Baltimore’s terminal operator P3 serves as ‘win-win-win’ paradigm

By: | Issue #660 | at 08:00 AM | Channel(s): Ports & Terminals  Terminals  

The Port of Baltimore’s busy Seagirt Marine Terminal serves as a paradigmatic example of successful engagement of the private sector in public port terminal operations.
The Port of Baltimore’s busy Seagirt Marine Terminal serves as a paradigmatic example of successful engagement of the private sector in public port terminal operations.

The Maryland Port Administration’s public-private partnership for its burgeoning container terminal is proving to be a paradigm for port P3s, while advancement of another joint endeavor to further help the facility compete for freight heading to the Midwest has hit a snag. “We’re a firm believer in public-private partnerships,” James J. White, the MPA’s executive director, told AJOT in an Oct. 24 phone interview.

“I think it may be the best public-private partnership in the nation,” White said of the $1.3 billion, 50-year agreement inked in late 2009 with Ports America Chesapeake LLC for operation of the Seagirt Marine Terminal.

“It works for all of us,” White continued. “We really enjoy working together. We market together and leverage our relationships with the ship owners.”

Maryland Port Administration Executive Director James J. White has ample reason to be enthusiastic about the MPA’s public-private partnership with Ports America Chesapeake.
Maryland Port Administration Executive Director James J. White has ample reason to be enthusiastic about the MPA’s public-private partnership with Ports America Chesapeake.

Ports America Chesapeake’s general manager, Bayard Hogans, concurs, telling AJOT, “The partnership associated with the Seagirt P3 is a great model of how public and private sectors can work together to create a ‘win-win.’ “From the public side, there was a clear need to make the Port of Baltimore competitive in a changing market and ensure the economic impact to the state would persist,” Hogans said. “From the private side, there was a strong business case to be made that justified the investment, so creating this partnership, which at the time was unique, was truly beneficial for both sides.

“Like any deal,” he said, “the devil is in the details, so each opportunity will have its own unique aspects that will need to be worked through, but, based on the success of the Seagirt P3, it is clear that private investment is a good option for the public sector to consider when faced with large infrastructure needs.”

In fact, the Seagirt P3 might better be described as a “win-win-win,” as not only do the port and Ports America benefit, but also gaining are a number of additional parties, from the container lines able to bring their big boxships far inland from Atlantic waters to the shippers moving cargo on those megavessels. Ultimate beneficiaries should include consumers as well.

Meanwhile, things aren’t moving along so well for another P3 – this one looking to combine state and federal dollars with money from CSX Corp. – to facilitate efficient inland rail links to enhance the Port of Baltimore’s competitive stance in reaching Midwest consumer markets.

The rail project deals with the more-than-100-year-old Howard Street Tunnel beneath downtown Baltimore, which must see its clearance increased to accommodate CSX trains carrying double-stacked containers.

White had said the rail project would “put us on a level playing field with New York and Virginia in going after discretionary freight to the Midwest.”

However, to the shock and disappointment of Maryland officials, CSX leadership – on the eve of a federal funding submission deadline – informed the Maryland Department of Transportation that it did not plan on moving forward with the project on the tunnel, which is owned by CSX.

MDOT Secretary Pete K. Rahn, in a Nov. 1 letter to U.S. Transportation Secretary Elaine L. Chao, said MDOT would not be submitting an application for federal funding by the Nov. 2 deadline date.

In the letter, Rahn called the 11th-hour CSX decision “both surprising and incredibly troubling,” adding, “It is MDOT’s intent to work with CSX to explore other options to improve the flow of freight into and out of the Helen Delich Bentley Port of Baltimore.”

While earlier efforts to gain federal funding for the tunnel project had not proven fruitful, Maryland officials had looked to again apply for federal dollars on Nov. 2, this time seeking $155 million to augment $145 million from the state and $145 million that CSX had said it would pony up. The total project cost dropped dramatically as engineers, continuing to work while funding was in limbo, came up with a less expensive approach.

The entire rail undertaking, including work on overpasses near Seagirt as well as the tunnel rework itself, would take about four years to complete following receipt of all funding, according to White.

In the meantime, the Port of Baltimore, offering 50-foot depths along its channel and at Seagirt berths, already is handling containers at a record pace. Building upon its high mark achieved in its fiscal year ended June 30, the Port of Baltimore saw its 20-foot-equivalent container unit count jump 10.5 percent in its first fiscal quarter, ended Sept. 30, while the port’s total ship count for the quarter remained at 359, the same as for the comparable year-earlier three-month period.

The greater TEU count is due to the fact that the containerships calling Seagirt are getting bigger, and, although the largest vessel to call Seagirt to date has a 9,400-TEU capacity, White is confident of the port’s ability to regularly accommodate vessels transiting the newly expanded Panama Canal with TEU capacities in the 14,000 range, with the ability to receive those with capacities of 20,000 TEUs and more potentially limited only by a 186-foot air draft.

Of course, the Seagirt facility, which dates back to 1990, wouldn’t have such capability without the assertive participation of Ports America Chesapeake, which, according to White, has since 2010 invested more than $250 million in terminal equipment and infrastructure. That’s money that otherwise would have had to come from the state’s transportation trust fund – dollars that can now be directed toward other pursuits, from dredging to roadways.

Ports America Chesapeake’s Hogans said, “The significant growth of container volumes in the Port of Baltimore can be directly attributed to the investments made by Ports America Chesapeake and the expansion of Seagirt Marine Terminal.

“Without the private-sector engagement, this impressive level of growth would not have been able to be achieved,” Hogans continued. “Based on the competitive business environment of container shipping, it can be strongly argued that volume and business impact could have been lost without the engagement.”

Hogans said his company now looks forward to working with the Port of Baltimore on an expansion strategy that includes a 70-acre tract, contiguous to the 284-acre Seagirt terminal, that the MPA acquired in May for $55 million. That acquisition, the first of its kind for the MPA in three decades, should keep the Port of Baltimore from being land-challenged until at least 2030, according to White.

A busy Seagirt Marine Terminal is vital not only to serving markets farther inland but also in efficiently, cost-effectively getting cargo throughout the nation’s fourth-largest consumer market, as Baltimore-Washington trails only the New York, Los Angeles and Chicago areas among U.S. population centers. Two-thirds of the nation’s people can be served within an overnight drive of the Port of Baltimore.

The area around the Port of Baltimore has become a hotbed for distribution center development, with Amazon already operating two warehouses each covering 1 million square feet and a third similar facility planned for the Tradepoint Atlantic campus at Sparrows Point that in 2018 is to see opening of facilities including a 1.3 million-square-foot Under Armour distribution hub.

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American Journal of Transportation

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For more than a quarter of a century, Paul Scott Abbott has been writing and shooting images for the American Journal of Transportation, applying four decades of experience as an award-winning journalist.

A graduate of Northwestern University’s Medill School of Journalism, with a master’s magna cum laude from Trinity Evangelical Divinity School, Abbott has served as president of chapters of the Propeller Club of the United States, Florida Public Relations Association and Society of Professional Journalists.

Abbott honed his skills on several daily newspapers, including The Cincinnati Enquirer, The Richmond (Va.) News Leader, Albuquerque Journal and (South Florida) Sun-Sentinel, and was editor and publisher of The County Line, a weekly newspaper he founded in suburban Richmond, Va.

A native Chicagoan, he is a member of American Mensa and an ever-optimistic fan of the Chicago Cubs.