Faced with years of decline, the port launched a plan five years ago to focus on niche cargoes that roll on and off ships, and not so much on the container trade.
I wouldn’t say ‘not so much on the containers.’ I think that we gave a greater focus than in the past to roll-on, roll-off project cargo and automobiles. We’ve never lessened the intensity that we have for containers. It’s still a commodity we think we can grow, and grow successfully. But the strategic plan really got us guided. It really allowed us to get focused, build toward the future and create assets that we can go out and market.
Why is the container trade so much more highly coveted by ports?
Actually, out of all the modes of transportation and moving cargo, containers are probably the most boring. It’s very repetitive. You’ve got a crane operator and it goes from ship to truck to terminal to out gate. The cargoes that we’ve been very successful in handling are very labor intensive, such as the automobiles. Each automobile has to be driven off individually. It creates a lot of longshore hours. I think the reason why containers are pursued so aggressively by all ports is because that’s the major mode of transportation today and there are more containers out there than anything else.
But handling containers costs more for the port, doesn’t it?
Right, each one of those container cranes is about $7 million. With the auto ships that come and the farm equipment ? they basically only need a parking lot that’s well lit with good security. The water depth isn’t as deep as what’s required by the container vessels. There’s less dredging that needs to be done and fewer capital assets on the land-side required for “ro-ro” project cargo.
If ro-ro project cargo is both cheaper on the land-side and creates more jobs, why invest $300 million into the container-based Seagirt Marine Terminal as the state has done?
The reason why you invest into Seagirt and you continue to chase containers is because you want to be as diversified as possible. When I look at our port and compare it to other ports, I think we’ve done a good job in diversifying. The farm equipment has been down over the last two years as well as automobiles because of the slip in the worldwide economy. But our container business has been up; we were up eight percent last year. That diversity on total tonnage allowed us to remain constant. If we were just focused on ro-ro or we were just focused on containers you go the way of the trade.
Can you give me an idea of the economic size of the port?
There’s 18,000 direct jobs associated with the Port of Baltimore, but once you take into account the indirect and the related jobs, it’s 127,000 jobs in the state of Maryland. In the last economic study we did there were $286 million in local, municipal and state taxes generated by the port. There’s wages and income paid to just Marylanders of close to $2 billion a year. It’s a great economic engine for the state.
What about the budget of the port itself?
The revenue generated by the port back to the general transportation trust fund is approximately $75 million to $80 million a year. Taking our operating expenses compared to our revenue, this year we’re estimated to post a profit of just under $4 million. In each of the years that I’ve been here we’ve made a profit.
One of the things that the port has done recently to attract auto shippers was open the Masonville Auto Terminal. It was designed to handle 125,000 cars a year. What is it up to now?
The terminal, when we first envisioned it, we envisioned it as a 50-acre facility. By the time we were done with phase one, it ended up being about 42.6 acres, so the design capacity is more around 90,000 automobiles, and that’s just phase one.
So you slightly scaled it back. Is that because you think you won’t need as much capacity?
No, it’s just that once we had a real piece of land and once the engineers were done with it–because of environmental issues that we needed to address–the 50-acre parcel that we had picked out–once we were done laying asphalt, putting in the buildings and putting in roads–was 42.6 acres.
How do we rank as an automobile port? I’ve read that we?re third on the East Coast.
Overall, yes, but we’re No. 1 in the country for export automobiles. We still want to get [to No. 1 overall]. We don’t wake up every morning saying we want to be No. 2.
What’s it going to take?
I think we have some good opportunities in the next year to get some new business that we don’t see right now. We’ve been told by ATC, which is the tenant over at Masonville, that they just got the Honda account, which should result in approximately 70,000 to 80,000 new automobiles moving through the Port of Baltimore that we don’t see today. That will give us a big jump. We’re working with some auto manufacturers overseas to put some products through here as well. I think if we get to the next phase of Masonville and we continue to develop Dundalk for Amports, we’ll really be a force to contend with and we’ll be well on our way to that No. 1 status.
Scandinavian “ro-ro” shipping line Wallenius Wilhelmsen recently signed a 20-year agreement with the port.
That was huge for us.
The port is going to create a $10 million facility for them in Dundalk. What do we get in return?
Prior to signing that agreement, they guaranteed us a minimum of 200,000 tons of cargo each year. The term of that agreement was two to three years, and that had been going on for probably two or three terms. We took the position with them that we’d like to do business with them long-term and in doing so we’d build them this facility and they’d guarantee us a minimum of 600,000 tons in each and every year of the 20-year agreement. I honestly feel that down the line with this company, because they are the biggest ro-ro carrier in the world, we could see as much as 2 million tons a year.
Are they the port’s No. 1 customer now?
No, they’re up there in our top 10 but the biggest customer that we have today is Mediterranean Shipping Corp., which we just signed a 10-year lease with.
There was some interest years ago in building a cruise ship terminal in the Inner Harbor. Is that dead now?
We’re still looking at the cruise business. We think it’s something that could be successful for us here. We do have the fourth-largest consumer group in the country in the Baltimore-Washington corridor, and it makes it very convenient to get in your car, drive 20 minutes or a half hour, get on a cruise ship and you can take your family on vacation for a week. I think there’s a market here. It certainly would be wonderful for the city, with cruise ships stopping here on a regular basis, passengers getting off and shopping downtown. We haven’t lost sight of it. Today we handle it at a marine terminal, which isn’t the most attractive place. We’ve just hired a consultant to do a feasibility study on the cruise business here in Maryland. I’d say in about three or four months, it should be complete.
What’s on the horizon for the port?
We’re getting to the point right now where we’ve signed a lot of long-term agreements, we’re lucky ? [and they’re] really pressing the capacity of our marine terminals. We feel that in order to grow the port we’re going to need more land in the long term. I think the smartest way to expand the port is with contiguous property so you don’t have to create another marine terminal someplace. That’s what we’re looking at right now.
What’s next for you? There has been quite a bit of turnover in the director’s chair over the past few years. Do you have plans to move on?
I’m here for the long haul. We have had tremendous turnover here in this position. When I took this position I believe we’d had five port directors in the last 10 years. This January I’ll have been here for three years and it’s my intent to make this a career here.
