Ocean shipping: Maryland Ports Administration, Ports America set to move forward with public-private partnership
Deal would significantly increase Port of Baltimore's competitive position
Jeff Berman, Group News Editor -- Logistics Management, 11/23/2009
BALTIMORE-In an example of a public-private partnership geared towards job creation and subsequent increased business opportunities, the Maryland Ports Administration (MPA) and Ports America Chesapeake, a subsidiary of private equity fund Highstar Capital, inked a 50-year deal in which the MPA will lease its 200-acre Seagirt Marine Terminal to Ports America.MPA officials said that under the terms of the deal Ports America will construct a 50-foot berth for the port that is expected to spur business activity and accommodate larger vessels that will be able to dock at the port. They added that this partnership is expected to produce 5,700 new jobs, with the total investment and revenue from this deal to the state of Maryland having the potential to reach more than $1.3 billion over the span of the deal, as well as generate $15.7 million per year in new taxes for the state.
Construction for the berth is expected to be completed by 2014. This effort will make the Port of Baltimore one of only two U.S. East Coast ports-the Port of Virginia is the other-with a 50-foot berth and a 50-foot channel.
"The biggest benefits [of this] for shippers will certainly be the availability of a 50 foot berth at the Port of Baltimore," said MPA Spokesman Richard Scher in an interview. "Baltimore will become only the second port on the East Coast to have both a 50 foot channel and berth." The Port of Virginia in Norfolk, Va. is the other.
Scher added that the berth will allow shippers to place more TEU (twenty-foot equivalent) containers on vessels bound for Baltimore, noting that a 50 foot berth will allow Baltimore to welcome larger ships and more cargo.
According to MPA and Maryland State officials, this agreement must be submitted to the Board of Public Works for approval.
And they said that when the agreement is made official, Ports America will be responsible for running the daily operations of the Seagirt Marine Terminal, as well as investing in a new 50-foot berth, cranes, and other infrastructure at Seagirt. Ports America will make an annual payment and provide ongoing revenues to the MPA during the life of the agreement, and the State of Maryland would continue to own Seagirt.
Ports America already operates the Seagirt Marine Terminal and has operated the terminal since it opened in 1990. It has also run operations at the port's Dundalk Marine Terminal since 1996.
"When the Panama Canal expansion project is completed in 2014, it is expected that a greater and larger number of ships will travel to East Coast ports to reach their customers quicker and less expensively than their current route of going to West Coast ports and sending products by rail to markets throughout the country," said the MPA. "Without a 50-foot berth, those larger ships would not have enough water depth to dock and bring additional business to the Port of Baltimore. The cost to develop the 50-foot berth and four cranes is approximately $105.5 million."
And MPA's Scher said that the advantages are that the Port of Baltimore will be one of two East Coast ports with a 50 foot berth and channel.
"We already have the channel," he said. "However we have a strong advantage over Norfolk because of our consumer market. We are located within the third largest consumer market in the nation. Baltimore sits between Philadelphia and Washington, DC/Northern Virginia. This area includes more than 14 million consumers.
A Wall Street Journal report noted that this deal reflects how private infrastructure groups are looking for opportunities at a time when many state and local governments are strapped for cash. The report cited similar efforts occurring at other U.S.-based ports, including the Port of Oakland, the Georgia Ports Authority, the Port of Charleston, and the Virginia Ports Authority.
"Difficult economic times also open the door for new business opportunities," Maryland Lieutenant Governor Anthony Brown told the WSJ.
U.S. Pacific Rim ports need makeover
06/29/2009
View All On-Demand Webcasts