Scores of people donning suits descended on Seagirt Marine Terminal at the Port of Baltimore this week. Right down on Berth 4 where normally you would take your life in your hands by just getting out of your car and dealing with the container traffic, a caterer was handing out chilled glasses of lemonade as a band played patriotic tunes.
This unusual spectacle was organized to celebrate an unusually successful arrangement between the state of Maryland and Highstar Capital, a private investment firm. So far, the deal has yielded good results for both sides.
This story goes back to 2001 when everyone was on red alert for more acts of terrorism. The British port operator P&O Ports held a contract from the state to operate the marine terminals in Baltimore (along with New York/New Jersey and five other ports). P&O was sold to Dubai Ports World, a company owned by the Arab Emirates nation of Dubai. President George W. Bush approved the sale, not a big deal since shipping is the most global of businesses. Well, it became a big deal, a huge deal, in fact, until DP decided to sell off its U.S. operations to investment bankers. So, Highstar Capital, a leading independent infrastructure investor, formed Ports America (gotta love that name). Ports America Chesapeake is an affiliate of Ports America and is the day-to-day operator of Seagirt.
Ports America Chesapeake signed a deal with the state in 2010 promising $1.3 billion in infrastructure improvements in exchange for a 50-year lease on Seagirt.
That’s why there were guys in suits and a band on the pier yesterday. Everyone from the governor to the ILA wanted to congratulate each other on the P3 (that’s the cool way to say Public Private Partnership). The cash from the financiers helped back a $105 million expansion of the terminal that gave Baltimore a 50′ deep berth and four brand new super-post-Panamax cranes, positioning the port as a player when the new, wider lane of the Panama Canal opens.
We will have to wait and see if the investment works out for the state and the bankers.
One thing I hope is that part of the $1.3 billion is earmarked for paint, because I am worried about how long these new cranes are going to stay white. They look great new, but really, white cranes in a container terminal? That’s like having a guy with a silver tray handing out lemonade in glasses on the pier.