State transportation officials are close to signing a 20-year, multimillion-dollar deal with a major shipping line that will accelerate the port of Baltimore's transformation into an East Coast powerhouse for automobiles, farm tractors and other specialized cargo that can be rolled on and off ships.
If realized, the deal will bring new jobs and revenue to the port, while also lending added credibility to the state's 1996 strategic plan to attract a combination of automobiles, forest products and other niche cargo to Baltimore in hopes of reversing the port's decade-long decline.
The proposed agreement, which is slated to be considered by the state Board of Public Works on Wednesday, calls for Scandinavian shipping company Wallenius Wilhelmsen to lease a new state-financed terminal facility and bring a minimum of 2.4 million tons of cargo to Baltimore during each of the five four-year periods contained in the initial 20-year lease. The $1.4 billion shipping line is one of the port's largest customers and one of the world's largest carriers of automobiles and heavy equipment.
In documents filed with the BPW, the port describes the potential deal as the "largest commitment by a steamship company in the history of the port of Baltimore." Baltimore handles about 500,000 tons of roll-on/roll-off cargo annually, placing it third among East Coast ports.
Officials with the port and Wallenius Wilhelmsen stressed that a final deal has not been reached and that terms outlined in public documents could change as negotiations continue.
"We've been working on this for two years, and we're reaching the homestretch," said Gary Jones, vice president for Wallenius Wilhelmsen's North Atlantic division.
Port officials say they are hopeful the agreement will be final by the end of the month.
"Right now, we expect it to stay on the [Board of Public Works] agenda," said Kate Philips, a spokeswoman for the Maryland Port Administration.
Negotiations began after Wallenius Wilhelmsen approached the port about consolidating much of its East Coast business in Baltimore. The deal calls for state officials to construct a 50-acre load center at the Dundalk Marine Terminal that could be expanded by up to 100 acres in coming years.
Port officials had once hoped to attract a major container shipping company to the terminal, but that deal fell through last year despite the state's pledge to spend more than $300 million to attract the business. Industry observers say the port's recent efforts to attract niche cargo are a partial recognition that the lucrative but fickle containerized cargo business has passed Baltimore by.
Wallenius Wilhelmsen unloads cargo at several terminals within the port, requiring ships to move frequently between terminals to unload cargo. The new facility would allow the company to save time and money by unloading all of its cargo at one location.
Documents filed with the BPW say the lease will be for 20 years, but gives Wallenius Wilhelmsen the option of renewing for three additional five-year terms.
As structured, the first phase of the two-part agreement calls for the port to build a 120,000-square- foot cargo shed and make other improvements to the 50-acre site at Dundalk. In the second phase, the port would expand the facility by up to 100 acres and potentially construct another 100,000 square feet of shed space. State transportation officials have set aside up to $12 million to pay for phase one of the project.
In its BPW filing, the port estimates annual revenue from the initial phase will be about $1.2 million and revenue from the second phase will be $2.9 million.
It is uncertain how many jobs will result from the agreement, though port labor unions say they expect to see their man-hours increase if the deal is finalized.
Labor unions played an important role in bringing Wallenius Wilhelmsen to the table. The shipping line initially complained that restrictive labor rules would hamper any deal with the port. Some local longshoremen, who were skeptical that the company would follow through on certain promises, initially voted down a contract agreement that contained work rules favored by the company. Further negotiations last summer led to a contract that contains much of the flexibility the shipping company was seeking.
"Labor has done its part in the attempt to acquire this new work, and we're just waiting for the Board of Public Works and the Maryland Port Authority to take care of their end," said Clifton Gross, president of Local 333 of the International Longshoremen's Association. "We're waiting for the work to come."
Rupert Denney, president of the Maryland Maritime Association, said any increase in cargo volume will help the port maintain its critical services, such as those provided by tugboat companies, cargo handlers and equipment vendors. The association represents port business interests.
"It gives the port a vibrancy and a level of service that we might not get if we get below a certain [cargo volume] level," he said.