Maersk, port adjust contract Change reflects shipping line's diminished volume


December 17, 1997|By Suzanne Wooton | Suzanne Wooton,SUN STAFF

The Maryland Port Administration and Maersk Inc. have renegotiated a contract that reflects the Danish steamship line's significantly reduced service at the port of Baltimore.

The latest contract replaces an unprecedented 10-year deal that Maersk signed in 1991, agreeing to bring 30,000 containers and 50 ships a year to the port, in exchange for highly favorable terms for using services at the state-owned Dundalk Marine Terminal.

Last year, however, Maersk broke that contract after it formed an alliance with Sea-Land Service Inc., another steamship line, and shifted much of its service from Baltimore to Norfolk, Va., where Sea-Land is dominant. Once one of the largest steamship services here, Maersk now calls at the port of Baltimore only sporadically, its vessels often bypassing Baltimore as they steam up the East Coast en route to Europe.

"We wanted to put together a lease that reflected reality rather than what was 10 years ago," said Tay Yoshitani, executive director of the MPA, which operates the state's public marine terminals.

The latest agreement calls for Maersk to move a minimum of 20,000 containers and 30 ships per year, excluding barges. The agreement provides no assurance that Maersk will continue serving Baltimore, but it calls for a penalty of $250,000 if the carrier cancels within the first four years of the contract.

In the meantime, Maersk will pay a penalty of $100,000 for failing to meet the terms of its original lease in 1996. Any other penalties for the remaining four years of the 10-year lease have not been determined, the MPA said.

The MPA operates the state's six public marine terminals and sets the rates for the use of cranes, docks and other facilities. Discounts typically are given to lines with greater volumes. At one point, Maersk brought 120 ships a year to Baltimore.

While the loss of revenue from Maersk is important, the decline in work for longshoremen and other port workers was even more significant. Port officials are hoping to preserve whatever Maersk business they can.

"Their presence obviously has declined quite a bit, but Maersk-Sealand is a very significant player and they seem to be doing very well," Yoshitani said. "We hope some of their success will spill over to Baltimore."

Pub Date: 12/17/97

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