MPA deal is aimed at keeping Maersk at Baltimore port

February 10, 1991|By John H. Gormley Jr.

With less than two months left before the expiration of Maersk Line's lease in the port of Baltimore, the Maryland Port Administration is trying to persuade Maersk to stay by offering the line something it probably can't get in Virginia -- its own custom-built terminal from which it could offer terminal services to other steamship lines.

MPA Executive Director Brendan W. O'Malley said in an interview last week that the state is offering Maersk, the port's most important customer, a deal that would allow Maersk to take advantage of the fact that it operates a stevedoring company as well as a steamship line.

In October, Maersk's stevedoring subsidiary, Universal Maritime Service Corp., began competing for business in the port of Baltimore. The company has several other steamship-line clients in Baltimore in addition to Maersk Line. "We think Baltimore is the place for both Maersk and Universal to be. We believe the range of stevedoring opportunities is greater in Baltimore," Mr. O'Malley said.

Maersk now leases space from the MPA at the state's Dundalk Marine Terminal. Mr. O'Malley said the state is "laying out a number of options at Dundalk" for Maersk.

One state source familiar with the negotiations said Maersk wants the MPA to spend about $15 million developing a terminal for Maersk's use at Dundalk.

Such a terminal would include a highly automated gate, similar to the one at Seagirt Marine Terminal, that would permit Universal to process large volumes of cargo efficiently.

The cost of the terminal improvements would be paid back to the state under a long-term contract, according to the source, who compared the arrangement to the one the state worked out with Toyota for development of its importing and processing facility for cars in Fairfield.

The source, who asked not to be identified because of the sensitivity of the discussions, said there seemed to be a split in the Maersk organization, with the operations people favoring the Virginia ports of Hampton Roads because of their proximity to the Atlantic and the marketing people favoring Baltimore because of its proximity to a much bigger consuming market.

"We've got to make Baltimore as attractive as possible operationally," the source said. "We're going to do everything we can to keep them."

Delegate Timothy F. Maloney, D-Prince George's County, said he thought the legislature would be receptive to financing a package to keep Maersk in Baltimore, despite the state's difficult financial circumstances.

"This is precisely the kind of investment we should be looking at, even in tough times," he said Friday. "It would be a mistake to do otherwise."

Mr. Maloney, chairman of the House subcommittee with oversight responsibility for the port, has been sharply critical of the MPA in the past and has warned port officials that the legislature would not keep funding projects if the port continued to lose business.

Much of the state's recent investment in port facilities has been speculative. The state spent more than $250 million building Seagirt Marine Terminal without any guarantee steamship lines would use it. By contrast, under the proposal being worked out, the state would receive a long-term commitment from Maersk in return for the public investment, Mr. Maloney said. Consequently, the state would be assured of receiving sufficient economic benefits to justify the investment.

If the legislature did agree to fund the new terminal for Maersk, less money might be available for other port projects, Mr. Maloney said.

In the ports of Hampton Roads, private companies are allowed to compete for stevedoring business -- loading and unloading ships. But private companies are not allowed to provide terminal services -- managing the storage areas and processing the trucks that bring cargo to and from the docks. That part of the business is controlled by a state-owned entity, Virginia International Terminals.

The deal proposed by the MPA would allow Universal to provide both stevedoring and terminal-management services to Maersk Line and to any other steamship line in the port. Universal is already offering both stevedoring and terminal services to several steamship-line customers in Baltimore. The development of a modern terminal by the state for Maersk would give Universal much better facilities to help it expand that business in Baltimore.

David L. Bindler, the regional director for Maersk Line based in Baltimore, declined to discuss details of the offer by the state. He did confirm, however, that Maersk is reviewing its entire operation in the mid-Atlantic area, a review given greater urgency by the fact that the lease in Baltimore is about to expire.

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