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Delaware weighs options for Port of Wilmington

Tuesday - 1/22/2013, 10:05am  ET

By AARON NATHANS
The News Journal

WILMINGTON, Del. (AP) - The choice that Delaware faces about the future of its port - whether, and how, to pass off control to a private partner - is similar to a choice that Maryland faced a few years back.

Officials in Maryland say they're happy with how their own three-year-old port privatization project at the Seagirt Marine Terminal in Baltimore has been going. They say it has enabled them to get ready for the big ships expected to pass through the Panama Canal and head up the East Coast in 2015 - and to take advantage of the ships passing through the Suez Canal today.

Delaware is considering its own private partner, Kinder Morgan, the Houston- based energy transportation giant, to operate the Port of Wilmington using a long- term lease. Kinder Morgan is preparing its formal proposal to the Diamond State Port Corp., which currently operates the port on behalf of Delaware.

Kinder Morgan does not currently do business in Wilmington, which is largely a fresh fruit port.

Instead of choosing an outsider to run its port, Maryland turned to a familiar face in 2009, when it tapped Ports America Chesapeake to sign a 50-year lease and operate the terminal under a public-private partnership. Ports America had already operated the terminal on a contract basis since it opened in 1990.

Ports America advertises itself as the largest terminal operator and stevedoring company in the nation, operating in about 42 ports. It is owned by Highstar Capital.

As a joint venture partner in Delaware River Stevedores, Ports America also has a presence at the Port of Wilmington, offering labor and equipment to handle cargo. The Delaware River Stevedores also operates a terminal at the Port of Philadelphia.

Port of Wilmington Chairman Alan Levin said Ports America requested information during the Delaware solicitation, but chose not to make a bid.

In the past, when the Baltimore port wanted to make capital upgrades, it usually got its project funding from the state. But several years ago, Gov. Martin O'Malley informed the Maryland Port Administration it wouldn't have enough money to perform the upgrades needed to keep the port competitive. So the port administration put out a request for bids for a private partner with deeper pockets.

Ports America wasn't the only bidder for the Baltimore contract. Ceres Terminals Inc., the nation's third largest stevedoring company, was also in the mix. Jim White, executive director of the Maryland Port Administration, said they were comfortable going with either company. In the end, Ports America's proposal was more lucrative to the state, White said.

Ports America took over operational control of the 200-acre Seagirt terminal in January 2010, as the state continued to own the land.

Baltimore has an advantage over Wilmington, and most other East Coast ports: The draft, or depth that the bottom of vessels can travel, is 50 feet deep and has been for 20 years. When dredging is completed, Wilmington's draft will be 45 feet. Only Norfolk, Va., can also boast a depth of 50 feet on the East Coast.

So the challenge was to create a berth at which the biggest vessels can dock in Baltimore. Many of these vessels now use West Coast ports.

Ports America spent the $105 million needed for the container cranes, building the berth and dredging the river.

The groundbreaking for the new berth was in March 2010. It was announced the project would support 5,700 jobs - including 3,000 in construction.

The Baltimore berth is now finished, with four "Super-Post-Panamax" cranes - the largest cranes in existence - installed.

Skeptics have argued that all East Coast ports will be fighting for a share of the new business, and few will benefit all that much. Ports like New York/New Jersey, Miami and Savanannah, Ga., also are working on improvements to benefit from the big ships. And West Coast ports and rail lines are expected to fight to keep their current business. But management and labor at the Baltimore port remain hopeful.

"It's worked out great for us," said Steve Lukiewski, labor coordinator for the International Longshoreman's Association Local 593, which represents workers at the Port of Baltimore. But he added they really won't know the full benefit of the upgrades until after the Panama Canal widening project is finished.

Lukiewski said the union had some concerns about the change ahead of time, but are happy about how things have turned out.

"We knew with Ports America what we were getting. They've been in the port forever," he said.

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