Maersk suspends service S. American cargo goes to Va.

move seen as step toward pullout

Alliance effects appear

Local dock workers, maritime industry will see loss of work

April 12, 1996|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

Maersk Inc., one of the largest steamship carriers at the Port of Baltimore, is suspending its weekly South American service here, underscoring long-held fears that the Danish giant intends soon to scrap the remainder of its service in Maryland as well.

The company said yesterday that the decision to shift its South American service to Norfolk, Va., is part of its continuing assessment about how to deploy the 175-ship fleet resulting from Maersk's recent alliance with Sea-Land Service Inc.

"It is not yet permanent," said Tony Chiarello, regional manager for Maersk in Baltimore.

But a pullout by Maersk has been widely predicted since its alliance with Sea-Land last year. And port officials believe the South America decision is final and will be followed shortly by the loss of far bigger Maersk ships that sail to Europe.

"Nothing is irreversible, but this is what I would consider a permanent decision," said Tay Yoshitani, executive director of the Maryland Port Administration, which operates the public marine terminals here. "If they stop calling South America, it doesn't make us particularly optimistic about the other routes."

Maersk had 52 ships a year in the South American service here. It currently schedules roughly that many to Europe, although its weekly European service has bypassed Baltimore a number of times recently.

The cutback means the loss of work for longshoremen who load and unload ships, and it creates a ripple effect within the local maritime industry for line handlers, tugboat operators, bay pilots and others.

The loss of the European service would have an even greater impact since those ships are much bigger and carry more cargo.

"We have made very aggressive proposals to retain their business," Mr. Yoshitani said. "But given what's happening with the alliance between Maersk and Sea-Land, this is part of their global strategy."

Maersk and Sea-Land last year formed an alliance that pools their ships, terminals and containers worldwide, producing a combined fleet of 175 ships and 500,000 containers and chassis.

In recent months, both companies have been analyzing how to integrate their networks to provide better global service. A decision on the remaining service here is expected by late May.

Baltimore is considered vulnerable because it takes ships 12 hours to move up the Chesapeake Bay -- a costly and time-consuming journey for steamship lines.

"The reasons are pretty clear," said Mr. Yoshitani. "The additional steaming time up the bay weighed heavily in their decision."

In contrast to Baltimore, the port of Hampton Roads, Va., -- encompassing Norfolk, Portsmouth and Newport News -- is just a couple hours from the Atlantic Ocean.

Mr. Chiarello said the shift to Norfolk will have no impact on customers' shipping cargo through the Port of Baltimore since Maersk will still provide barge service from here to its ships in Norfolk.

"There's certainly going to be an impact on the port," Mr. Chiarello said. "But as far as the customer is concerned, there's no difference."

Other steamship lines currently serve South America from Baltimore. Mr. Yoshitani said some of those could pick up part of the cargo that Maersk brings here.

Maersk and its subsidiaries employ 110 people in Baltimore, and the company estimates that it pumps at least $29 million a year into Maryland's economy.

Sea-Land is a subsidiary of the Richmond, Va.-based giant CSX Corp., which also provides rail and intermodal service at the Port of Baltimore.

Pub Date: 4/12/96

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