Port's top line ready to sign 10-year lease Length of contract with Maersk seen as a major boost

November 03, 1991|By John H. Gormley Jr.

In a vote of confidence in the port, Maersk Line has agreed to lease terms that will keep its ships coming to Baltimore for 10 more years, according to sources familiar with the negotiations.

Maersk is by far the most important container line in the port, moving more than a half-million tons a year -- about one in every seven containers handled on state piers.

The normal term of a lease for a steamship line in Baltimore is three years. The willingness of Maersk to sign one for 10 years is a big boost for a port that has watched its business steadily erode over the past few years, with most of the lost traffic heading south to Virginia's ports at the mouth of the Chesapeake Bay.

When Maersk's current lease expired earlier this year, its future here was very much a question mark, since just two years ago Maersk shifted a third of its ships from Baltimore to one of those Virginia ports, Norfolk.

But instead of shifting the rest of its business to Virginia, the line reportedly has agreed to a 10-year lease, a duration that is without precedent for a steamship line in Baltimore.

"If it's true, it's wonderful news," said John T. Menzies III, chairman of a group of maritime industry executives that advises the state port agency. "It's a wonderful affirmation of Baltimore's potential as a port."

One source said Friday that the Maryland Port Administration had reached agreement with Maersk. Another source confirmed yesterday that the state and the line had agreed to terms, although all the legal documents had not been signed.

Gov. William Donald Schaefer is expected to announce the Maersk agreement Tuesday at a news conference in Annapolis. The governor's office has said that Mr. Schaefer will make an announcement concerning the port but has declined to specify the topic.

David L. Bindler, Maersk's regional director in Baltimore, also declined yesterday to confirm that an agreement had been reached. He did say that a high-ranking official of the Danish steamship line, Executive Vice President Jorgen Engell, will be in the Baltimore area tomorrow and Tuesday.

Signing up Maersk was essential to the future of the port, one source said. If Maersk had left, he said, "it would have been the beginning of the end" for Baltimore "as a major mid-Atlantic seaport."

Given Maersk's reputation as one of the best-managed operations in the maritime industry, the line's departure would have made it difficult to retain lines or to attract new lines to Baltimore. Other companies, the source said, would have asked themselves, "If the big boy doesn't want to be there, why do we?"

The Maersk agreement should be a huge psychological boost for the port, demonstrating that it can compete with Virginia in the high-stakes battle for big shipping lines and the economic benefits they bring.

"One of the real crises we've wrestled with is, 'Can we make it? Is there some fatal flaw?' This is evidence there isn't some tragic defect in what we offer," Mr. Menzies said. "Baltimore is not dead."

The message to other lines should be persuasive because of Maersk's reputation for thorough analysis of its options and because of its deep understanding of actual conditions in Baltimore, Mr. Menzies observed.

"This isn't a customer we've seduced. It's someone who's here and knows what we're capable of doing," he said.

It was beginning to appear that the port's location -- 150 miles north of the mouth of the bay and the Atlantic Ocean -- was a fatal flaw. In the last five years, several major lines had concluded that the business they were doing in Baltimore was not worth the expense of traversing the bay.

Capt. Michael R. Watson, president of the bay pilots who guide ships through the system of channels leading to Baltimore, said Maersk's decision shows that the cargo to be gained here more than justifies the long trip up the bay.

"It demonstrates Baltimore is a perfectly situated and centrally located port for cargo," he said. "The cargo is flowing here, and the steamship lines are coming here to get it."

The other flaw that often seemed fatal was labor turbulence at the port. Maurice C. Byan, president of the Steamship Trade Association of Baltimore Inc., said the Maersk decision would help to validate the progress labor and management have made in bringing greater stability to the port.

"There are indications the port is doing something right," he said. "This really improves our chances of attracting other lines back."

Asked to rank the importance of the Maersk agreement, he replied, "On a scale of 1 to 10, this is a 15."

Keeping Maersk in Baltimore will mean preserving the line's substantial contribution to the local economy.

According to an economic impact study done for the Maryland Port Administration, 12 jobs are produced directly for every 1,000 containers moved through Baltimore. That would mean that the 35,000 containers handled by Maersk per year would generate more than 400 jobs. An additional 300 jobs would be produced indirectly.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.