Ship pilots request rate increase

June 05, 1991|By John H. Gormley Jr.

The Association of Maryland Pilots has asked the state Public Service Commission for permission to raise by one-third over three years the rates it charges for bringing ships in and out of the port of Baltimore.

The members of the pilots' association have seen their income decline significantly in the last few years as the result of the decline of the port of Baltimore and industry trends toward bigger ships, which have allowed more cargo to be carried in fewer ships.

In 1986, the members of the association earned $92,200 each. Last year, the figure dipped to about $76,000, according to Capt. Michael R. Watson, the association's president.

"We hope to get it back up to 90, maybe a hundred thousand," he said.

Noting that the pilots have not sought an increase since 1985, Captain Watson said, "Now it's time we fell in line with everyone else and got a fair and equitable adjustment. I filed what I thought was a reasonable request."

Pilotage is one of the basic costs of doing business in the port. Since Baltimore is farther from the ocean -- 150 miles -- than any other major port on the East Coast, its pilot costs are also higher. For example, it costs roughly twice as much in pilot fees to bring a ship to Baltimore than to the port's archrival, Norfolk, Va., which is only 24 miles from the Atlantic.

Port officials are concerned that increases in pilot fees could further damage the port's competitive position. The Maryland Port Commission will formally oppose the rate increase before the Public Service Commission when hearings begin this summer, Maryland Transportation Secretary O. James Lighthizer, said yesterday. Mr. Lighthizer is chairman of the port commission, which functions as a board of directors for the Maryland Port Administration.

"We will oppose it. The question is to what degree . . . 30 percent, even over three years, is excessive, especially considering the port's competitive position," Mr. Lighthizer said following a meeting of the Port Commission.

He did suggest that the commission would be willing to accept something less than what the pilots are seeking. While insisting on the need to keep port costs down, he said, it may be time for the pilots to get some increase.

Capt. Lorenzo di Casagrande, who directs operations for Mediterranean Shipping Co., the first steamship line to agree to use the port's new Seagirt Marine Terminal, strongly opposed the pilots' request. "Any increase is not good. I don't think it's the time. They should hold back for a better time," he said.

Mediterranean's cargo volumes in Baltimore have been growing steadily since the line began using Seagirt in September. An increase in costs because of pilot fees might force his line to reconsider what it must charge its customers, and that in turn could harm efforts to bring more cargo through Baltimore, he said.

"For us what's important is stability for a certain period of time," he said, since the line needs to determine what its costs are so it can price its services accordingly.

"I didn't expect it," Captain di Casagrande said of the rate request. "If this goes through, we may have to re-evaluate our rate structure."

In response to criticism about the timing of the rate request, just when there are some signs that Baltimore may be improving its competitive position, Captain Watson said that the pilots have represented an island of stability in the port during a period of extreme turbulence. "During all the turmoil of the last six years, the Maryland pilots are the ones who stood by the port," he said.

During that time, the pilots were instrumental in pushing to completion a project to deepen the port's channels to 50 feet after years of delays. The pilots helped to get the dredging going by proposing a revised design that dramatically reduced the cost. The pilots also pushed for improvements in the Chesapeake and Delaware Canal, permitting its use by the biggest containerships now serving Baltimore.

John T. Menzies, the chairman of the Private Sector Port Committee, a group of port executives who advise the MPA, voiced some sympathy for the plight of the pilots. "I see that group as having worked very hard to get ships through the C&D Canal and to stretch the limits of navigation in the bay," he said. "While there's a concern for anything that raises costs, there's appreciation for them as a group. They've worked pretty hard to see the port succeed."

The pilots are a professional association. At the end of the year the group subtracts its expenses from its revenues and divides the remaining profit equally among members.

There's a sense in some quarters that the pilots have not managed to pare their work force to match the size of the work now available. If there were fewer members, each pilot would receive a bigger share at the end of the year.

The association has reduced its ranks by about 10 percent through attrition in the last few years. But ship arrivals in Baltimore have declined by almost a quarter since 1984, falling from 2,986 to 2,293 last year.

This year the rate of decline has been even more pronounced, as arrivals have fallen more than 10 percent through April.

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