Double port trouble

Our view: A private operator could meet container challenge

August 07, 2008

Baltimore, founded as an inland deep-water port, now finds itself losing a competitive struggle for the container traffic that carries much of the world's commerce. The Seagirt Marine Terminal, opened 18 years ago to help the port of Baltimore compete for this lucrative business, is struggling to cope with an array of operating disadvantages that could cost hundreds of millions of dollars to remedy with no assurance of future success.

A possible answer, port officials believe, is to lease the entire Seagirt facility for 30 to 40 years to a private operator willing to invest in making the facility a success. That strategy offers a sensible, viable option to improve port operations without burdening taxpayers. Port officials say there are eight or 10 port terminal operators, in the United States and abroad, who would be willing to bid to operate the Baltimore facility. It is hard to imagine how events could have conspired more against Seagirt. Shortly after it opened, shippers began double-stacking freight container boxes on rail cars - moving double the amount of goods to their destinations with only a small increase in cost. But double-stacked containers can't fit through the Howard Street tunnel used by the CSX rail line that serves Seagirt. It would cost a breathtaking $1 billion to expand the tunnel and hundreds of millions more to deepen the berths and install taller cargo cranes to serve the bigger ships traveling between Asia and the East Coast.

Baltimore also finds its location a handicap because of the time and fuel needed to bring ships up the Chesapeake Bay. Meanwhile, shippers in other ports have been able to negotiate lower rail freight rates. All of this has left Seagirt handling less than half of its capacity while container business has boomed in Norfolk, Va., and other East Coast ports.

There is no easy answer to this confluence of trouble, but sharing the substantial economic risks at Seagirt with a private long-term operator would be a smart way to go.

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