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Baltimore Bets on Port Privatization

Frank Sobotka never delivered on his dredging in Season 2 of The Wire, but it appears like Baltimore is finally one step closer to getting a much improved Port of Baltimore.

Maryland Governor Martin O’Malley announced last week that the state signed an agreement with Port America to operate the port for 50 years. The deal is contingent on Port America, the nation’s largest port operator, to invest hundreds of millions of dollars in the facility. This includes an extended berth capable of hosting the larger container shapes set to land on the East Coast when the newly-widened Panama Canal opens in 2014.

There are two key issues here to keep an eye on, one of those local and one far-reaching.

First, what does this deal mean for Baltimore? According to the most recent BLS estimates, the Baltimore-Towson metropolitan area employs almost 18 percent of its workforce in trade, transportation, and utilities. This is below the national average of 19 percent, but still a large share of metro employment. Clearly aimed to increase Baltimore’s role as an Eastern shipping hub, these investments have the real potential to increase employment and send positive externalities throughout the local economy.

However, there is no guarantee these short-run construction jobs will generate long-term economic growth and more sustainable jobs. Moreover, the length of the deal means Baltimore could find itself captive to a poorly structured deal.

Second, this deal will provide another ‘data point’ in the ever-evolving conversation around transportation privatization. Serving as the fourteenth largest container port in the lower 48 states in 2007, this is an enormous deal in terms of dollar amount and potential impact. And how this deal shapes up for Baltimore--especially when it comes to economy-wide job creation and freight firms’ locational decisions--will all be closely watched by municipalities and port management across the country.

If Baltimore starts rising up the port rankings after 2014, the deal’s legacy could be one of increased privatization across the country, and one not just limited to maritime infrastructure.

The next step is approval in Annapolis--which is no sure-thing. As the country saw with the Pennsylvania and New Jersey turnpike privatization proposals, many pitfalls await such high-profile infrastructure deals.

Just like Sobotka’s experience with the city budget, this whole deal could go up in smoke.