Niche operators drawn to Baltimore waterfront

Strategy: While negotiating two big deals, port officials want to keep the small ones, too.


January 23, 2000|By Robert Little | Robert Little,Sun Staff

Olav Rakkenes says he loves Baltimore, and does Baltimore ever love Olav Rakkenes.

Mayor Martin O'Malley made the Norwegian businessman an honorary citizen of the city. State officials threw him a party at the top of the World Trade Center, and the governor came. With gifts.

When Rakkenes visited Baltimore in December, he was something special -- the head of a successful, respected shipping line who considered the port of Baltimore a good place to do business. He signed up his shipping company, Atlantic Container Line, for the longest deal in the port of Baltimore's history -- a 10-year lease, worth $100 million.

"We are very pleased with Baltimore," Rakkenes said, a complementary state drink in his left hand. "The reason is business. It's the port of choice for many of our customers."

That's just the image that Maryland's port officials hope will define the state's role in the international shipping business this year.

But 1999 was also the year that the port lost its largest deal ever -- a potential blockbuster contract from the Danish shipping line now called Maersk Sealand. That company is more successful and perhaps more respected than Atlantic Container Line. And it decided Baltimore was not the right place to do business.

Both developments point to the port's likely course for 2000 and beyond.

Small niche operators such as Atlantic Container Line are expected to grow in the port of Baltimore this year, attracted by the city's unique strengths and pleased with a state government that will work hard and spend money to have them.

But the large operators, the companies that could rebuild Baltimore into a major port city -- the Maersk Sealands of the business -- could be as hard to attract to the city as ever.

"Things are always moving in this business -- you're winning some deals, you're losing some," said James J. White, executive director of the Maryland Port Administration.

"But we have a solid strategic plan for growth, and we'll keep working to implement it."

The port's strategic plan, developed several years ago, calls for concentrating on maritime-related businesses that have become Baltimore's strengths. That means improving terminals and piers to attract ships hauling automobiles, paper products and construction equipment, while giving less emphasis to the shipping business' glamour trade -- containers.

Few people mentioned the strategic plan last year, when the state was offering the companies that have formed Maersk Sealand a $300 million new terminal to build a hub here for container cargo. The shipping lines chose instead to remain in New York -- the market for most of the cargo -- even though Baltimore's offer was cheaper, its channels are deeper and the local longshoremen offered better terms.

But today, Maryland's port officials talk more about keeping existing container business than about trying to get more. One line, Mediterranean Shipping Company, started a new container service to South America last year, but others pulled out. Baltimore's share of the East Coast container cargo market has steadily dropped.

Final statistics for 1999 are not available, but Baltimore was on track to handle roughly 250,000 containers, about the same as in the previous two years. The major East Coast ports, such as Norfolk, New York and Charleston, S.C., saw container business grow as much as 10 percent.

"We have some work to do for containers," said White. "But we see some good signs that things are happening."

Thankfully for the port of Baltimore, not all segments of the shipping business are alike. Baltimore is a secondary port for container carriers, who demand speed and low vessel-operating costs, because it is so far from the ocean. But ships hauling less time-sensitive cargo such as cars, tractors and rolled paper typically care more about lease costs, service and how far a port is from consumers. Those businesses have warmed to Baltimore in increasing numbers.

"Sure, it's a long way, but we have to do it -- we have a lot of customers that demand Baltimore," said Rakkenes, whose company hauls automobiles, heavy machinery and containers.

The Maryland Port Administration began the year 2000 negotiating two large deals, both of which should be finalized soon and either of which could make this a banner year for the state's public marine terminals.

One involves the port's favorite commodity -- automobiles. The Scandinavian shipping company Wallenius-Wilhelmsen Lines wants to build a new East Coast hub -- the largest U.S. terminal for the largest company in the auto-shipping business.

Wallenius-Wilhelmsen is among the port's biggest customers, and it has an offer from the state for reconditioned berthing and wharf space. It is negotiating with area longshoremen, and a decision is expected within months.

But before that, the Finnish paper manufacturer UPM-Kymmene is expected to announce whether all of its imported magazine paper -- as much as 1 million tons a year -- will go to Philadelphia or Baltimore.

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