Coal exports surge in wake of port dredging Deeper channels let ships take on larger loads

October 23, 1991|By John H. Gormley Jr.

Despite a slow start during the first half of this year, the port of Baltimore will have moved more export coal by the end of October than it did in all of 1990.

The port is benefiting from a surge in international demand for coal, as well as a deeper channel system in the port that allows big coal ships to operate more efficiently here.

The Consolidation Coal Sales Co. terminal, the port of Baltimore's principal export coal pier, set a record for shipments last month.

During the month, 21 ships loaded 1.3 million tons of coal at the Consolidation pier in Canton. The figure probably would have been even higher, but mechanical problems forced the shutdown of the terminal's facilities for unloading rail cars for several days.

"Shipments are up significantly," George McElroy, the terminal's manager, said yesterday.

This month's figures will not be as strong as those for September, but Mr. McElroy expects his terminal to handle more than 1 million tons of export coal again.

According to statistics compiled by John S. Connor Inc., steamship agents, the port's two major export coal terminals handled 24 export coal ships in September, twice the number of ships serviced in the same month a year ago. The port had loaded nearly 7.1 million tons on 123 ships through September. (Consolidation accounted for 86 percent of that tonnage.) During the first nine months of last year, the port loaded 6.1 million tons on 110 ships.

Jeffrey A. Watkins, vice president of Hill & Associates Inc. in Annapolis, a management consulting firm that specializes in coal, said the boom in coal exports is "real." But he warned, "It may not be long-lasting."

Export coal facilities on the East Coast are operating near capacity, Mr. Watkins said, to keep up with demand, primarily from Europe. Part of the increase is a short-term phenomenon related to concern about supplies from Poland and the Soviet Union. Because of the economic uncertainties there, some users in Europe have turned to more secure supplies of U.S. coal.

While the current surge may not last long, the long-term prospects for U.S. coal exports are very good, Mr. Watkins said. A number of nations in Western Europe are moving to close highly subsidized domestic mines.

As subsidies for these mines are ended and the mines are closed, demand for U.S. coal should climb steadily, giving the industry "a good, strong outlook," Mr. Watkins said.

The port of Baltimore's ability to compete for that growing coal business was improved by the deepening of the port's shipping channels from 42 feet to 50 feet. That dredging project was officially completed late last year, but for safety reasons the bay pilots have been changing the draft limits in increments.

During the first half of the year, the pilots increased the draft restrictions from the predredging limit of 41 feet to 45 feet. During the summer, they increased the depth to 46 feet. This month, they increased the limit another foot to 47 feet.

Each foot of draft allows a typical coal ship in Baltimore to load an additional 2,400 tons of cargo. Before the dredging, the typical coal ship with a carrying capacity of 60,000 to 70,000 tons had to leave the port about 80 percent full. With the deeper channels, these so-called "Panamax" vessels (ships small enough to use the Panama Canal) can leave Baltimore fully loaded.

The increased draft also allows the port a better shot at attracting more of the large Cape-class vessels, according to Philippe Masiee, vice president of the W. J. Browning Co., steamship agents. While the biggest of these ships still cannot fully load in Baltimore, it is now possible for such a ship to take on a load of 125,000 tons or more here. That could mean more of those big ships would find it economically feasible to load coal in Baltimore, Mr. Masiee said.

Capt. Michael R. Watson, president of the Association of Maryland Pilots, said that his membership agreed to increase the draft to 47 feet at the end of September after his group received sounding reports confirming that the channels near the mouth of the bay were dredged to the prescribed depth. He believes the deeper channel system is the main reason Baltimore has been able to benefit from the current boom in coal shipments. "We're getting a flood of ships because of the 50-foot channel," he said.

Earlier this year, Conrail decided to close its coal terminal in Philadelphia and route the coal through the Consolidation terminal, in large part because of the deeper channel. That shift is expected to mean an additional 3 million tons will be handled in Baltimore annually.

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