The 61 pilots who guide ships up the Chesapeake Bay to the port of Baltimore will get a nearly 12 percent rate increase over the next two years as part of a five-year agreement between the Association of Maryland Pilots and maritime business leaders.
The deal came after a five-month review that lacked much of the acrimony that has characterized past negotiations between bay pilots, state regulators and industry leaders. The industry has historically fought any increase out of fear that higher costs might drive business away from Baltimore.
The money raised from the rate increase will be used to buy new equipment and to increase pilot pay for the first time since 1999.
The five-year agreement will raise pilot pay by about 5.9 percent in the first year, for an average of $184,000.
The agreement doesn't come at a particularly good time for the port, which has struggled to keep costs low in recent months as ship calls have fallen along with the strength of the U.S. economy. Industry representatives, however, concluded that the new rates were reasonable and opted to accept the increase rather than engage in an expensive legal battle with the bay pilots.
"The shipping companies have always loathed to see any rates rising at all in this competitive day and age," said Rupert Denney, president of the Maryland Maritime Association, which represents a majority of the shipowners and agents using state ports. "But I do think to a certain extent the shipping industry ... felt we had to be somewhat pragmatic about it."
Denney credits the bay pilots' new management team for coming to the table with a reasonable rate proposal. Past negotiations have started with the two parties miles apart, he said.
Bay pilots characterized the talks as more "harmonious" than at any time in recent history.
"We had a number of meetings where we were able to discuss a number of issues important to pilots and the industry, and we were able to resolve them in a very pleasant and businesslike atmosphere," said Capt. Eric Nielsen, president of the Association of Maryland Pilots.
The size of the increase was questioned by the Maryland Public Service Commission, which regulates pilots' rates. Though it didn't sign the agreement, PSC staff ultimately concluded that the rates were reasonable and didn't oppose the settlement, which became final Saturday.
The Maryland Port Administration, which oversees state-owned marine terminals, also did not sign the agreement. However, in a letter to the state hearing examiner who handled the case, the agency said it did not oppose the negotiated settlement.
State law requires that ships calling at the port of Baltimore be guided by Maryland pilots who are familiar with the bay's shipping channels.
While bay pilots charge competitive rates per mile, ships visiting the port pay some of the highest piloting fees in the country because of the port's distance from the ocean. Docking pilots usually take over from the bay pilots once ships reach the Key Bridge.
The latest deal calls for pilot fees to increase by 8 percent this year, or about $1.5 million based on the association's estimates. An additional 4 percent increase will take effect Jan. 1, 2003. The remaining three years of the agreement call for rate increases tied to the cost-of-living index.
Part of the rate increase -- about $1.6 million -- will help pay for two heavy-duty boat launches used to ferry pilots to and from ships. Another $730,000 will be used to buy global positioning equipment, laptop computers and custom software that pilots use to guide ships through shipping channels in the bay and the Chesapeake and Delaware Canal.
The deal includes discounts for shipowners bringing new business to the port.