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Our view: A 50-foot-deep berth and a huge financial investment in the port make a long-term lease with Ports America look like a golden opportunity for Baltimore

  • Baltimore's port needs upgrades before 2014, when Panama Canal improvements will mean bigger ships on the East Coast.
Baltimore's port needs upgrades before 2014, when Panama… (Baltimore Sun file photo…)
November 23, 2009

For a decade, a 50-foot-deep berth at Seagirt Marine Terminal has been on top of the wish list for Baltimore's port. Good things - including 2,700 permanent jobs - must come to those who wait because it's beginning to look a lot like Christmas has finally arrived in South Baltimore.

In a first-of-its-kind arrangement for the port, state officials have negotiated a contract to lease Seagirt to a private company, Ports America Chesapeake, for the next 50 years. In return, Ports America would build the much-anticipated berth at a cost of $105 million.

But wait, there's more. The company has also agreed to invest $500 million to maintain and improve the terminal over time and to give the Maryland Transportation Authority (which has financed Seagirt's development) $100 million once the deal is approved.

As Seagirt's sole operator, Ports America would also make payments to the Maryland Port Administration depending on the volume of container traffic. The amount would increase once the volume hits 500,000 containers a year (from the current 350,000).

And in one more important trade-off in the deal, Ports America would surrender 65 acres at Dundalk Marine Terminal so the port administration could expand the importing of cars and trucks. Right now that potentially lucrative trade is at a roadblock because the port lacks sufficient space to temporarily park the vehicles.

The port agency has been looking for a public-private partnership deal for years, but this, at least at first glance, would seem to exceed expectations.

In unveiling the arrangement Friday, Gov. Martin O'Malley envisioned it creating a total of 5,700 jobs. That includes the 3,000 temporary jobs made possible by construction at the port and on whatever projects the transportation authority chooses to pursue.

Just as importantly, the investment means the port can attract the much-anticipated huge container vessels made possible by upgrades to the Panama Canal that are expected to be completed by 2014. Baltimore's shipping channel is deep enough to serve such mega-ships, but its current berths are not, nor are the existing cranes large enough to reach across their oversize decks.

Bigger ships mean lower shipping costs for trade from Asia to the East Coast (and then connected by rail to the Midwest). Baltimore is uniquely situated to take advantage of the opportunity. But financing the 50-foot-deep berth through traditional means - the Maryland Transportation Trust Fund - was all but impossible given the competing highway and transit needs.

Yet not building a berth wasn't really an option either. Without one, the port was likely to lose at least one shipping agency, Evergreen, that accounts for nearly a third of current container traffic. Instead of adding jobs, the port would stand to lose many hundreds of them.

Still, there are risks involved. As trade grows, Ports America will be able to set licensing and stevedoring rates to the company's advantage, for instance. The contract ended up attracting only one bidder, and the port administration has had to rely on outside experts to help negotiate the high-stakes arrangement.

Is it the best possible arrangement? There are two weeks to review the details before the contract goes before the Board of Public Works on Dec. 16.

Careful scrutiny will be required, but prospects for the deal look good. The port's work force, Maryland companies that depend on foreign trade, the local economy and taxpayers all stand to benefit from the new facility and the jobs that would be created. After such a brutal economic recession, that's enough to make the holidays a bit happier all around.

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