Stiff head wind blowing as port sails into 2003

State's financial pinch coming at a bad time

Port of Baltimore

January 12, 2003|By Paul Adams | Paul Adams,SUN STAFF

Since unveiling a new diversification strategy four years ago, the port of Baltimore has attracted enough automobiles, farm tractors, paper and other niche cargo to keep the city's waterfront business growing despite a sluggish global economy.

But port business leaders say the pace of activity will slow in 2003 as the economy continues to limp along and a state budget crisis hinders plans to expand public marine terminals.

Maryland has spent tens of millions of dollars in the past two years to land long-term contracts with key shipping lines and manufacturers, resulting in a surprising space crunch at formerly underused port facilities. Without money for expansion, any new business could pose logistical challenges, officials said.

"We're looking at other properties right now, but we're coming into a very difficult period here for the state of Maryland," said James J. White, executive director of the Maryland Port Administration, which oversees state-owned terminals. "Everybody is going to be standing in line [for money] and saying, `How about me?' And believe me, I'll be waving my hand, too."

The state's financial constraints come at a time when the port is enjoying a level of stability that was absent during much of the 1990s, when rival East Coast ports gradually stole market share from Baltimore in a fierce competition for lucrative cargo that comes packed in steel containers.

To reverse the trend, Maryland transportation officials targeted alternatives, such as automobiles, farm tractors and other machinery that is rolled on and off ships, forest products and other noncontainerized cargo.

The strategic plan has gradually yielded results. The port administration signed a 20-year deal with Scandinavian shipping line Wallenius Wilhelmsen in 2001 that has transformed the Dundalk Marine Terminal into a hub for roll-on/roll-off cargo. The business was up 8 percent in the first half of 2002, and Baltimore's share of the East Coast's roll-on/roll-off market topped the 50 percent mark for the first time. So far, the state has spent $14 million on terminal improvements related to the contract and is working on plans for the next phase.

However, White and shipping analysts said this year will be tough for roll-on/roll-off carriers as the industry continues to consolidate and users of big-ticket items, such as heavy machinery, put off new purchases as a result of the slow economy.

"I see in discussions with some of the carriers that the market as far as volume goes is pretty flat right through [2003]," White said.

The port's automobile business faces a different kind of challenge. The port's auto terminals are so packed that officials say there isn't enough room to handle another major contract. Vehicle-processing companies in Baltimore signed a series of deals with manufacturers during the past two years, making Baltimore the No. 2 auto port on the East Coast with about one-fifth of total market share.

"The problem in Baltimore is that we are just not going to be able to handle the growth in any new business with the existing facilities," said Jim Davis, chief executive officer of Amports, the port's largest handler of automobiles.

The prospect for more automobile cargo is strong enough that transportation officials barely flinched when Toyota announced last year that it was moving most of its Baltimore business to New Jersey. Several companies - including Amports - are bidding to take over the 44-acre Toyota facility and fill it with new and existing business. "The growth ability is there," Davis said. "It's not pie in the sky."

Port officials are hoping to break ground this year on an expansion of the state-owned Masonville auto terminal, which is adjacent to the Toyota facility. But that project would take 18 months and cost about $12 million. ATC Logistics, the auto-processing company that leases the facility, has said it wants the additional space.

Expanding the auto terminals also will have to compete with plans to build more warehouse space for the port's growing paper, pulp and lumber imports. The port handled 1.03 million tons of forest products in fiscal year 2002, which ended in June. That's a nearly 27 percent increase over the previous year. Port officials have plans to build an additional 500,000 square feet of shed space during the next two years to accommodate more paper from overseas manufacturers.

The port's main container terminal remains one of the few facilities with room to grow. In May, the port administration took delivery of six gantry cranes that enable longshoremen to stack cargo containers higher and more densely, effectively expanding capacity at the Seagirt Marine Terminal using existing space. Each mobile crane cost about $1.2 million.

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