City and its Strategic Seaport Evolve to Meet International Economic Demands

Baltimore, the largest city in Maryland, has held top honors for a number of events in the history of America. The city was the first to import and package tea in America in 1811. The lyrics to the country’s national anthem, “The Star-Spangled Banner,” were first printed in Baltimore in 1814. Even ice cream made its debut in Baltimore, with the nation’s first commercial factory opening in 1851. The city’s prized seaport also became the second leading port of entry for immigrants coming to the United States during the 1800s.

Today, Baltimore and its seaport have evolved with the times, continually redefining the city’s identity to prosper economically, culturally and socially. The most recent transformation has been from a sleepy industrial-based manufacturing town to a revitalized, popular area destination that has successfully steered itself toward a service sector-oriented economy. This latest reincarnation, which gained momentum in 2003, can be seen in the tourists flocking toward the Inner Harbor, as well as the massive amount of goods being transited behind the scenes as part of the city’s thriving port industry — an industry that’s been attracting the attention of investors both locally and abroad.

In fact, more foreign companies are investing and doing business in Baltimore than ever before. For instance, Baltimore has become the number-one city for the export of vehicles from the United States. To meet the demand for cars worldwide, the expansive Port of Baltimore’s Fairfield Auto Terminal is comprised of four specialized terminals for handling and processing automobiles, light trucks and similar cargo. Mercedes-Benz leases 44.1 acres there, including a 50,000-square-foot building used to process autos and light trucks. Another facility — the state-of-the-art Masonville Marine Terminal owned by the Maryland Port Administration — encompasses nearly 50 acres, with a 94,000-square-foot building also designed for processing automobiles.

For 300 years, Baltimore’s port has served the state of Maryland and beyond — whether it was welcoming immigrants or processing steel and sugar — and today, the port’s capabilities continue to expand. According to Maryland Gov. Martin O’Malley’s office, the port is breaking all previous cargo records, while at the same time developing policies to be both environmentally friendly and one of the most secure ports in the nation.

Last year for instance, a high-tech entrance and departure point for trucks on the port grounds was opened. The system uses real-time video feeds and security checks to instantly verify a trucker’s identification and purpose of visit.

The Maryland Port Administration also plans to activate a video surveillance system that will display real-time video at its public terminals. In fact, the Port of Baltimore was one of the first U.S. ports to receive radiation equipment used to screen containers, and 100 percent of all imported containers are checked for radiation.

All of this adds up to increasingly smooth operations and record-breaking business for domestic and international companies. This boom has forced Maryland government and business organizations to retool their strategies to cater to the growing, lucrative international stream of companies pouring into Baltimore.

“Half of our time is being spent in attracting foreign direct investment,” said Robert Walker, director of the office of international trade and investment for the Maryland Department of Business and Economic Development (DBED). “That’s relatively new in terms of the mission.”

DBED previously only promoted traditional trade opportunities primarily aimed at small and medium-size companies, but the city’s economic potential quickly caught the eye of a broader audience.

The numbers speak for themselves. The Baltimore Port Authority estimates that the port handles more than 30 million tons of cargo each year. Total trade turnover from the port was billion in 2007 alone. The value of the imports is roughly billion, up 3 percent compared to 2006. Meanwhile, exports shot up dramatically in 2007 to more than .5 billion — up 45 percent over 2006.

Where are all the goods leaving Baltimore heading to? The top individual market countries to receive Baltimore exports include Canada, Egypt, Mexico and China. Europe too is a top export destination as a region.

On the flip side, the foreign presence in Baltimore is also making itself known with a string of major international business transactions.

Walker of DBED pointed to one recent transaction that exemplifies the importance of foreign direct investment to Maryland’s economy. In May, Russian steel company SeverStal closed an 0 million, all-cash deal to buy Sparrows Point, a fully integrated steel mill in Baltimore. The deal provides both a strategic opportunity for SeverStal to expand its existing U.S. business and a chance for the local steel mill to re-emerge from decline. SeverStal plans to upgrade the Sparrows Point facility with another 0 million investment, Walker said, noting that the total transaction represents class=”import-text”>2008June.Baltimore or Bust.txt.3 billion in foreign direct investment from just one facility.

In another recent deal, Israel’s Teva Pharmaceutical Industries, the largest generic drug maker in the world, announced early this year plans to acquire biotech company CoGenesys of Rockville, Md., for 0 million.

“Foreign companies own and operate facilities, plants, offices and labs in Maryland that generate about 105,000 jobs in the state,” Walker explained. “That’s 5.5 percent of the workforce. That’s why we’re focusing more on attracting foreign investment to the state. There’s a lot of interest in Maryland.”

Baltimore also has the advantage of having a large “Foreign Trade Zone” (FTZ) in its borders. The concept of FTZs dates back to the 1930s. FTZs were created in the United States to provide special customs procedures to U.S. plants engaged in international trade-related activities to entice greater foreign business and investment. A foreign trade zone is a federally designated area in a U.S. city with manufacturing, distribution and/or warehouse operations where the merchandise is considered international commerce. The key is that FTZs are duty-free. That means foreign companies can bring in imports or merchandise, keep them in a foreign trade zone for an indefinite period of time, and not pay any customs duties. It can hold the goods there until it finds a domestic buyer, saving cash in the interim.

Baltimore is home to “Foreign Trade Zone No. 74” — a coveted status, according to Elizabeth Weiblen, Baltimore Development Corp. Enterprise Zone Administrator. Weiblen is the director of FTZ No. 74, which covers 1,600 acres of noncontiguous industrial land, encompassing Baltimore, Baltimore County, Harford County and Anne Arundel County. Baltimore occupies the biggest chunk of the trade zone, taking up nearly 1,500 acres.

“There are a lot of international companies in Baltimore,” Weiblen said. “We have many companies that are headquartered internationally who have a presence here.”

Rupert Denney represents one of those companies. He heads the Baltimore branch of Dutch-based C. Steinweg Inc., a logistics company that transports commodities such as metals. C. Steinweg realized Baltimore’s potential back in 1989, when it established an office there.

“Baltimore is close to a significant portion of U.S. consumers,” said Denney, who also serves as chairman of the Baltimore Port Alliance. “On a per-mile basis, Baltimore is closer to major consumption centers like Chicago, Cleveland, Columbus and Pittsburgh.”

As a transit port, Baltimore rivals ports in Los Angeles and Seattle, Denney said, noting that through sheer geography, the Port of Baltimore has also prospered thanks to lower domestic transportation costs.

“Deregulation of domestic transportation and escalating fuel prices — that benefit is becoming more and more realized because in international transportation by sea, often the domestic cost is at par or only slightly lower than the sea freight cost,” Denney explained.

This means that Baltimore has become a major hub for processing material from all over the world. In fact, it’s a strange international potpourri that passes through its piers — citrus fruit from Brazil, stereos from Southeast Asia, raw product from the Caribbean to make Domino Sugar, drywall from Canada via the National Gypsum Company, even molasses that wind up in animal feed at hundreds of Maryland farms.

It’s quite an evolution from the days when the British declared Baltimore and its harbor a “nest of pirates” during the War of 1812. Back then, the city’s Fort McHenry came under attack by British forces near the harbor after the British had burned down Washington, D.C. American forces ultimately won what became known as the Battle of Baltimore.

Today, the battleships along the harbor are just for tourists and the only international wrangling taking place in Baltimore and its port is of the quieter investment variety, as Maryland’s historic Charm City puts its stamp on a sea of goods transiting their way effortlessly around the world.

About the Author

Christine Cub