Port of Baltimore to get multi-million-dollar upgrade

Public-private partnership would prepare port for super-size ships once Panama Canal is widened

  • The state has been looking for a partner to dig a 50-foot-deep birth at Seagirt Marine Terminal for super-large ships once the Panama Canal is widened, and to build four cranes similar to this one.
The state has been looking for a partner to dig a 50-foot-deep… (Baltimore Sun photo by Glenn…)
November 20, 2009|By Michael Dresser | michael.dresser@baltsun.com

Gov. Martin O'Malley is expected to announce today that a company will invest hundreds of millions of dollars to upgrade the port of Baltimore - a project likely to bring thousands of jobs to the city.

The deal, part of a long-term lease agreement, is needed to prepare the port for the larger ships expected to dominate maritime commerce after the widening of the Panama Canal is completed, high-ranking administration officials said. They identified the company that will take over container operations at Seagirt Marine Terminal as Ports America Chesapeake, a newly chartered affiliate of Ports America Group - the terminal's current operator.

With the state's Transportation Trust Fund depleted, the Maryland Port Administration has been working for more than a year to find a private partner to build a 50-foot-deep berth and purchase four cranes so Seagirt could handle the oversize cargo ships that are expected to use the canal to sail from Asia to the East Coast after 2014.

Officials estimated the cost of building the expanded berth at $105 million, and said Ports America is expected to invest up to $500 million in capital projects at the port over the 50-year term of the agreement.

They predicted the agreement would directly create 5,700 new jobs in Maryland - 2,700 of them permanent positions at the port.

Rupert Denney, chairman of the Baltimore Port Alliance, a group representing maritime businesses, called the deal "a positive development," good for the Maryland Port Administration and the port community in general.

Though he was not privy to the selection of Ports America as the winning bidder, Denney said upgrading the terminal likely would lead to more shipping business for the port and more employment.

"If Ports America are prepared to invest this amount of money in the port of Baltimore, they have every single incentive to make the operation work," he said. "That'll turn into probably higher volumes and more man-hours."

According to the administration sources, Ports America was the sole company to put in a bid. But they expressed confidence the state had negotiated a good deal.

State officials familiar with the deal asked not to be identified because it had not been formally approved. But they described it as a one-of-a-kind public-private partnership with no clear precedent in the port industry.

The contract comes up before the Maryland Port Commission Friday morning for what is expected to be easy approval. O'Malley and top transportation officials have called a news conference immediately afterward. The pact would still have to be reviewed by General Assembly budget committees and ratified by the Board of Public Works.

Under the agreement, sources said, the state will receive regular lease payments for the next 50 years. In addition, Ports America would provide the roughly $100 million necessary to transfer ownership of 201 acres at the terminal from the Maryland Transportation Authority to the port administration.

According to the sources, the state would also receive a payment for each container that moves across the Seagirt docks above a 500,000 annual threshold. The state would remain in charge of security at the terminal, with the Maryland Transportation Authority Police continuing their role as first responder.

Most container cargo that comes from Asia to the Eastern United States travels by ship to the West Coast and then moves across country by train. A high-ranking port official estimated that by sending mega-ships through the Panama Canal, shipping lines will be able to lower the cost per container from roughly $2,000 to about $200.

The canal's existing locks are limited in the size of the ships they can handle, but Panamanian authorities are midway through a $3 billion project to add a third set of locks - wider and deeper - to allow the largest vessels.

According to the high-ranking official, the port of Baltimore stood to lose significant business - including that of the giant Evergreen Line - had it not found a way to pay for the expanded berth at Seagirt. Evergreen accounts for about one-third of the 350,000 containers that come through the port of Baltimore annually.

With the agreement, port officials expect to be in an excellent position to gain container business because it will be one of the few East Coast ports with the 50-foot-deep channel needed to accommodate the larger ships.

According to administration officials, Ports America was one of two companies that responded to the state's original request for bidders. They said the other bidder, Ceres Marine Terminals, pulled out days before the deadline.

Baltimore Sun reporter Timothy B. Wheeler contributed to this article.

Highlights of the port deal
•Ports America Chesapeake would build 50-foot-deep berth and equip with four cranes.

•Maryland Port Administration would receive.lease payments from Ports America.

•Ports America would provide roughly $100 million to buy out Maryland Transportation Authority.

•Contract calls for capital investments up to $500 million over 50 years.

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