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Baltimore steers a course to triple container shipping Deeper channels give port an edge over N.Y. in bid for major terminal

THE BALTIMORE SUN

The Port of Baltimore moved within one step of becoming a major East Coast destination for international trade last week, and now the deal's success or failure could hinge on a thick layer of rock lining a New Jersey waterway called the Kill Van Kull.

That narrow passage, which leads to the piers where shipping giants Maersk Inc. and Sea-Land Service Inc. have been sending their ships for the past 25 years, is no longer deep enough for the companies' largest vessels.

So those shipping lines, responsible for almost 20 percent of the world's container cargo, are considering Baltimore as their new Northeast hub.

If the Port Authority of New York and New Jersey can dredge that waterway and the rest of its shipping channels -- a task that would require dynamite in some spots -- then, industry analysts say, Baltimore won't stand a chance of stealing shipping business from the largest consumer market in the nation.

But if New York can't dredge, then Baltimore's container cargo business could reap a deal that would triple its size and make it a global factor overnight.

The prospect is so tantalizing to Baltimore port officials that they are offering hundreds of millions of dollars in incentives, hoping their comparatively small port to the south can catch the East Coast's giant off guard.

"It's just an incredible opportunity for the port," said James White, acting director of the Maryland Port Administration.

"And we're doing everything we can to take advantage of it."

A matter of feet and dollars

Ten feet of extra depth means more to a shipping company than simply whether their vessels will fit into a port -- it can make the difference between a profit and a loss.

Maersk and Sea-Land have purchased or ordered more than 20 vessels designed to handle twice the cargo of standard ocean-going ships, cutting costs by moving more containers in fewer trips.

But when Maersk showcased its 1,100-foot-long Regina Maersk last summer, the ship churned up mud in New York harbor.

And it wasn't even sailing as deep as normal; it had stopped first in Halifax, Nova Scotia, to off-load enough weight to fit through New York's channels.

Few of those mammoth vessels trade in the North Atlantic today, but as Maersk and Sea-Land negotiate terminal leases for the next 25 years, they are demanding a port that can handle their "post-Panamax" ships, so named because they are too large for the Panama Canal.

Benefits of 50-foot depth

Baltimore's primary channels are 50 feet deep -- post-Panamax depth. Maersk and Sea-Land selected Baltimore as one of three finalists for their new East Coast hub Thursday, pitting it against New York and the 60-foot-deep Halifax.

"We wouldn't even be in the running without that 50 feet," said Helen Delich Bentley, the former congresswoman who says she ran for office mostly to ensure that Baltimore's shipping channels were dredged.

The dredging problem in New York harbor is of a scale that few American port officials could even imagine.

The Kill Van Kull and its connecting channels are just 9 1/2 miles long and will cost at least $621 million to deepen 5 feet because of the rocky bottom and the cost of disposing of the material.

In contrast, the 47 miles of channels connecting Baltimore to the Delaware Bay through the Chesapeake & Delaware Canal are lined with mud and would cost $83 million to deepen 5 feet.

Battle for federal money

Like their Maryland counterparts, New York port officials fight every year for federal dredging money -- and they promise they'll get it.

"We have an active and ambitious project under way, and we're confident that we've broken the dredging logjam," said Allen Morrison, spokesman for the New York port authority.

When Maersk and Sea-Land announced their search for an East Coast hub in May, few officials in the maritime trade thought it was for real.

To leave New York is to abandon the largest port on this side of the continent and the ultimate destination of much of their cargo.

But since the first announcement, the companies have met repeatedly with officials in Baltimore, sent their top executives to tour the Dundalk Marine Terminal and discussed the deal with Maryland officials last week at Maersk headquarters in Copenhagen, Denmark.

'It's the real thing'

"When we first met with the Maersk and Sea-Land people, I think every port had reservations," said White, the Baltimore port director.

"But their level of interest has been very high, and they've followed up with very specific points. I'm convinced it's the real thing."

A study conducted for the Port Authority of New York and New Jersey several years ago by the Northern Virginia consulting firm Louis Berger International concluded that shipping lines would stage a "mass exodus" from the New York market if the draft in its channels isn't deepened.

The study placed the breaking point closer to 35 feet, not the current 40, but it was written before the industry's post-Panamax trend had taken root.

New York port officials were in Washington, D.C., last week asking the White House for $60 million to continue dredging the Kill Van Kull.

Opportunity for rivals

Meanwhile, other port cities are using the dredging problem in New York as an opportunity to showcase themselves as an alternative. Otherwise secondary harbors such as Baltimore could have enough advantages to steal business as long as New York is perceived as too shallow.

"The draft there clearly is one of the major issues for us," said Clint Eisenhauer, a spokesman for Sea-Land.

"There is no one port that meets all of our wish list of attributes right now, so it's kind of a complex equation. And a lot of things could make the difference."

Baltimore is offering the companies an established marine terminal with direct rail access and a labor pool that is among the more experienced and efficient on the coast.

Port officials refuse to discuss the terms of their offer, but have said they would finance improvements to the docks, dredge at the piers and construct new cranes.

For Baltimore the deal could mean about 550,000 more cargo containers shipped through the port yearly, and more in later years.

All of the port's current shipping lines combined ship fewer than 300,000 containers.

Reversing a disadvantage

Baltimore's historical disadvantage -- its geographic placement 10 hours from the open ocean -- could be its best attribute as the Maersk/Sea-Land negotiations proceed, analysts say.

Even if Maersk and Sea-Land don't send their ships to New York, they still have to send much of their cargo there, and Baltimore is close to the region by truck and rail.

That was a key reason the two companies rejected Norfolk when they narrowed their list of candidates, and the reason most observers suspect that fellow finalist Halifax will never get all of the business.

New York port officials have long said they expect to keep Maersk and Sea-Land's business, and some suspect that if the lines pulled out, their customers would use another line's ships.

When United States Lines went bankrupt in 1986, it was moving 300,000 containers through the port, and all of that cargo was quickly picked up by other shipping companies.

Pub Date: 12/13/98

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