The port of Baltimore lost its bid to become an East Coast powerhouse yesterday, as two of the world's largest shipping lines announced they will pass up an offer from Maryland and build a major new terminal in New York Harbor instead.
Despite Maryland's promise of cheap labor, deep water and a new 330-acre facility in Dundalk, officials with Maersk Inc. and Sea-Land Service Inc. said the port of Baltimore could not overcome New York's advantage as the largest consumer market in the country.
The Maersk/Sea-Land contract was considered the port's best opportunity in a generation to stem its gradual decline. The deal would have tripled the container cargo business through Baltimore, created thousands of jobs and re-established the city as a major destination for international trade.
The port of Baltimore suffered from the same affliction of geography that has caused it to steadily wither the last two decades: It's in Baltimore, too far from the major markets and deep oceans that drive the modern trade in waterborne commerce.
"Baltimore's offer was very competitive. For the past few weeks, it could have gone either way," said Tommy Thomsen, president of Maersk. "But we were not convinced, in the end, that it would be in the best interests of our customer base."
Officials in Maryland tried to mask their disappointment, calling the port of Baltimore's status as a finalist proof of its future viability.
"Obviously, we're disappointed," said state Transportation Secretary John Porcari. "But if Baltimore wasn't taken seriously before, every major steamship company has to take us seriously now."
The shipping lines' decision to build in Elizabeth, N.J., needs the approval of the governors of New York and New Jersey, who have stalled contract negotiations as they quarrel over the structure of their bi-state port authority. But both governors expressed delight at yesterday's announcement, and Thomsen said, "We do believe it will be resolved."
Maersk and Sea-Land rejected an initial offer from New York and New Jersey last September, but New Jersey Gov. Christine Todd Whitman added $120 million to the offer last month.
Maryland officials said yesterday that they consider Baltimore's offer superior. They had promised to clear away half of the Dundalk Marine Terminal for the two shipping lines, and to build cranes and warehouses, reconstruct bulkheads and deepen the Patapsco River. The combined cost would have been $250 million or more.
The Maryland Port Administration offered to lease the new facility to Maersk and Sea-Land at rates rumored to be well below the industry norm, and locked in for 25 years or more.
Baltimore's longshoremen agreed to every wage and hour concession the lines asked for, and promised to top any offer from workers in New York. Baltimore's bay pilots offered a 20 percent rate discount, and the state threw in free World Trade Center office space.
The shipping lines asked for a mile of berthing space and as many as a dozen modern gantry cranes, and because Baltimore planned to renovate a marine terminal, it could have provided the new facility quickly and relatively inexpensively.
"We won this thing hands down on the facility and labor side," said James White, executive director of the Maryland Port Administration, which operates the state's public marine terminals. "What really killed us was the railroads."
More than half of the cargo shipped in the Northeast by Maersk and Sea-Land either originates from or is bound for New York, so Baltimore needed new rail connections to ship the cargo north. The cost of moving cargo containers to and from Baltimore over ground proved to be the city's most formidable disadvantage, Thomsen said.
Baltimore did offer something New York couldn't: 50-foot-deep shipping channels. Channel depth was a prime demand of the shipping lines, necessary to accommodate the huge next-generation ships that the lines plan to use.
New York harbor officials have promised to dredge their channels to 45 feet by 2004 and 50 feet by 2009, but the work will cost up to $2 billion. If the target dates are not met, Sea-Land and Maersk "may have to look at alternatives," Thomsen said.
The Maersk/Sea-Land terminal in Baltimore could have created 3,000 direct jobs, placed 750,000 cargo boxes on the city's railroads and highways, and made the city into an import-export hub for industries throughout the Eastern United States.
Anirban Basu, an economist who follows Maryland for the Regional Economic Studies Institute at Towson University, lamented the loss.
"That's terrible. That could have fueled a lot of growth, not just in shipping but in many transportation industries -- trucking, distribution, logistics, the airport," Basu said. "It would have created jobs in many sectors of the economy. It truly is a sad day."
Maersk, a division of the A.P. Moller Group in Copenhagen, Denmark, and Sea-Land, a subsidiary of CSX Corp. in Richmond, Va., share vessels and port space throughout the world, and they announced last summer their intention to build a new hub port in the Northeast to consolidate most of their cargo. The two lines call in several East Coast ports, with the bulk of their operations in Elizabeth, N.J.
In December, the shipping lines narrowed their choices to Baltimore, Elizabeth and Halifax, Nova Scotia, rejecting Norfolk, Va., Boston and other contenders. Halifax was eliminated as a contender for all of Maersk's and Sea-Land's business, because it is too far from markets on the U.S. East Coast.
Pub Date: 5/08/99