In the meantime, shippers are stuck with higher rail rates out of the port of Baltimore, a reversal of the advantage the port enjoyed prior to railroad deregulation when its inland location meant cheaper rail rates to the Midwest. But rate contracts are no longer determined by distance. The greater the cargo volumes a port handles, the lower the rates a railroad generally offers its shipping customers there.
Now the inland location favors trucks.
"The fantastic geographic advantage that Baltimore enjoys for trucking works against them for rail service," said Paul Bingham, an economist with the Global Insight firm who monitors the port sector. "The railroads are less interested in the shorter service lanes then the long-hauls, such as feeding Chicago through Savannah. There's the potential for them to capture more revenue on longer journeys."
Both the port and CSX could offer the shipping lines financial incentives to lure more container traffic to Baltimore, a Drewry Shipping Consultants Ltd. report on Seagirt suggested.
Seagirt also sits within the fourth-largest consumer market in the country but captures just 16 percent of the market within a hundred-mile radius from Baltimore, according to the Drewry report obtained by The Sun. Cargo trucked in from New York or Norfolk to Baltimore could be rerouted into Seagirt instead.
"Additional containers would serve this community," said Mark Montgomery, senior vice president of East Coast operations for Ports America. "There's still a really great opportunity for Baltimore to grow here."
Instead of growth, Seagirt's cargo volume dropped 2 percent last year, the first decline in several years, to the equivalent of 479,123 20-foot containers, or TEUs. Seagirt could annually process 1 million-plus TEUs, according to Montgomery.
Private operators bidding on Seagirt should propose to substantially raise its container volumes, White said.
The MPA expects to hire a Wall Street firm by October to determine the prospects of a public-private partnership for Seagirt. The financial adviser would then draft a concession agreement that the port would float to the private sector. The state could also decide to extend Ports America's contract or find another Seagirt tenant instead of forging ahead with privatization.
The prospect of a 20- to-30-year contract for the control of Seagirt should attract bids from at least 8 to 10 operators, said White, the MPA's director. Both Ports America and the Mediterranean Shipping Co. say they would bid on a long-term lease.
"There's going to be tremendous interest in this," White said. "We would turn our portfolio over to them and say: 'This is the business that we have today. You honor these contracts, be responsible for renewing them and bring in new business., "
laura.mccandlish@baltsun.com
