State, Finland's M-real to announce long-term pact

port expects '05 total paper imports of 700,000 tons

Port brings in scissors, rocks, a lot of paper


Stacked to the rafters in the sprawling metal sheds around the South Locust Point marine terminal in Baltimore are some of the basic ingredients of the American holiday shopping season: paper used to make glossy catalogs, cosmetics packaging, greeting cards and the cartons that hold 12-packs of beer.

Today, the state plans to announce that it has signed a deal with a Finnish company to bring enough of the rolls and piles to stuff the stockings of everyone in Baltimore with the equivalent of a half-ton of paper. The new contract will also cement the port's designation as one of the nation's top handlers of imported forest products.

M-real USA Corp., the U.S. arm of the Finnish company, signed a deal to double its annual imports into the port of Baltimore to more than 300,000 tons of paper. The contract could last for up to 18 years, an unusually long commitment for a port customer. Most contracts last several years.

"It was quite a big decision," said Cliff Kaufman, M-real USA's vice president of customer service and logistics, who came to Baltimore from Norwalk, Conn., for today's announcement. "This was a competitive deal."

M-real will begin importing the additional paper in February, diverting it from Philadelphia, another major port for paper products. The company expects to continue increasing its tonnage shipped to the United States if paper prices, which have been in a slump, continue to rise.

Baltimore expects to handle more than 700,000 tons of imported paper this year, about 60,000 tons more than it handled last year even with a paper strike in Finland that dented imports for several weeks this summer. This year's total is several times the amount the port handled in 2000, according to port records.

Much of it comes from Finland, which produces about 15 percent of the global supply of paper. Canada is the United States' biggest source of imported paper, with newsprint being the most common grade, according to PricewaterhouseCoopers LLC. The United States is the world's biggest exporter of toilet paper, with much of it flowing through West Coast ports to China.

The United States remains the world's biggest customer for paper in general. Every year, each man, woman and child in the country consumes the equivalent of 700 pounds of forest products, according to TAPPI, the technical association for the $340 billion global forest and paper industry. Every year, more than 350 million magazines, 2 billion books and 24 billion newspapers are published in the United States.

One ton of M-real's specialty paper could make about 8,000 magazines, Kaufman said.

The port of Baltimore developed a strategic plan targeting niche cargo such as paper in the 1990s. Its location, a day's journey up the Chesapeake Bay, made the more common and valuable containerized cargo - including clothes, toys and electronics - a harder sell than at ports closer to the ocean.

In making the commitment to paper and other forest products, the port had to train and equip its longshoremen, and build sheds with stronger floors than those at regular warehouses because rolls of paper are so heavy. Port officials say the effort has paid off: It's one of the largest handlers of paper and other noncontainerized cargo such as automobiles and farm and construction equipment.

Paper in general hasn't been the highest-value commodity or the biggest job producer through the public and private terminals in Baltimore, but it is in the top half, according to a 2003 study conducted for the port by Martin Associates of Lancaster, Pa.

The M-real contract, which has been in the works for about a year, will mean more containers for Baltimore because some sheets of paper come in metal boxes. It will also mean a few more ships per month coming to the port, a new shipping line calling on the port and about 200,000 more longshoreman hours a year, about twice the current number needed to handle M-real's goods.

Kaufman, a native of Montgomery County, said he did not give his home state special treatment in making the deal. Negotiations were handled by Morgan C. "Trip" Bailey, president of BalTerm, the company that handles all of the public port's paper, by the new port director, R. Brooks Royster III, and by officials from Gov. Robert L. Ehrlich Jr.'s office. The state has agreed to help build warehouse space to accommodate the expected load and the growth in tonnage. Those officials are expected to be at the port ceremony today to announce the news.

"There was special training for [longshoremen] to reduce damage and improve quality," Bailey said of handling the paper, which can be easily ruined by bad weather or by "clamp" trucks used to move it from ship to shed. "There was a lot of cooperation from the port administration and others to be able to do this."

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