Bay pilots seek 11.6% rate rise

Projected added cost for ship operators is $2.2 million a year

PSC's OK is required

Group of 62 pilots says money is for pay, new equipment

September 07, 2001|By Paul Adams | Paul Adams,SUN STAFF

In a move that will likely meet resistance from the port community, the 62 pilots who guide cargo ships from the ocean to Baltimore's doorstep filed for an 11.6 percent rate increase yesterday to pay for new equipment, training and pay raises.

The Association of Maryland Pilots projected that the new tariffs would cost ship operators doing business in the port of Baltimore an additional $2.2 million per year.

The proposed rates are subject to approval by the state Public Service Commission, which also regulates utilities.

"We will still be way below the East Coast average and the Gulf Coast average," Capt. Eric Nielsen, president of the bay pilots association, said, referring to pilot pay.

Since 1787, state law has required ships entering the port to be guided by pilots able to navigate the bay's shipping channels. Bay pilots make about $174,000 per year, Nielsen said, while comparable pilots in some Louisiana and Florida ports receive more than $300,000.

The proposed increase comes after months of controversy surrounding a much larger rate increase for state docking pilots, a group separate from the bay pilots.

That dispute, which prompted a state rate inquiry, was resolved recently after port business leaders agreed that rates charged by the 10 pilots who guide ships to berth are reasonable in light of increased operating costs.

With the port scratching for all the new business it can get, the port community historically has fought increased piloting costs, arguing that it could cause some shippers to take their cargo elsewhere.

But port officials anticipate less controversy over the bay pilots' proposed rate increase, which has been widely expected during the past year and is less than previous requests.

"While we obviously resist any rate increase from any of the vendors, we do believe that with both pilots associations right now there's an atmosphere of dialogue and cooperation," said Rupert Denney, president of the Maryland Maritime Association, a trade group that represents shipping agents.

State transportation officials had not seen details of the proposed rate increase yesterday. But a spokeswoman for the Maryland Port Administration, which operates the port's public marine terminals, said any change in pilot rates could affect the state's marketing efforts.

"Any increase on any of the various fees that are included in shipping are going to impact how we market the port," said Kate Philips, the port administration's spokeswoman.

While Maryland pilots charge competitive rates per mile, ship operators visiting Baltimore pay some of the highest piloting fees on the East Coast because of the port's distance from the ocean. While pilot fees generally account for less than 1 percent of the overall cost to ship goods, ocean carriers factor those costs in when deciding which ports to call.

The bay pilots last filed for a rate increase in August 1997. After several months of negotiations, pilots and business leaders agreed to a three-year deal that increased rates 5 percent in the first year and 4 percent in each of the two remaining years.

The agreement, later approved by the PSC, was expected to raise the pilot association's annual revenue to $19.8 million by 2000. But actual revenue came in at less than $18.9 million, or about $1 million shy, as a result of changes in the shipping industry. The pilot's new request for a rate increase stems in part from that shortfall.

If the PSC approves the increase this year, about $850,000 of the projected $2.2 million increase in pilot revenue would pay for an 8.5 percent pay raise for the association's active and retired members.

Because the group has not received an increase in two years, the raise would actually amount to about 4 percent per year, Nielsen said.

Most of the additional revenue - about $1.6 million - would be used to pay for two new launches used to ferry pilots to and from ships. The association is hoping to replace launches built in the early 1980s.

Another $730,000 would go toward the purchase of new global positioning equipment, laptop computers and specialized software that pilots use to guide ships through narrow shipping channels in the Chesapeake Bay and the Chesapeake and Delaware Canal.

The association's existing stock of laptops is rapidly becoming outdated and there aren't enough for all the members.

Nielsen said equipping pilots with the updated equipment is a matter of public safety and would put the association on a par with other pilots on the East Coast.

"It's just a good safety feature that I think Maryland needs, too," he said. The pilots also are seeking about $46,000 to pay for advanced training courses, Nielsen said.

As a concession to port officials, the pilots have proposed to offer improved discounts for the port's heaviest users. Discounts for some shipping lines could climb as high as 20 percent under the new scheme.

Denney, of the maritime group, said the port community doesn't dispute the pilots' need for new equipment. But he suggested that some of the costs could be covered by reducing the number of pilots on the payroll.

Port business leaders have long argued that there are too many bay pilots to handle the diminished number of ships calling at Baltimore.

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