Contributed by: Don WinnerBy CHRISTOPHER CONKEY for the Wall Street Journal - The deal, announced Friday, is essentially a 50-year lease between the Maryland Port Administration and Ports America Group, a company owned by Highstar Capital, a New York private-equity fund. In exchange for the right to operate Baltimore's cargo-container terminal for 50 years, Ports America will make an upfront payment of $100 million and a series of infrastructure improvements at the port. Chief among them: deepening the water at the cargo terminal to 50 feet from its current depth of 45 feet. The improvements will enable Baltimore to compete for the supersize cargo vessels that are expected to start passing through the Panama Canal after its expansion is complete in 2014 or so. The vessels are capable of carrying twice as many 40-foot containers as the cargo vessels that typically call on East and Gulf Coast ports. Other ports are considering similar expansions and hunting for the capital to get them done. The Port Authority of New York and New Jersey is examining a number of proposals to fix its biggest impediment to serving bigger cargo ships: a bridge that isn't high enough for the vessels to fit under. Port officials in Charleston, S.C., are studying plans to increase the depth of its water, which fluctuates by six feet along with tides. The port is also moving to develop its Navy Base Terminal, which would boost container capacity by 50% when finished.
Officials in Savannah, Ga., are improving rail connections, purchasing new gantries and upgrading technology in an effort to more than triple the number of containers the port can process. The port will find out within the next year or so whether it can proceed with a channel-deepening project that would enable it to handle the larger vessels.
"The canal expansion is clearly going to be a game-changer in international trade," said Curtis Foltz, chief operating officer at the Georgia Ports Authority.
The port in the best position east of the Panama Canal may be in Norfolk, Va. The water is already 50 feet deep there, and the port has joined with freight rail company Norfolk Southern Corp. and others on the Heartland Corridor, a rail connection to the Midwest that can accommodate trains double-stacked with 40-foot cargo containers.
"We do know [traffic] is going to go up" after the canal is widened, "and we're definitely going to be ready for it," said Joe Harris, a spokesman for the Virginia Ports Authority.
Private infrastructure groups are looking for opportunities at a time when many state and local governments are strapped for cash. Florida recently signed a deal with a private consortium to build and operate a tunnel at the Port of Miami. Earlier this year, the Port of Oakland agreed to turn over some of its terminals to Ports America, which has gradually established a presence at virtually every major port in the country.
"Difficult economic times also open the door for new business opportunities," said Maryland Lt. Gov. Anthony Brown, referring to Baltimore's deal with Ports America. Maryland officials said the deal could ultimately bring 5,700 jobs to the state, which plans to spend the $100 million upfront payment on road, bridge and tunnel upgrades.
In a statement, Christopher Lee, president of Ports America Chesapeake and managing partner of Highstar Capital said the company is looking forward to implementing "the critical infrastructure required to maintain the Port of Baltimore's competitiveness and importance to the Maryland economy."