Virginia Resources Authority, their bondholders, to shut them down.

``I want to stress that we have always made our bond payment,'' he said. ``I don't anticipate our bond being pulled as long as we're paying and showing progress.''

LeMond said the railroad has improved service by hiring a different barge-towing contractor. In past years, rail cars would not be barged across the Chesapeake in 15 to 25 mph winds. But the new contractor has bigger tugs that will operate in that type of weather, said Lamond.

He's been asking former customers to give the Eastern Shore Railroad another chance. So far, that strategy is working.

The railroad expects to haul 1,000 additional carloads of chemicals from Delaware this year, and an extra 200 to 300 carloads of coal for Delmarva Power and Light. Cocoa bean shipments are expected to jump from about 250 cars to nearly 600. The pulpwood and plywood business is new.

``It boils down to seeing the right people and saying: we need help,'' LeMond said. ``Give us a chance.''

LeMond is hoping that the proposed sale of Conrail to Norfolk Southern and Richmond-based CSX will bring even more business to Eastern Shore Railroad.

There's a lot of industry on the Delmarva Peninsula, said LeMond, and moving those products will be very important to whichever railroad gets Conrail's tracks there. He and J.T. Holland, president of the Eastern Shore Railroad, have talked primarily with Norfolk Southern.

``We said, this railroad's in trouble. What can we do to regain some of the traffic that's been lost in the past few years?'' said LeMond. ``They don't want to see a railroad go out of business.''

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