Battle of the ports, Act 2

March 12, 1995|By Suzanne Wooton | Suzanne Wooton,Sun Staff Writer

It's a high-stakes, high-seas battle, a constant tug-of-war for ships and cargo.

Baltimore vs. Norfolk. The two cities have been at it for years -- fighting hard to keep each other from steaming too far ahead.

After whipping Baltimore for most of the last decade, Norfolk's lead has slipped considerably during the past couple of years. Determined not to repeat Baltimore's legendary plunge of the '80s, Norfolk is striking back.

In the ever-shrinking steamship industry, with major carriers calling on fewer and fewer ports, the bruising battle can only intensify between the mid-Atlantic ports, situated just 180 miles from each other at either end of the Chesapeake Bay.

"What we're seeing now is Act Two of a drama that started 10 years ago," said Richard A. Lidinsky, former official at the Maryland Port Administration (MPA) and now a Washington maritime lobbyist. "It's a continuing game now played under some different rules. It's going to be a tough slug ahead."

Last week, Baltimore suffered at least a temporary setback. The top Maryland Port Administration official, Michael P. Angelos, resigned in the midst of a federal investigation into his trading of stock in a Baltimore banking company. The administration's second-in-command, Deputy Director G. Gregory Russell, involved in the same probe, also stepped down.

So far, operation of the port's five public marine terminals and movement of cargo have remained unaffected by the internal agency upheaval. But the high-level turnover -- representing the sixth shift of power at the MPA in the past 10 years -- signals uncertainty to shipping world executives who rely heavily on personal relationships.

The flap also plays into the hands of Virginia port officials, who already had been revving up their the war of words.

"I'm not some cocky, little jackass down here on the East Coast who thinks he's got it made," J. Robert Bray, longtime executive director of the Virginia Port Authority, said in a recent interview in Norfolk.

"There's only one goal for us and that's getting cargo to Virginia," he said. "When we go out to compete, we die on the cross to get it here."

It was that kind of tenacity that characterized Mr. Bray and Joseph A. Dorto Jr., the head of Virginia International Terminals Inc., as they spearheaded Norfolk's dramatic growth from the seventh- to second-largest port along the East Coast.

During the 1980s and early '90s, with Baltimore beset by labor strikes and management problems, Norfolk lured nearly two dozen steamship lines to Norfolk. Between 1984 and 1994, cargo in Norfolk soared to almost 8 million tons a year from 3 million, while Baltimore's dropped from 6.7 million tons to 6.3 million.

Indeed, except for a one-year blip, Norfolk has been on a joy ride since 1982, when Virginia consolidated port facilities in Hampton Roads. At the time they were owned by different agencies, individual cities and private companies, and the merger placed them under a single state agency, the Virginia Port Authority, with the Virginia International Terminals Inc. as the operating arm.

At the same time, the port teamed up with Norfolk Southern Corp., which aggressively capitalized on rail deregulation by undercutting competitors in Baltimore. With full employment, the newly created Ports of Virginia also enjoyed labor-management harmony that was the envy of Baltimore and other northeastern ports.

Out of desperation, Baltimore learned a lesson.

"They got hungry and aggressive and the pendulum began to swing the other way," said one executive for a major steamship line that serves both ports.

In a flurry of steps aimed at stemming the loss of business, Baltimore opened glitzy new terminal facilities, stepped up marketing efforts, eased work rules for dockworkers and patched up a notoriously bad labor-management image.

Last year, the port of Baltimore handled 6.8 million tons of cargo while Norfolk and the other Hampton Roads port facilities moved nearly 8 million. Two years earlier, that difference had been twice as large.

"It's probably one of the more remarkable turnarounds that I've seen in the port industry in a long, long time," said Leo Donovan, senior partner with Booz, Allen consultants in McLean, Va. "Norfolk is still in the lead, but the gap has closed."

And now Norfolk is even showing the same signs of strain that affected Baltimore in the early 1980s, when it rode the crest of full employment.

Last fall, longshoremen there overwhelmingly rejected management's first-ever request to reduce labor rates on break bulk commodities, such as rubber and cocoa beans, to compete with nonunion ports to the south, such as Charleston and Savannah.

"They [the longshoremen] are too fat and happy," said Johnnie J. Johnson, chief negotiator for the Hampton Roads Shipping Association, which represents the port's major employers. "Baltimore's a good example of having to hit rock bottom before you start coming back up."

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