Maersk signs 10-year lease cargo declines at port

November 06, 1991|By John H. Gormley Jr. | John H. Gormley Jr.,Sun Staff Correspondent

ANNAPOLIS -- It was a rare day for Gov. William Donald Schaefer yesterday -- the chance to bask in the warm glow of the success of the port of Baltimore.

"It's a historic day for the port of Baltimore," the governor said at a State House news conference called to announce that Maersk Line, one of the world's foremost steamship lines, had agreed to sign a 10-year lease at the port.

"I'm very pleased," the governor said, calling the lease evidence of progress the port has made in resolving its problems.

The news conference was held against a backdrop of mixed news for the port. The Maryland Port Administration reported general cargo tonnage moved over state-owned piers declined in the third quarter by 6.7 percent, after two straight quarters of growth the port managed to post despite the recession.

The MPA also reported making progress during the quarter in reducing its $5.5 million deficit it has projected for the fiscal year that ends in June. During the first fiscal quarter, which ended Sept. 30, the port agency ran up a deficit of $460,000, or about 40 percent less than the original forecast of a deficit of $789,000 for the quarter.

No other steamship line in Baltimore has ever signed as long a lease as Maersk's. Jorgen A. Engell, the line's executive vice president, said, "We've done it because we believe in the future of the port of Baltimore."

Most of those attending the news conference -- mostly maritime executives and port officials -- were well aware that the negotiations with Maersk were long and difficult. Mr. Engell got a laugh when he observed, "Nobody will accuse us of making a hasty decision."

In a sense, the lease affirms the status quo. Maersk Line, which has been calling at the port for about 60 years, will continue to JTC bring its ships up the Chesapeake for another 10. But to the governor and others who have struggled to revive the port's sagging fortunes, the agreement marked a huge psychological victory. Maryland Transportation Secretary O. James Lighthizer put it this way: "First-rate companies don't call at second-rate ports."

In another sense, the lease is a big departure, since it includes an agreement that will allow Maersk stevedoring arm Universal Maritime Service Corp. to operate its own terminal within Dundalk Marine Terminal.

That arrangement will give Maersk much greater control over its cargo operations at the port. The result, Maersk hopes, will be better and faster service for Maersk and other steamship lines using the terminal.

The labor climate is one of the reasons the outcome of the negotiations was far from certain. Baltimore has had a very troubled labor history in the last few years, logging two strikes in 1990. This year, however, has been marked by a truce among the leaders of International Longshoremen's Association, management and the state.

Adrian G. Teel, executive director of the MPA, refused to say how much he will be able to reduce the agency's $5.5 million projected deficit.

Port officials said that the disappointing cargo report was a result of the recession catching up with the port. Exports moving through the port continue to increase, although less dramatically than during the first half of the year. Export steel, for example, grew by 38.5 percent, and export autos were up 40 percent.

But those gains could not offset a big drop because of lower domestic consumption. Total container traffic, the port's bread and butter, was off 6.6 percent for the quarter.

For the first nine months of the year, general cargo moving over state piers is still ahead of last year by 1.3 percent.

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