Controversial carrier Shipper: Baltimore's port is bullish on Cosco, but others regard the Chinese line as a rogue business and a threat to national security.

November 08, 1998|By Robert Little | Robert Little,SUN STAFF

In a port city that many of the world's largest steamship lines have abandoned, the arrival of China Ocean Shipping Co. four years ago was like a transfusion of fresh blood. As other container ships left Baltimore, "Cosco" sailed in. As lines reduced service, Cosco expanded.

"They're definitely one of our top carriers," said Mark Johnson, the Maryland Port Administration's deputy marketing director. "We're very happy they're here.

But not all of America is so bullish on Cosco these days.

Washington policy-makers consider the company a threat to market capitalism and national security. Its rates are restricted, its trade in American ports monitored. The company has been embroiled in national controversies ranging from a crash in New Orleans to gun smuggling in San Francisco. A task force of the U.S. House of Representatives calls Cosco a thinly veiled arm of the Chinese military.

Cosco is far different than any other ocean carrier plying Baltimore harbor and the rest of the world -- it is the state-owned shipping line of the People's Republic of China. And company officials say its Chinese ownership is the sole reason the carrier is treated so differently in the United States. Cosco is today at the center of Sino-American trade disputes involving everything from the soaring American trade deficit to the kinds of bugs shipped with Chinese cargo.

But amid it all, the Beijing-based shipping giant continues to sail the globe, calling in virtually every major port and growing into one of the largest, cheapest and most successful shipping lines in the world. What Washington policy-makers call a threat, port cities like Baltimore call a growing, innovative company that they welcome without hesitation.

"We cannot help feeling discriminated against," Cosco officials said in a statement last month. "The fact that Cosco has operated under accepted business practices has been ignored."

Officials with the Maryland Port Administration aren't ignoring Cosco.

The line was among the first container carriers to connect Asia with the East Coast via the Suez Canal rather than the Panama Canal, a service that gives Baltimore a direct link with the Mediterranean Sea and the Far East.

The company made Baltimore a regular stop on its Atlantic service at the end of October, promising a ship in port every Wednesday and more than 270,000 tons of cargo moving through the Seagirt Marine Terminal each year. The company is reportedly considering a new service between the East Coast and South America.

Baltimore port officials make regular visits to Cosco's American offices near New York. A delegation from Maryland followed the Pride of Baltimore II to Shanghai last April to play host to Cosco officials and encourage them to sign a new contract with the port when their current arrangement expires next year.

With two container ships at Seagirt every week, Cosco brings the Port of Baltimore about 50,000 containers of cargo every year. The time the two ships spend in port amounts to about 1,000 man hours of work each week for longshoremen and other laborers, the Maryland Port Administration estimates.

Besides the container ships, the company's bulk vessels are routine carriers of cargo like paper products and dry bulk through Baltimore. Cosco's is the largest fleet of bulk vessels in the world.

But while Cosco has long been a conspicuous presence in the English-speaking media, the focus rarely has been on its contributions to the nation's economy.

Several years ago it reportedly lent $120 million to the failing Orient Overseas shipping line, run by shipping tycoon C. H. Tung. A committee of Beijing loyalists later elected Tung the first Chinese governor of Hong Kong, prompting cries of cronyism from the city's more democracy-minded officials.

In February 1996, a Cosco ship unloaded 2,000 dismantled AK-47 assault rifles in San Francisco that were allegedly destined for American street gangs. The smugglers were not Cosco employees -- they used a fraudulent American import license and were later jailed by the government in Beijing -- but it took American agents posing as Miami crime figures to unravel the operation.

In December of that year, a Cosco ship sailing the Mississippi River crashed into a Rouse Co. shopping mall in New Orleans, injuring 116 people. The U.S. Coast Guard later determined that the ship's engine had stalled because of inadequate maintenance.

All of those stories became fodder for Cosco's critics in Congress when the company asked last year for permission to build a $200 million cargo terminal at a former U.S. Navy base in Long Beach, Calif. Congress rejected the plan recently after some members argued that the facility would be tantamount to a Chinese naval base on American soil.

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