Entering deeper water

December 27, 2007

Imagine thousands of shipping containers sitting end to end like a great wall of steel stretching from downtown Baltimore to Laurel. Now picture all 22 miles' worth of containers loaded onto a single massive vessel. For the folks who run the port of Baltimore, it doesn't take much imagination: They've had two such ships dock at Seagirt Marine Terminal this month.

Container ships are growing like NFL linemen on cheap buffet food. Around the world, ships the length of several football fields have become increasingly common. Bigger ones are on the drawing board. Baltimore's shipping channel is deep enough to serve them, but its terminal berths are not.

Seagirt needs a berth with a 50-foot depth; its three existing berths can handle ships that require a 45-foot depth but no more. The solution is not so simple as dredging five more feet. Dig any further and you undermine the bulkheads. Creating a berth would cost $80 million to $120 million, including cranes and other landside facilities.

Yet without such an investment, the port's growing volume of container traffic and the Baltimore area's 18,500 port-related jobs could be at risk.

The trouble is the Maryland Port Administration doesn't have the money, nor is it likely to anytime soon. There are too many competing transportation needs in the state - even with the $400 million-a-year transportation spending bill approved by the General Assembly last month.

That's why the MPA's decision to seek a private partner to invest in this project is an attractive alternative. It's entirely possible that a large investor such as AIG Global Investment Group, which bought P&O Ports last spring, would be willing to do it - in exchange for a long-term contract to operate the port.

AIG is one possibility, but there are others, including SSA Marine and Tideworks Technology, the largest U.S.-based terminal operator. State officials would simply put the contract out for bid.

And yet it's still not clear that private equity is the best solution, and there are risks involved. After all, international trade is growing, and Maryland could lose out on potentially higher licensing and stevedoring rates that would instead benefit the vendor.

So while the option of private equity is worth pursuing, such an arrangement should also be approached with caution. It's been done elsewhere but never in Baltimore. The port needs a 50-foot berth, but taxpayer interests also need to be protected. Financial shoals are not always obvious; the state would be wise to investigate the waters thoroughly before setting a course.

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