Port trying to lure 2 lines Sea-Land and Maersk consider relocating from N.Y. and N.J.

May 23, 1998|By Kevin L. McQuaid and Shanon D. Murray | Kevin L. McQuaid and Shanon D. Murray,SUN STAFF

The Maryland Port Administration is working to lure two of the world's largest steamship lines to the area, a move that could create hundreds of jobs and stem the loss of shipping companies that has shrunk the region's once-mighty terminals.

The MPA's bid for Sea-Land Service Inc. and Maersk Inc. comes as the two lines are considering relocating from New York and New Jersey because of stalled contract negotiations with port authorities there.

Sea-Land and Maersk, which sent letters to seven ports asking for expressions of interest, are considering consolidating their operations into a single service center in the Northeast.

"We're looking at the most efficient ways going into the next century for us to operate our network," Chris Koch, a Sea-Land spokesman in Charlotte, N.C., said yesterday.

"The business has become so brutally competitive that the only way for us, in turn, to remain competitive is to focus on cost."

For Baltimore, a Sea-Land/Maersk commitment would represent a homecoming. Sea-Land, a CSX Corp. subsidiary, left the area for Norfolk, Va., about four years ago. Maersk moved most of its operation away shortly thereafter.

In addition to Baltimore, the ports invited to bid for the business include Halifax, Nova Scotia; Boston; Philadelphia; New York; and Norfolk.

Company officials also approached Rhode Island about bidding, because state officials there are working to convert a former naval base to a port facility.

Luring Sea-Land and Maersk away from New York could be extremely lucrative for the MPA, which operates five public terminals, including Dundalk Marine Terminal and the Seagirt Marine Terminal.

"It would be a massive undertaking," said Linda Jordan, a spokeswoman for the MPA, which last week made a presentation to the companies expressing interest in the project. "It could conceivably create hundreds of new jobs. But we would have to consider what investment would have to be made."

For instance, she said, the Sea-Land/Maersk team would likely require a facility at least as large as the Seagirt terminal, which opened in 1990 at a cost of $200 million.

In New York, the two companies, which operate together under a vessel sharing agreement," employ 600 longshoremen and handle about 500,000 containers of cargo annually -- about one-third of all cargo shipped there. By comparison, the MPA's facilities collectively handle about 300,000 of the 20-by-40-foot steel boxes each year.

Negotiations between the Porty Authority of New York and New Jersey and the companies have broken down because the states want to raise the $10 million a year in rent that is paid to them. Port officials there claim the raise is justified because the .. rent in the leases -- which were written decades ago -- fail to address basic cost increases.

The companies contend that increased rents would hurt their business.

Several ports are banding together to pressure shipping companies to maintain rental rates. Most recently, Charleston; New York; Baltimore; Savannah, Ga.; Wilmington, N.C.; and Norfolk, Va., signed a five-year pact to share information and work together. That agreement, filed with the Federal Maritime Commission, was a response to a recent wave of mergers and alliances among shipping lines.

"A conference like this strengthens the abilities of ports to respond to the demands of steamship lines to reduce rates," Jordan said.

"Now, steamship lines can shop between several ports for their service and can play one port off against another. With this alliance, the ports can act as a solid group and agree on one price -- if they choose to -- so everyone can earn enough revenue to cover costs."

The battle lines will likely be drawn very soon. Sea-Land's lease expires in February 1999 and Maersk's lease expires in November 2000.

The two companies expect to decide in the summer whether to relocate or remain in New York and New Jersey.

"Baltimore has a lot of advantages and inherent disadvantages," Koch said. "We'll just have to see what they come up with."

Koch said the two companies will consider work force, dredging issues and rail line connections in making a decision.

Pub Date: 5/23/98

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.