Sea-Land Service Inc., the largest American shipping line and one of two companies eyeing Baltimore as the site for an East Coast cargo hub, will be carved into three individual businesses this year, company officials announced yesterday.

The decision to split Sea-Land into a domestic shipping line, an international shipping line and a marine terminal operator should not affect the quest for a new Northeast hub, a company spokesman said. Officials at the port of Baltimore suggested that the move could improve the city's chances of winning Sea-Land's business.

But yesterday's announcement renewed speculation that Sea-Land, the last American-owned global shipping line, is being packaged for sale to a foreign competitor, a move largely considered a death knell for what remains of the American merchant marine.

"This makes Sea-Land easier to sell off; I'm sure that's what they're thinking," said Jim McCaul, a shipping consultant with International Maritime Associates in Washington.

"The container shipping business is just terrible these days because of the problems in Asia. It's just a rotten business to be in."

Sea-Land is a subsidiary CSX Corp., the Richmond, Va.-based operator of the East Coast's largest railroad. The three new units will remain CSX subsidiaries and will be based at Sea-Land's headquarters in Charlotte, N.C.

Since last summer, Sea-Land and its Danish partner, Maersk Inc., have searched for a site to build a new container terminal where they can consolidate most of their cargo shipped to and from the East Coast. Baltimore and New York are considered the top finalists, and a decision is expected within days. If Baltimore is selected, its container cargo business could triple.

CSX officials said yesterday that Sea-Land will not be split until the third quarter of this year, well after Maersk and Sea-Land have decided where to consolidate East Coast operations.

"That decision is going to be made relatively soon, and prior to the implementation of these new companies," said Clint Eisenhauer, a Sea-Land spokesman.

Sea-Land invented container shipping in 1956, and operates 94 ships and 26 marine terminals for shipping container cargo to most regions of the world. Company executives say the three separate companies will allow for more focused management of the company's businesses.

Low rates for cargo moving from Asia have dealt a heavy blow to the container shipping business throughout the world. Sea-Land is one of the world's more profitable shipping lines, and produced just $16 million in fourth-quarter profit last year despite about $1 billion in revenue.

For 1998, Sea-Land reported operating income of $133 million on revenue of $3.9 billion.

CSX has made little secret the past few years that Sea-Land is for sale, and yesterday's announcement was widely viewed as a message that the company is courting foreign investors.

Because 16 of Sea-Land's ships sail "coastwise" routes restricted to American-built, American-flagged vessels, federal law would prohibit its sale to a foreign-owned corporation.

By making its domestic shipping business a separate entity, however, Sea-Land could offer its largest component -- the international shipping business -- to a foreign buyer.

Sea-Land is the largest employer of American merchant seamen, and the last global shipping line owned by Americans. Its sale to a foreign corporation would not necessarily mean that Americans would lose their jobs -- several foreign shipping lines sail American-flagged ships -- but labor groups took yesterday's announcement as a bad sign.

"They're not in the shipping business any more, they're in the money-making business," said Don Dishinger, secretary of the Radio-Electronics Officers Union. Three-quarters of the union's jobs are on board Sea-Land vessels.

"If we lose Sea-Land, our union's dead," Dishinger said. "I'm not sure there's going to be a merchant marine much longer."

Maryland officials have a meeting scheduled Friday at Maersk's New Jersey headquarters to discuss a potential move to Baltimore, and another meeting later this month with Sea-Land officials in Charlotte. None expect yesterday's announcement to affect the talks.

James White, executive director of the Maryland Port Administration, said Sea-Land's breakup could make it easier for Maersk and Sea-Land to move to Baltimore because the company has long proposed creating a new terminal operating company on the East Coast.

Also, the company's potential departure from New York has been complicated by its successful service between the United States and Puerto Rico.

By separating the domestic and international shipping trades, Sea-Land could more easily move its international service to Baltimore while keeping its Puerto Rican service intact, White said.

"Maybe I'm looking at this too optimistically, but this could accelerate what they've been telling us they want to do," said White.

Pub Date: 3/17/99