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Port administration seeks to lease Seagirt terminal

The Baltimore Sun

The Maryland Port Administration has taken the first step toward leasing the Seagirt Marine Terminal to a private company that would spend more than $100 million to expand the terminal and then run it.

The agency has agreed to hire a Florida-based consulting firm to identify possible bidders willing to spend $100 million to $120 million to expand Seagirt's capacity and then manage the terminal under a long-term lease with the state.

The money is needed to build berths with a depth of 50 feet to accommodate the larger container ships that are expected to dominate world commerce after the widening and deepening of the Panama Canal is completed in 2014.

Port Administrator James J. White said the agency is seeking a private partner because there isn't enough money in the state Transportation Trust Fund to build needed facilities in time to compete for new business the expanded canal will generate.

"The way the funding is right now, we're not going to be ready," White said. "We need to go outside the box - do something different."

The port administration has entered a contract with Public Financial Management of Orlando, Fla., to help find a partner and arrange a deal. The contract, which goes before the Board of Public Works for approval Oct. 15, is worth up to $990,000.

White had earlier signaled that the O'Malley administration was considering such a venture at Seagirt, where container traffic has been lagging in recent years, but the contract represents the first step toward actually putting together a deal.

He emphasized that Maryland would not sell the terminal, but would sign a long-term lease agreement with a company that would finance the new facilities in return for the right to collect fees from shipping companies over the term of the deal. He added that the contract involves Seagirt only -- not any other of the Baltimore port's terminals.

Helen Delich Bentley, the former U.S. congresswoman for whom the port of Baltimore is named, hailed the decision to seek private financing.

"We need the 50-foot berth very badly. We should have had it last year, and the state has no money," said Bentley, now a consultant to the maritime industry. She said such deals will become increasingly prevalent in the port business and estimated that any lease would have a term of 30 years or more.

David Miller, managing director of Public Financial Management, said his company has extensive experience working with port agencies around the country and putting together public-private partnerships. He pointed to a recent agreement between the Jacksonville Port Authority and Mitsui O.S.K. Lines under which that company is building a new, 158-acre terminal to serve containerships sailing to and from Asia. As part of its deal with the Florida port, Mitsui is building two 1,200-foot-berths and dredging the harbor to accommodate large vessels.

Like Jacksonville, the Maryland port is looking to expand with an eye toward capturing a share of Asian cargo that is now unloaded on the West Coast and shipped east by rail.

White said that with a wider and deeper Panama Canal, much of that shipping will come to East Coast ports, where cargo will be loaded onto trucks to be taken to its final destination.

"We think there's a lot of trade that will flow through Maryland over our docks that doesn't flow there today," White said. He estimated that 200,000 containers a year come from Asia to the Baltimore region by rail from the West Coast.

If the port of Baltimore does not expand its container facilities by 2014, White said, it can expect to lose business to other East Coast ports.

To accommodate the larger vessels that will be coming through the canal starting in 2014, the Seagirt terminal will need berths that jut out into water that has been dredged to a depth of 50 feet. White said the facility will also need four new container cranes with a longer reach than the port's current equipment.

The 18-year-old Seagirt terminal has been operating at less than half its capacity because it has a number of strikes against it that don't affect Baltimore's competitors. It lacks a berth with a 50-foot depth that can accommodate larger ships. Because its rail connections depend on the outmoded and undersized Howard Street Tunnel, trains serving the port can't carry the double-stacked containers that are now the industry standard.

Improved facilities at Seagirt would not address the double-stacking problem but could help the port attract more cargo that would be transferred to trucks. Baltimore's inland location, requiring a trip up the Chesapeake Bay, is seen as an advantage for trucks but not for railroads.

Bentley said it's critical to have the new infrastructure in place by the time the widened canal opens. "If we don't, we're shut out altogether," she said.

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